The economic development crowd is going about this all wrong

Nevada’s economy hasn’t diversified, and isn’t diversifying anytime soon. Deal with it.

May 13, 2020 7:32 am

An adult store on the Strip getting boarded up at the start of the shutdown in March. (Photo: Bridget Bennett)

The leisure and hospitality industry accounts for one of every four jobs in Nevada. Or it did, anyway.

A day, or an hour, doesn’t go by without someone — a resort industry executive, a furloughed housekeeper, a public official, a stock market analyst, a journalist, a poker player who blogs — saying something about when and how the resort industry will or should reopen.

That’s as it should be. 

For all the hand-wringing over Nevada’s failure to diversify its economy because uh-oh now look where we are, well, here we are. Nevada’s economy hasn’t diversified in a statistically meaningful way, it isn’t going to anytime soon, and we shouldn’t pretend otherwise.

Despite the earnest efforts of the state’s growing economic development industrial complex over the last few years, battery factories and data centers and all the other ventures Nevada has attracted by doling out publicly subsidized handouts — even the holy sacred football field amen — have created a workforce that is still dwarfed by the number of people directly and indirectly employed in what is — or was — the state’s primary industry.

And now, in Nevada’s greatest economic crisis ever, the economic development crowd is saying what we need is more financial enticements to lure new firms to come to Nevada.

As one economic development official explained to business allies last week, “The strategy is to push and push hard for new job creation.”

With incentives.

In other words, more of the same.

To be fair, there is a pandemic crisis twist. The new buzzword in the economic development community is “reshoring,” which means getting medical equipment and pharmaceutical manufacturers from abroad to relocate to the U.S. All the cool kids in economic development are emphasizing “reshoring” opportunities, each stressing the importance of their town getting out in front of all the other towns that are trying to do exactly the same thing. It’s a great plan, assuming the medical equipment and drug manufacturing industries are so vast they can create hundreds of thousands of jobs in every city in America.

But just in case that doesn’t work, here’s a suggestion for the Las Vegas Global Economic Alliance, the Governor’s Office of Economic Development, the Economic Development Authority of Western Nevada, and all the other development and workforce groups, education institutions, allied business organizations, and think tanks that have been preaching diversification so fervently: Step back. Consider for a moment that things are not what they were three months ago. And ask if this whole “economic development” thing needs a big fat fundamental rethink.

Something completely different. Please.

Attracting new businesses to Nevada in any significant degree is, right now, not much more than idle chatter, given the uncertainty of how the coronavirus is going to play out. Some opportunities may present themselves eventually, over time. But how much time? The good Dr. Fauci isn’t sure what will happen or when. Do economic development cheerleaders know something he doesn’t?

Even under a best-case scenario, in which a handful of firms are attracted to Nevada sooner rather than later, do economic development go-getters think it will be enough to make even a mildly measurable difference to the economy, or its development?

No uncertainty whatsoever looms over one consequence of the current crisis. Even as demand grows for public services, public resources are going to shrink, and state and local governments are going to have to cut budgets. That’s a rock solid lock.

After the economic crash of 2008, governors nationwide went all Herbert Hoover and sliced public spending. It was exactly the wrong thing to do, because it had ripple effects throughout the economy, and not in a nice way.

Budget cuts will similarly compound economic pain now.

States have pinned hopes on help from the federal government. But after a brief shining moment of sane and productive cooperation which led to the CARES Act, Republicans in the White House and Congress now appear to have lost whatever interest they may have had in using the federal government to help people. The only policies that rogues gallery of grifters and sycophants is going to pursue between now and the November election is stuff that enriches corporations and impoverishes everyone else, including state and local governments.

If the state’s economic development advocates would like to develop the economy, instead of doing more of the same, they need to shift the paradigm. The economic development field has been somewhat prestigious for a couple decades, and is more professional than it used to be (this is perhaps especially true in Nevada), so people who work in it tend to be pretty smart and can probably come up with some great ideas. But if I may, let me humbly toss out a couple.

First, economic development groups and their “partners” should marshal their formidable collective resources to reform systemic policies and practices that make life harder for working people than it needs to be. Unaffordable child care, poverty-level wages, erratic working conditions, skimpy or non-existent health, sick leave, vacation and retirement benefits, ruthless banking options, a dearth of public transit, a profit-driven court system, one of the nation’s most thread-bare safety nets — all those create broad workforce instability and erode the purchasing power of the consumer core of working Nevadans, which in turn hinders, to borrow a term, economic development.

Those barriers to prosperity and well-being also block performance in one area that every economic development organization in Nevada and the nation unanimously agrees is a tip top priority, education.

Second, if Nevada’s politically juiced-up and much-admired economic development movers and shakers want to do something that would make a difference but quick, they shouldn’t be dreamily promising to attract new jobs (however few) with tax cuts and giveaways. They should be identifying the most expeditious way possible for the state to reverse the tax cuts and giveaways that have already been bestowed to companies that never needed them in the first place, and then lobby like hell to replace those race-to-the-bottom “incentives” with responsible policy.

Amazon, Tesla, Google, Apple, Switch — and yes, even the football team — don’t need the goodies Nevada has given them. But the state does.

The chambers of commerce, higher education institutions, and politicians have all been staunch allies of the economic development set. And they all know prosperity isn’t shared in Nevada. They shouldn’t be whining for tax breaks and pining for deals, begging for grants, and smiling at ribbon-cuttings.

They should be pushing economic development policy that helps people who work in the jobs Nevada has (or had, but will someday have again), not cheering on economic development agencies as they muse about how wonderful it will be when every Nevada child learns to code or whatever.

The state’s economic development efforts need to concentrate on developing the economy we’ve got instead of daydreaming about an imaginary economy that exists mostly in economic development agency promotional materials.

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Hugh Jackson
Hugh Jackson

Hugh Jackson was editor of the Las Vegas Business Press, senior editor at the Las Vegas CityLife weekly newspaper, daily political commentator on the Las Vegas NBC affiliate, and author of the Las Vegas Gleaner political blog. Prior to moving to Las Vegas, he was a reporter and editor at the Casper (Wyoming) Star-Tribune.