The Stat Pack
In light of Nevada receiving its first Golden Shovel award, we thought it appropriate to pick the brains of two team leaders who helped make it happen. We hope you enjoy the following in-depth Q&A with Jonas Peterson, CEO of Las Vegas Global Economic Alliance, along with a separate Q&A with Mike Kazmierski, CEO of the Economic Development Authority of Northern Nevada.
the Stat Pack: What are LVGEA’s projections for new jobs in Southern Nevada in each of the next three years?
For 2015, most economists predict Southern Nevada’s rate of job growth will be between 2.9 and 4.3 percent. Based on the early indicators we’re seeing at LVGEA, I lean toward the more optimistic end of that range and expect our metro area to gain around 35,000 new jobs.
In 2016, I expect our trend of robust job creation to continue. The recent surge in industrial buildings coming online should continue to fuel new projects. By the end of 2016 a 6% unemployment rate should be within our reach.
If we can continue to position our market for high growth industries, build new industrial and office product, improve our education and workforce system and improve internal/external transportation access, we have a very bright future. In fact, we simply have the most opportunity of any market in the southwest.
That said, we need to stay focused on community and economic development as a region. Our strategy is paying off and now is the time for us to prepare for the next, inevitable market downturn.
the Stat Pack: Does LVGEA project that those jobs will primarily arise in the sectors and industries targeted by the Governor’s Office of Economic Development (GOED)? Which other, non-targeted industries are most likely to organically contribute to job growth in Nevada?
We expect job growth to continue to be broad-based. Target industries such information technology, logistics & operations, manufacturing and health care are showing improvement and we are gradually becoming more diverse, and we still have really promising growth opportunities with unmanned systems, additional technology applications, everything gaming, and renewable energy. Interestingly, many of the sectors that we are becoming more diverse in are also related to our main industry – tourism. One great example is the gaming technology industry. With major expansions going on at Scientific Games, Konami, and Ainsworth, and with several other companies working on skill-based gaming applications, there is now no doubt that we are the global capital of the gaming industry but also the global capital of the gaming technology industry.
the Stat Pack: Which states are Nevada’s biggest competitors for attracting companies in GOED’s targeted industries? How does Nevada’s economic development budget compare with those of competitor states?
Our team is passionate about helping Southern Nevada do everything possible to emerge as an economic leader in the Southwest. When we do this well, we’re also doing our part to help create Governor Sandoval’s New Nevada and helping the Intermountain West to become one of the most attractive regions in the U.S.
Economies are interesting in that they don’t necessarily follow political boundaries. So, in many ways Southern Nevada’s economy actually benefits from robust economies in neighboring markets. That’s why we’re continually looking to improve connections to markets like Southern California, Phoenix and Salt Lake City.
Here’s what’s interesting: when it comes to business location decisions, the process for high-value companies is increasingly global. Yes, we have competition in the southwest – Phoenix, Los Angeles, Denver, Salt Lake City. But in many industries, we also have to compete with London, Singapore, Shenzhen, and regional economies across the globe. As a region and state we need to set our sights on being globally competitive. If we get that right, we’ll win more than our fair share of companies.
the Stat Pack: Would you recommend any changes to the incentive and support programs that exist at GOED?
At the Legislature this year, we recommended that legislators endorse an incentive program for the aviation industry. Gov. Sandoval ultimately signed this into law and we saw immediate local business expansions because of that law. We also monitored legislation that tightened eligibility requirements for incentives. This new law will restrict state incentives to companies that pay higher-than-average wages. We were generally pleased with the results of the 2015 Legislature when it came to incentive and support programs like the Catalyst and Knowledge Funds, both of which were funded at the same level as in the previous biennium.
Our board hasn’t adopted priorities for the 2017 legislative session, but there are definitely a few changes to consider. Our domestic manufacturing base in Nevada could really benefit from coming into alignment with 37 other states and eliminating sales and use tax on manufacturing equipment. When expanding companies are spending large sums on expensive manufacturing equipment to start-up or expand operations, our 8.1% makes that piece of equipment that much more expensive than Arizona, Utah, California, Texas, Oregon, or Washington. We’ve actually lost expansions to neighboring states because of this.
Another change to consider is a dedicated revenue stream for economic development. Stability and predictability would enhance our planning ability and support a long-term vision that will pay off during the next, inevitable economic downturn. For example, Ohio has seen success by dedicating alcohol tax revenues to economic development. In my opinion, another improvement would be to enhance the Catalyst fund. Through a relatively small investment in Catalyst ($10 M/year statewide) has led to company locations with over $100 million of economic impact in southern Nevada alone. With an ROI that high, I think we should try to do more.
the Stat Pack: What are Las Vegas’s primary metro competitors doing that we might emulate, in terms of workforce development, abatements, incentives, etc.?
