Las Vegas ranks well behind other metropolitan areas in creating advanced industry jobs, a regional economic development expert says, but is making strides to close the gap.
A new report from the Brookings Institution, a Washington, D.C.-based think tank, ranked Las Vegas 63rd out of 100 metropolitan areas in number of advanced industry jobs with 32,967. That’s a cluster of high-paying jobs in manufacturing, technology, engineering and other sectors.
Although the number may disappoint people hoping for a more diverse economy, Las Vegas is progressing. Between 2013 and 2015, the city’s advanced industry job count grew by 3.4 percent a year.
“The region has not had a history in advanced industries, but it’s beginning to gain some traction and see real progress in terms of job growth; especially, in digital services, which is high-tech, said Mark Muro, a senior fellow and the director of policy at the Metropolitan Policy Program at Brookings. “These are critical industries that can support a prosperous economy. And, Las Vegas has significant growth to come with Faraday Future building a manufacturing plant.”
Faraday is moving dirt at its $1 billion factory site in North Las Vegas. Its plan calls for 4,500 jobs with average wage of $22 per hour, which is higher than the $16-plus average of the hospitality and leisure industry.
That’s quite a boost for the advanced manufacturing sector in which Las Vegas has 7,800 jobs, Muro said.
“The supply chain and immediate vendors to (advanced industry) companies are a lock,” he said. “Those have to happen. These are essential to the operations of the company. In general, there are 1.5 to two jobs needed locally outside of the industry on the supply side. For auto, it’s even higher than that. There’s a likelihood Las Vegas will move significantly up the list for its advanced industry presence.”
Through the end of 2015, the 32,967 advanced industry jobs supported more than 26,000 other jobs in the region. Advanced industry jobs pay, on average $82,000 a year, resulting in $5.9 billion in economic output, Muro said. In comparison, other industries average $47,571 a year, Brookings reported.
However, the valley only has 3.5 percent of its jobs in that advanced sector, ranking third from the bottom nationally.
“You have other things going on,” Muro said. “World-class gaming and hospitality, and entertainment. These advanced industries are not historically what the state or Las Vegas has done. That puts you somewhat at a disadvantage for building longer lasting and more durable, and better-paying employment.”
John Restrepo, principal of RGC Economics and a Nevada labor analyst, said although Las Vegas may be at the bottom of most advanced industry job metrics, the city is making strides.
“What the facts tell us is that it takes a great deal of time, talent, treasure and political will to transform an economy,” he said. “That’s especially true for one that’s still largely based on low-skill, low-wage workers.”
Engineering accounts for 7,450 jobs in Las Vegas, which is 22 percent of the advanced industry total, and it has grown by 4.6 percent between 2013 and 2015. Computer systems design is No. 2 at 4,630 jobs, and it’s grown by 6.1 percent.
The biggest gain in job growth is data processing and hosting at 20 percent, but that field only accounts for 1,270 jobs, Muro said. Web search portals and internet publishing accounted for 18.8 percent growth with 840 jobs. There were 720 software products jobs, an 11.4 percent growth.
“There’s clear traction now in some of the digital services — data processing, web search and software,” Muro said. “It’s from a small basis, but there is significant new employment being created in these important and good-paying industries. It’s growing as fast as anywhere in the country.”
Switch, a data storage company, is amid that growth, but start-up activity in downtown is, too, Muro said.
“The Zappos presence has been critical in sophisticated e-commerce and all of the technical backend there,” Muro said. “Certainly, Switch has brought attention and infrastructure to the field. I think the proximity to both the Bay Area and Los Angeles with their huge pools of technical expertise gives you the proximity to the hotbeds.”
The development of Faraday Future and the Tesla electric car plant in Northern Nevada are part of an ongoing push by local and state officials to use incentives to diversify its economy, especially since the collapse caused by the Great Recession. Muro said it’s appropriate for Nevada to focus on advanced industry jobs as a measure of progress for diversification.
“You’re not going to be the Bay Area, Boston, Detroit or Nashville (Tennessee) in having huge presence in these industries,” Muro said. “You do need to have complementary industries that are on different boom-and-bust cycle that are different from gaming and hospitality.”
Nevada’s lack of an income tax hasn’t been the impetus for the growth in advanced jobs and companies relocating here, but lower costs are a factor, he said. As the Bay Area overheats with rising real estate costs and vehicle traffic snarls, that’s incentive to leave, Muro said. Many millennials, he added, are likely to enjoy Southern Nevada’s “let-live and creative environment.”