Monday, February 7, 2011

Yet Again, I Told You So.

Remember when I said this last Monday?

The real estate speculation and debt fueled "boom times" of the last decade are long gone, so we need to stop acting like we can return to those "good old days".

Numerous ordinary Nevadans have already seen the writing on the wall. "Easy" construction jobs are no longer all that easy to get, and "plentiful" casino jobs are no longer all that plentiful, especially now that the casinos are increasingly investing in foreign markets and less so in new Nevada properties. That's why more and more of them are doing what Tera and John are doing. They're going back to school, working on advanced degrees, and doing what they need to do to access the jobs of the future.

So why can't Brian Sandoval see this? I'm sure he didn't hear any stories like this one at either of his inaugural balls last weekend, so why couldn't he take the time to stop at the town hall at Grant Sawyer on Saturday to listen?

More and more Nevadans realize that the only real way to "let Nevada be Nevada again" is for Nevada not to repeat the mistakes made in the past. The days of "easy money" in gaming and "growth" are behind us. We now have to adapt our economy for the new reality. What are we doing to adapt?

In the last two days, I caught two very troubling Sun articles that we should take as warning signs. The first is from yesterday and notes the "brain drain" that's only worsened since the start of "The Great Recession".

Nevada, like many states and countries, has always suffered from a flight of human capital, or “brain drain,” as it’s often called. Many of our best and brightest take a pass on UNR and UNLV, and once they matriculate at elite universities elsewhere, they wind up in regions that are financial and technological centers and offer more varied cultural and recreational lives.

This brain drain problem was mitigated during the boom, as tens of thousands of college-degreed Americans came to Nevada for opportunity. The valley was flush with architects, construction management experts, marketers, attorneys, accountants and other professionals. In fact, today there are roughly 191,000 working-age adults in the valley with bachelor’s degrees who weren’t born in Nevada, according to an analysis of census data by Alan Berube of the Brookings Institution.

Although we enjoyed a migration surge of the educated, we also had a massive influx of less educated service and construction workers, and we were left with a workforce that was less educated than most large urban areas — 21 percent of Clark County residents had bachelor’s degrees as of 2009, compared with the national average of 27 percent, according to census data compiled by the Chronicle of Higher Education. By contrast, 28 percent of residents of Maricopa County, where Phoenix sits, have degrees; in Salt Lake County, it’s 29 percent.

This matters because economic development experts agree that Nevada faces a difficult path to recovery. We have limited natural resources, a struggling construction economy that won’t recover anytime soon and over-reliance on a tourism industry that is itself dependent on free-spending outsiders in an age of parsimony.

In short, we need our tourism industry to expand and innovate, or we need new industry. Both options would seem to require college-educated workers whom we don’t currently possess in enough numbers.

As we've talked about before, those areas that have more highly educated workforces are the places that recover more quickly. That's why places like Greater Salt Lake City and the San Francisco Bay Area are recovering more quickly than our humble burg that hasn't valued education.

Nope, instead we keep hearing more stories like Bud Meyers'. He and other Las Vegas area "99ers" have exhausted their unemployment benefits, but don't know what to do next because all they know is casino and/or construction, and neither industry is apt to hire them back.

Meyers’ story isn’t just about one man’s disheartening job search. It’s also about a class of workers approaching obsolescence in a town much changed from the days when they first came seeking opportunity.

Older casino workers such as Meyers feel passed over in a job market that favors applicants’ appearance and personality over work history or local connections, say job placement and training experts. Las Vegas always has been driven by eye candy. That was a commonly heard complaint even before the recession. Yet age discrimination actions rarely advance far. Employees are mainly concerned about keeping their jobs rather than causing a stir.

In two years of unemployment, Meyers drained his life savings of $40,000. But the experience has taken more than a financial toll on Meyers, who picks at his once-manicured nails and chain smokes while he speaks.

His graying hair and pale skin reveal a different man from the bartender who appears in personal photos with a tanned, chiseled face and gleaming black hair. The employed Meyers had coifed hair and a wide, mischievous grin. The jobless Meyers has ragged locks he cuts himself and insomnia, reflected in the bags under his eyes and an expression of defeat.

Though he subsists on just one meal a day to save money, the once-trim body that rushed about behind a bar, slinging drinks for tourists, has grown thick.

Many of the long-term unemployed like Meyers are showing up at agencies like the state-run JobConnect.

Ben Daseler, who supervises the state’s largest JobConnect office in central Las Vegas, said older hospitality workers are having an especially tough time finding work. Like other job seekers, he said, they are told to “be flexible and learn new skills.” [...]

“I couldn’t believe that someone with my experience couldn’t even get a job as a busboy,” Meyers said.

Still, he spent months applying online for similar job openings. But many casino companies prevent job seekers from applying for more than one job at once, requiring applicants to wait several weeks before they can reapply for something else. He also walked into bars and casinos, talking with bartenders, managers and human resources representatives to get a foot in the door. You have to apply like everyone else, they said.

What happened over three years ago wasn't just a typical "cyclical downturn" that one studies in macroeconomics. No, this was more. Our entire US economy was revealed to be frighteningly unstable, and it came perilously close to total collapse.

And more so than perhaps anywhere else in the nation, Nevada's economy was "built" around the very worst aspects of the postmodern American economy. How often did we hear that "growth begets growth"? How often were new home developments hastily approved just because "if we build them, they will come"? How often were we told not to worry about Americans mortgaging pretty much everything in sight to pay for "the high life", just because "real estate is a valuable commodity, it always goes up"?

As I've been saying on this blog for well over a year, Nevada's economy was built on financial quicksand. It was only a matter of time for many "homeowners'" over-leveraged "assets" to catch up with them, and for companies accustomed to "easy money" to see it dry up as fast as it appeared, and for our entire way of existence to be revealed as nothing more than a glamorized ponzi scheme.

We're only deluding ourselves if we really think all the "easy money" in casinos and construction will suddenly reappear as fast as it disappeared. It's just not realistic.

But you know what is? Making sure we don't repeat the same mistakes of the past. Why don't we get more of these 99ers back to school so they can learn new skills and be able to obtain jobs that can survive the new economy? Why don't we encourage more of our high schoolers to stay in school, go to college, and make something out of their lives? And why don't we build the kind of lasting infrastructure that will make more educated workers (and the companies looking to hire them) want to move here?

Again, we need to adapt. We need to change. We can't afford to follow the same path to failure (yet again). Nevada doesn't have to be a failed state. What will we do to change it?

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