Since February 2009 the unemployment rate in Las Vegas has averaged 13.1% and never dropped below 10.1%; it now stands at 11.5%. Jobless workers have not left the metro area despite the persistently high unemployment rate and lack of job growth since the recession ended. This stunning lack of out-migration, Las Vegas’ labor force of about 980,000 workers declined by less than 200 people in the past four years, is puzzling because there are better job prospects for the unemployed and underemployed in other parts of the western U.S.
Every other state has a healthier labor market than Nevada and every major metropolitan area has a lower unemployment rate than Las Vegas. The unemployment rate in North Dakota is 3.1% and has not been above 4.2% since February 2009. Unemployment rates in Nebraska, South Dakota, Utah and Wyoming are 3.8%, 4.5%, 5.2% and 5.2% respectively. The combined labor force in these states is more than 3.5 times larger than Las Vegas, and could easily absorb jobless workers leaving Las Vegas. The labor forces in these relatively healthy states have grown by an average of less than 1.4% over the past four years. In other words their labor markets are expanding at a steady but unspectacular rate.
The last four years stand in stark contrast to Las Vegas’ recent history. Between 2004 and 2008 the Las Vegas labor force grew by 16.8%. Between 2000 and 2004, a time of relatively slow economic growth for the U.S. overall, its labor force grew by 14.1%. This means that about one-quarter of the Las Vegas labor force arrived between 2000 and 2008. These recent arrivals came to a city in the midst of a real estate boom but have persevered through four years of high unemployment and plunging real estate values.
A comparison of Las Vegas and cities on the Gulf and Atlantic coasts that also experienced a real estate boom and bust in the past decade is informative. Between 2004 and 2008 the labor force grew by 13.4% in Fort Myers-Cape Coral, Florida and by 12.7% in Myrtle Beach, South Carolina. Since then their labor forces decreased by 1.3% and 4.2% respectively. If the labor force in Las Vegas contracted at the same rate as it did in Fort Myers or Myrtle Beach, because unemployed workers left the city to find employment elsewhere, the Las Vegas unemployment rate would be 1.3 to 3.9 percentage points lower.
Labor forces have declined in many cities across the U.S., even those that did not experience a real estate boom and bust, but not in Las Vegas. Much like the gambler who stays at the blackjack table believing his luck will change with the next shoe the people who came to Vegas for economic opportunities are hanging on and hoping that 2013 will be different.