Western Nevada Regional Wages Post Recession

Last week’s blog discussed the evolution of Western Nevada region’s[1] post recession economy in terms of its industry employment.  The blog discussed that in 2002, the region’s five largest employers were the Gaming, Retail, Health Care, Construction, and Manufacturing industries.  These industries made up 47% of all regional employment.  By 2013, this mix changed to Retail, Health Care, Gaming, Manufacturing, and Bars and Restaurants.  These industries made up approximately 46% of total regional employment.

[1] Includes Carson City, Douglas, Lyon, Storey, and Washoe counties.

Note: It should be noted that this list does not include all jobs in the region, a number of industries with low percentage of employment in the region (such as Mining) are excluded from the table.  The table is sorted by 2013 employment amounts.

As mentioned in last week’s blog, it is not only the number of jobs created by these industries that determines the region’s recovery and future success.  Wages paid for new jobs are also important.  For example, the Retail industry is now the biggest employer in the region.  However, wages paid by the Retail industry were $13.91 per hour in 2013, an 11% increase over the 2002 wage of $12.57.  Given a rule-of-thumb 3% annual inflation, the estimated 1.0% average annual increase for this industry over an 11-year period is well below inflation.  Additionally, this wage is less than the average hourly wage in 2013 for the State of Nevada of $21.22.  While it creates jobs and is necessary to provide services to the growing population, the Retail industry may not be an ideal candidate to target for future growth.

The Health Care industry, the second largest industry in the region, on the other hand had an average hourly wage of $25.13 in 2013, above the average State wage of $21.22.  The wage increased by an average of 2.3% per year since 2002, slightly lower than the inflation.  Giving the high wages in this industry, its growth through the recession, and its expected growth in the future, this is a good industry to target for expansion in the region.

The Gaming industry, the third largest industry in the region, had an average wage of $13.34 in 2013, an increase of an average of 1.7% per year since 2002, lower than the average inflation for the period.  Given this industry’s historic decline in employment, lower than average wages, and lack of expectation for future growth, this is not a good industry for targeted regional expansion.

The graph below shows average hourly wages for various industries in the region.  The graph shows that the average wages for the Management of Companies and Enterprises industry has significantly exceeded wages for all other industries, despite fluctuations between 2002 and 2013.  The average wage in 2013 for this industry of $60.10 was significantly higher than the State average of $21.22.  Wages in this industry grew by an average of 3.0% per year since 2002, in line with inflation.  This industry has the lowest employment of all regional industries considered in this analysis.  However, a positive growth trend exists for this industry, having gained 1,500 jobs or 82% of its employment between 2002 and 2013.  This industry deserves a second look to determine whether anything can be done to make the region more attractive to companies in this industry, thus encouraging future employment growth.

Other companies with wages of note are the Health Care industry, discussed above, and the Finance and Insurance; Professional and Technical Services; Government; Manufacturing; and Construction industries.  All of these industries had an average wage greater than the State average in 2013.  Similar to the Management of Companies and Enterprises industry, these industries should be considered for expansion, with an analysis for each industry to determine whether the region can be made more attractive for that industry to grow and hire more employees.

Washoe County Economic Indicators-January 2012-Part 2

Residential

The housing market continues to remain unpredictable, with growth and declines abounding.  On the positive side, the number of new home sales increased both over the previous period and the same period last year.  This news is tempered by the large amount of remaining housing inventory and the slowdown of sales between December 2011 and January 2012, though some of that may be attributed to seasonality.  Single family prices continue their decline, but there is some growth in the condo prices.

It makes sense that the number of notices of default is growing as institutions figure out ways to continue issuing these notices, following the changes in the foreclosure processes.  This may also impact REO listings and notices of sale, as fewer notices of default are issued.  This does not represent the performance of the real estate sector, but rather the impact of these restrictions.

Commercial

Commercial data is published on quarterly basis, latest available Fourth Quarter 2011 data was discussed in the previous post.

Conclusion

Overall, January was not a good month for the much anticipated economic recovery for Washoe County.  With declines in tourism, general, employment and housing markets, it is difficult to be optimistic about a quick recovery.  While some positive indicators exist, including fewer days on the market for residential properties, increasing weekly wage rates, and especially an increase in taxable sales; the overall picture is still bleak.

Washoe County Economic Indicators-January 2012-Part 1

We are finally moving into 2012 with the majority of our data and the start of 2012 is not acting like an economic recovery.  This blog covers data for General, Tourism and Employment economic indicators, to be followed by the Real Estate indicators next week.

As always, data is provided for the latest available period, the period immediately prior to the latest period and the data for the same period the year before. For example, Visitor Count data, available for January 2012 (current period) is compared to December 2011 data (previous period) and January 2011 (same period previous year).

