Lack of economic diversity reflects LV gaming power

By Kevin Rademacher / Staff Writer

Despite some impressive developments in diversifying the Las Vegas economy, the city's dominant industry is still growing faster than its nongaming rivals.

In a year that brought the opening of the Nevada Cancer Institute and the World Market Center, Clark County's Industrial Diversity Index -- compiled by the Las Vegas research firm Applied Analysis -- slipped to 60.4 in November from 60.6 for the same month in 2004.

The problem isn't the lack of new nongaming jobs, said local economists. Instead, it's the continued growth of the vibrant gaming industry.

"We've seen huge economic changes," said UNLV economist Keith Schwer. "The pie is getting bigger, but the percent of that pie that is gaming is about the same."

During that year, Las Vegas saw its number of professional and business service jobs -- such as accountants, attorneys and architects -- jump by more than 10,000. The financial sector added 4,200 jobs. Transportation and warehousing jobs jumped by 1,600 and manufacturing was up by 1,400 jobs, according to the Applied Analysis index.

At the same time, however, the number of leisure and hospitality jobs rose by 17,300 positions. Additionally, construction jobs largely driven by large projects on the Las Vegas Strip, jumped by 12,200.

"Gaming and construction are representing greater shares of the economy," said Jeremy Aguero, a principal with Applied Analysis. "Other industries are growing quickly. They are almost keeping pace, but our core industries are growing at a faster clip."

The combination of new industries and a strong core business, Schwer and Aguero agreed, is good news for Southern Nevada.

"Certainly we'd like to see greater industrial diversity," Aguero said. "That allows the trend to be sustainable over time. ... Still, it's difficult, if not impossible, to find a period that our economy has been stronger."

Schwer said: "Diversification means something only on a downturn. If the economy is doing well, you want to be on the fast horse."

In the near future, the trend of gaming growth keeping pace with diversification is likely to continue. By the spring of 2007, Southern Nevada should see the completion of the massive Solargenix solar power plant in Boulder City, the completion of CDW Corp.'s North Las Vegas Distribution Center and Qualcomm's satellite communication operations also in North Las Vegas. Combined, those projects -- all seen as major economic development victories -- will employ nearly 400 workers.

While it's solid progress toward diversification, when the Red Rock Resort opens early this year, it is expected to employ 2,600 workers. South Coast, which opened late last month, has more than 2,000 employees.

Somer Hollingsworth, president of the Nevada Development Authority, said diversity is important. He also was quick to point out that the success of the gaming industry is the foundation of the work now going on to bring in new industries.

"That's what's allowed us to have all of these great things that we like and move here for, like no corporate income tax and no state income tax," he said.

The growth and popularity of gaming, in Las Vegas and across the country, hasn't hurt in attracting new companies to Southern Nevada as any concerns over the nature of an industry once seen as off-putting melt away.

"When we look back five years and look at the companies that have come to Las Vegas, not too long ago we wouldn't have even gotten those companies to take our calls," he said.

Kevin Rademacher covers utilities and finance for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4069 or by e-mail at kevinr@lasvegassun.com.

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