Boomtown no more: how to save a troubled Las Vegas economy

I love Las Vegas.

Credit: pachd.com

The massive hotel pools. The glittering lights. The clink of slot machines. Hoards of people determined to gamble (and most likely lose) their hard-earned cash.

Many people say that you either love it or hate it. Well, I’ll admit it. I love it. And hailing from Southern California, I’ve probably been to Sin City far more times than the average American.

But even I, a self-described Vegas fan, have never stayed for more than a few days. That, you see, is my limit… the time when I need to return to reality.

It’s that mindset, though, that created a major problem for the Nevada economy in the wake of the housing bust and ensuing recession. Nevada’s financial health is intrinsically linked to the tourism and development industries.

When things are good, it’s great. But when things aren’t so good…

As Las Vegas Review Journal columnist Steve Sebelius wrote:

“Many of us never saw Nevada as home, but rather a way station replete with plenty of jobs and plenty of ways to blow the money made at those jobs. Las Vegas was the geographic equivalent of a rental car: no need to slow down for speed bumps or get the oil changed. When the good times stopped, we’ll turn her in and move someplace else.

Ironically, the recession may have changed that: When you’re stuck in an underwater home or facing the fact that there aren’t jobs elsewhere, you’re forced to stay. But forced to stay and forced to care are two different things.”

A recent study released by the Brookings Institute in Washington D.C. reports that in order to help recover from a downturn that left the state with record unemployment and foreclosure rates, state officials must focus on diversifying the state economy.

Tourism alone just doesn’t cut it, they say.

“Seven major industries and some 30 narrower target opportunities—distributed in varying mixes in the state’s regions—hold out plausible potential for economic growth and diversification for Nevada.”

The industries include:

  • Tourism, Gaming, and Entertainment
  • Health and Medical Services
  • Business IT Ecosystems
  • Clean Energy
  • Mining, Materials, and Manufacturing
  • Logistics and Operations
  • Aerospace and Defense

State lawmakers are listening, according to the report.

Nevada stands at a crossroads, yet it appears ready to remap its future.

Silver Staters sense that the current economic slump has not been just a temporary reversal but a challenge to the state’s traditional growth model—one that has revealed an economy over-dependent on consumption sectors, prone to booms and busts, and too little invested in innovation and economic diversification. And yet, for all that Nevadans have been early to recognize that the current slump will beget, in some places, innovation and renewal, and in other places erosion—and so requires action.

Now the ideas are there. It will be interesting to see if lawmakers are able to make some of these suggestions reality.

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