Nevada’s stubborn unemployment suggests loosening job market, economists say

While the Silver State still has one of the nation’s highest unemployment rates, hovering above 5 percent, state economists say the data shows a loosening job market and steps toward a “soft landing” — the theory of lowering inflation without causing mass layoffs and a recession that Federal Reserve officials have been working toward for roughly two years.

“I think we’re still higher in the good kind of unemployment,” DETR’s chief economist David Schmidt said. “I want people who are looking for a job to find one. If there’s people coming back (into the labor market), that’s kind of an optimistic bent for our unemployment numbers.”

Nevada’s loosening labor market

The latest statewide employment report from the Nevada Department of Employment, Training and Rehabilitation shows similar trends to the national average.

“We’re kind of mirroring what’s happening in the U.S. as a whole,” Schmidt said.

The state’s unemployment rate increased 0.2 percentage points from June to July, to 5.4 percent, according to seasonally adjusted unemployment data. The state added roughly 2,600 workers to the labor force and lost about 1,500 total nonfarm jobs. The biggest hits were in the accommodation and food services and support services sector – in Southern Nevada, that’s most likely to be the ancillary services that support the resort industry.

That could have been the beginning of the labor force changes expected by The Mirage’s closing on July 17. Schmidt said the closure was after economists polled the state for the July report, but still suspected the numbers reflect the beginnings of expected job loss associated with the resort closure. The full scope is expected to be captured in August’s data.

“Outside of those two industries, it was a pretty decent report,” Schmidt said. “We mostly made up for that decline in other industries.”

That’s because it reflects the expected process of the Fed’s “soft landing.” The higher interest rates are meant to make money more expensive, eventually causing businesses to slow hiring – but without triggering mass layoffs.

So far, that’s the case, Schmidt said. He sees that in how fast Nevada is adding jobs compared to other states. For instance, in January 2023, Nevada had the highest year-over-year job growth rate at 6 percent, according to Bureau of Labor statistics. Nowadays, Nevada is still regularly in the top three of the list but the rate has dropped several percentage points. In July, Nevada’s job growth rate was 3.3 percent, second only to South Carolina’s 3.7 percent.

“I would point to what (Federal Reserve Chair Jerome Powell) was saying at the national level. Part of the goal of having high interest rates is to restrict economic activity,” Schmidt said. “They would describe their policy as restricted, their goal is putting on the brakes a little bit. I think they’re satisfied with what’s happening nationally and we’re seeing some of that here too.”

Local unemployment report

More localized employment and unemployment data for July show communities in Southern Nevada have the highest rates of unemployed people, seasonally unadjusted. Henderson reached 6.3 percent, Las Vegas reached 6.7 percent and North Las Vegas reached 7.8 percent for the month, according to DETR.

Local employment and unemployment reports are not seasonally adjusted. Schmidt said that means some of those elevated month-over-month rates are expected because of the seasonality of some industries.

“We still have most of our unemployment from people who are entering the job market or people who quit their jobs, and not people who were fired from a job,” Schmidt said.

Those could be new residents, seasonal workers returning to the job search, young people after finishing schooling or educational programs, and others.

Scott Black, the mayor pro tem of North Las Vegas, said he suspected one reason the city is higher than others in the valley is because of the area’s growth. It’s the second-fastest growing city in Nevada, adding more than 22,000 people, or 9 percent, between 2020 and 2023, according to the U.S. Census Bureau.

To address that, Black said the city has spent the last several years adding employment services to municipal buildings. Those include the American Job Centers program, which has resource centers called EmployNV and youth-specific hubs around the state. EmployNV locations are inside the Alexander and Aliante libraries. A business counterpart and a small business connector also exist at North Las Vegas City Hall.

And the city expects to have more job growth in the future that could boost employment data. In recent years, it has turned its eyes to the Apex Industrial Park, a 7,000-acre area of developable land that has become a manufacturing and warehousing region. Several major retailers, like a facility for the shoe brand Crocs and a distribution center for Kroger, the parent company of grocer Smith’s.

“I think that we’re just getting started in terms of building the employment base via industrial development out at Apex,” Black said. “It really is a driver for not only North Las Vegas workforce opportunities. We’re hopeful that people will be able to land a good job in our community, live in our community, (and) go to school here.”

Contact McKenna Ross at mross@reviewjournal.com. Follow @mckenna_ross_ on X.