General

Data for population, assessed value and personal income is the same as in the previous reports.  Washoe County taxable sales increased by 34.6% between November and December 2011, though much of this increase is likely due to the holiday season.  What is more important is the 6% between December 2012 and 2011 taxable sales, indicating a growth in holiday spending over the previous year.

Taxable gaming revenue continues to decrease, falling by 6.2% between December and January.  Gaming revenue also fell between January 2012 and the same month in 2011, showing a continuing declining trend.  In further negative news, the consumer price index increased slightly between November and December 2011 and also compared to December of previous year, making our purchases a little more expensive.

Tourism

As bright as our tourism outlook was in December, we seemed to have expended our tourism attraction abilities by January.  Tourism data shows declines across all indicators, including visitor counts, available rooms, occupied rooms, room occupancy rates and average room rates when compared to the previous period (December 2011) and the same month last year (January 2012).  Let’s hope this is a one-time occurrence due to the lack of snow or other non-recurring conditions.

Note: Tourism indicators are highly seasonal, changing from month to month.  As a result, comparing the current period to the previous period may not be a good indicator of growth or decline, the comparison of the same period in current and previous year is more accurate.

Employment

Compared to the January 2011 (December 2010 for unemployment claims), the Washoe County January 2012 employment picture is much brighter.  While the labor force number decreased slightly, we had a significant decrease in the number of unemployed, unemployment rate and new unemployment claims.  The average weekly wage also increased from the same period last year from $816 to $849 (Q3 2011 to Q3 2010).

Compared to the previous period (December 2011), however, the number of unemployed, unemployment rate and new unemployment claims increased.  The average weekly wage was the only indicator that increased, though this indicator is lagging behind other indicators (latest available for third quarter of 2011).

Washoe County Economic Indicators-November/December 2011-Part 2

Residential

Washoe County’s residential real estate market has seen some positive changes, though the overall outlook is still bleak.  New home sales decreased in December 2011 compared to the previous month and the same period last year.  Existing home sales, however, increased by 75.7% from the previous December and 10.5% from the previous month.  Median single family and condo/townhouse closing price also increased, a 2.6% increase from November for single family homes and 5.8% for condos.  Days single properties remained on the market also increased for single family homes, but decreased for condos/townhouses.

Notice of defaults saw an increase between November and December 2011, as did notices of sales.  Trustees deeds and REO listings decreased during compared to the previous month and previous year.

Note: Notices of default data from the previous year should be disregarded as this data was impacted by restrictions placed on financial institutions regarding issuing these notices.  The number of notices of default is expected to grow as institutions figure out ways to continue issuing these notices.  This may also impact REO listings and notices of sale, as fewer notices of default are issued.  This does not represent the performance of the real estate sector, but rather the impact of these restrictions.

Commercial

The commercial real estate market performed well and poorly, depending on the sector.  The industrial property sector saw a decrease in vacancies, however, this decrease came as a result of reduced rental rates.  The office sector also saw some decrease in its vacancy rates, though not as significant as that for industrial properties.  Office retail rates grew slightly during this time.  Retail properties fared the worst in December.  Retail vacancy rates grew from the previous year and previous month, while retail rental rates declined, a combined negative impact on the sector.

Conclusion

The health of the Washoe County economy remains unclear.  Taxable sales and gaming revenue increased from the previous year, but not from the previous month.  This could be in part due to seasonality associated with the holiday period.  The tourist sector is a bright spot for Washoe County, with positive tourism numbers over the previous year.  This may be due to an improvement in the national economy.  Employment data also shows much improvement from the previous year.

Residential real estate indicators are also monthly positive, though there remains a slowdown in the new homes market.  On the commercial property side, industrial and office sectors are seeing some improvement, while the retail sector continues to struggle.  There is some hope for growth in this sector as taxable sales increase.

Overall, Washoe County is seeing more green numbers than in previous months, and if growth in these indicators continues, it will bode well for our recovery.

Washoe County Economic Indicators-November/December 2011-Part 1

Our last blog focused on data for October 2011.  Since then, both November and December data has become available.  Since the blog attempts to cover latest economic data available, we will skip November data and focus on December values, with the exception of taxable sales and taxable gaming revenue, data for which is available through November 2011 only.

As always, data is provided for the latest available period, the period immediately prior to the latest period and the data for the same period the year before. For example, Visitor Count data, available for December 2011 (current period) is compared to November 2011 data (previous period) and December 2010 (same period previous year).

General

Data for population, assessed value and personal income is the same as in the previous report; please see the October indicators for a detailed discussion.

County taxable sales decreased by 9.3% from October, but increased by 5.3% from November of previous year.  Taxable gaming revenue continued to decrease, falling between October and November of 2011, though revenue did increase by 1.4% from November of previous year.

Consumer price index increased by 2.75% between December 2010 and 2011, but fell slightly between November and December 2011.

Tourism

Washoe County’s tourism outlook as of December 2011 is bright, with all indicators showing positive growth.  Area visitors, available rooms, occupied rooms, resulting room occupancy rates, and average room rate increased between November and December 2011 and December 2010.

Note: Tourism indicators are highly seasonal, changing from month to month.  As a result, comparing the current period to the previous period may not be a good indicator of growth or decline, the comparison of the same period in current and previous year is more accurate.

Employment

The employment picture for Washoe County was less positive.  Labor force numbers continue to decline, the County’s labor force numbers decreased by 2.36% between December 2010 and December 2011.  While the number of unemployed workers has also declined significantly since December 2010, between November and December 2011, this number grew by 2.27%.  This resulted in an unemployment rate of 11.9%, which is 14.4% lower than in December 2010, but 2.3% higher than in November.

No new data for new unemployment claims and average weekly wage is available.

Please see next week’s blog for residential and commercial real estate market indicators and conclusions regarding the meaning of indicator changes.

Washoe County Economic Indicators-August 2011

The following are Washoe County (unless otherwise indicated as NV or US) economic indicators for the latest available period (August 2011 unless otherwise indicated).  This includes general, tourism and employment indicators.  Data is provided for the latest available period, the period immediately prior to the latest period and the data for the same period the year before.  For example, Visitor Count data, available for August 2011 (current period) is compared to July 2011 data (previous period) and August 2010 (same period previous year).

General

General Washoe County indicators show a continuous decrease in population, which is in part due to the out-migration of unemployed workers from the area in search of employment.  This decrease is lower than the 3.5% drop in population between 2009 and 2010 from 416,632 to 402,001.

The good news is the growth in State personal income and Washoe County taxable sales and taxable gaming revenue numbers, which grew from the previous period and same period last year.  Growth in personal income is important as it will encourage additional spending in the economy and increasing taxable sales and gaming revenue will generate additional revenue for the local governments through increased tax revenue and positive impacts on local businesses.

The bad news is that County property assessed values continue to decrease, generating lower levels of property tax revenue which is a major source of local government funding.  Also, consumer price index increased by almost 4% over the last year, indicating that products are becoming more expensive.

Tourism

Washoe County’s economy depends heavily on tourism.  Visitors to the area gamble, eat, drink, shop and visit entertainment venues in the area, spending money that would not otherwise exist in the economy.  In addition to generating revenue for local businesses, tourists create jobs and public sector revenue in terms of room tax, sales tax, and gaming tax revenue.

Tourism indicators are highly seasonal, changing from month to month.  As a result, comparing the current period to the previous period may not be a good indicator of growth or decline, the comparison of the same period in current and previous year is more accurate.

Above table shows that indicators fell between July and August, it is difficult to tell what portion of that decline was due to seasonality versus the economic health of the region.  However, compared to August 2010, all indicators, with the exception of available rooms, increased by a large percentage.

Employment

Employment is an important component of a successful economy.  Employed workers receive a salary which they spend on purchases of goods and services, housing, and other expenditures.  This spending ripples through the economy, creating additional jobs and productivity.  High unemployment hurts not only the unemployed workers, but also those who are employed by lowering the amount of spending in the economy.

Washoe County’s employment is showing some signs of uncertainty.  While the County lost almost 3% of its labor force from the same period last year, likely due to discouraged workers exiting the labor force through early retirement or leaving the area, it gained a few employees between July and August 2011.  The number of unemployed persons, which declined significantly between August 2010 and 2011, increased slightly between July and August 2011.

The overall unemployment rate, which takes into account unemployed and labor force numbers, declined over the last year and remained stable between July and August and the number of new unemployment claims across the State decreased both over the last month and last year.  However, the average weekly rate decreased significantly between July and August 2011, though it increased over the year.  Overall, the employment situation has improved from the last year, though the decrease in the average weekly rate in the last month is a concern.

Conclusion

Overall, the economic situation in Washoe County, as shown by above general, tourism and employment indicators, has improved slightly from the same time last year, though some indicators are still negative.  One of the biggest issues facing the County is the negative real estate market, which will be discussed in future blogs.

Washoe County Economic Indicators-Employment

Employment is an important component of a successful economy.  Employed workers receive a salary which they spend on purchases of goods and services, housing, and vacations.  This spending ripples through the economy, creating additional jobs and spending.  High unemployment hurts not only the unemployed workers, but also those who are employed by lowering the amount of spending in the economy.

*Previous period refers to the same period in the previous year.  For example, June 2011 data is compared to June 2010 data.

Washoe County’s employment is showing some signs of recovery.  While it lost approximately 4% of its labor force from the same period last year, likely due to discouraged workers exiting the labor force through early retirement, decision not to work, or moving out of the area; other employment indicators show positive changes.  Washoe County’s number of unemployed workers and unemployment rate decreased during this period, though some of the decrease may include the reduction in the labor force.  Also positive is the average hourly and annual wage increase, both grew by 1% from the previous year.