In 2016, we’re planning to launch a Community and Economic Research Center. I believe information is the currency of economic development and the Research Center is designed to help us create more currency.
There are only a few peer organizations that already have a successful research center. One that has been quite successful is the Los Angeles County Economic Development Corporation’s Kyser Center for Economic Research. I’ve seen firsthand how this group produces valuable economic development research for the region, and I think the LVGEA can adopt a similar approach. We’ve been working with their team to learn what has worked well in L.A.
Also, most of our neighbors exempt manufacturing machinery from the state sales tax base. Among the 50 states, Nevada is one of nine who tax manufacturing machinery in addition to the final product. From a regional competitiveness perspective, an exemption like this may be something for the state to consider in 2017 or beyond.
the Stat Pack: What are Southern Nevada’s top three competitive advantages in the region?
Southern Nevada has a unique value proposition right now. We have relatively low costs in the Intermountain West and high quality of life reported by residents. Most markets have one or the other. To be able to offer both is great positioning. If I had to pick three key advantages right now, I’d say companies look to Southern Nevada for workforce availability, market access and operating environment.
the Stat Pack: What are its three biggest negatives?
We’ve got opportunities to continue improving workforce quality, education, and access to capital.
the Stat Pack: What are the three biggest, best present-day economic development opportunities LVGEA is pursuing?
If you look only at what’s hot right now, I’d say attracting Faraday Future, capitalizing on the upcoming surge in speculative industrial development and creating a roadmap for southern Nevada’s future industrial needs are all at the top of our list.
the Stat Pack: In most regions, economic development agencies work closely with the business community. Give an example of how LVGEA is working with the Las Vegas Metro Chamber to advance Southern Nevada’s interests.
The LVGEA and Metro Chamber have partnered on numerous fronts. We meet regularly to coordinate programs, services and events. One recent example is the Clark County School District Superintendent’s Executive Advisory Committee. In addition to other partners like Nevada Succeeds, Metro Chamber and LVGEA members chaired subcommittees that advised the Superintendent, Pat Skorkowsky, on three projects.
Generally, it’s natural that broad, general business membership organizations with regional focuses are going to have a lot of alignment of interest, and the education advisory committee is just one example of how that alignment plays out in the community.
the Stat Pack: Is Southern Nevada even coming close to keeping up with Northern Nevada in terms of new companies coming in and new well-paying jobs created? If not, why not? What challenges has your agency faced that are unique to Southern Nevada?
When you dig into the actual numbers, similar growth has occurred in Northern and Southern Nevada. Take job growth rates for instance – both regions have been largely the same at about 3.5 percent year-over-year growth, according to the latest state numbers. If you look at average weekly wages for Q1 of 2015, both markets are similar with Washoe County at $820 and Clark County slightly higher at $831. Even when you take cost of living into account, you find similarities with Las Vegas MSA about 1.2% below national average and Reno MSA about 0.9% below.
Here’s what’s important – both regions are doing their part to help create the New Nevada. Together, with help from all the regions, Nevada has very real shot at becoming the fastest jobs producing state in the country next year. To get there we’re going to need continued growth in all corners of Nevada.
the Stat Pack: Nevada has fared poorly in attracting federal workforce training resources and the money the state has captured is largely being spent in the north through the Nevada College Collaborative. How is your agency facilitating work force training efforts in Southern Nevada? Are you engaging both the public and private (professional) schools? Are there any updates on this front?
We know that workforce is the No. 1 concern for our economic development clients, so naturally workforce is a major priority for us. That’s why our policy director, Michael Vannozzi, is now on the board of Workforce Connections, the Southern Nevada Regional Workforce Board. That’s why we supported legislation that funded STEM Challenge Grants, which will help fund workforce training efforts statewide and in Southern Nevada. I am also on the CSN advisory board.
That said, I think there’s more we can do with regard to connecting regional public and private schools to local industry leaders. We’re in the process of working with CCSD’s Career and Technical Education and Magnet School program to do just that. To return to the earlier point about information being the currency of economic development, a regional workforce skills gap analysis will better help us identify training opportunities. Such a study would also assist in attracting federal workforce training resources.
the Stat Pack: With the UNLV School of Medicine coming online, there will be a boom in healthcare spending and investment, which will require hundreds if not thousands of healthcare professionals. What is your agency doing to help on that front?
Our board of directors wholeheartedly endorsed fully funding the UNLV medical school and lobbied for such funding during the 2015 legislative session. More broadly, through engagement and partnerships, the LVGEA has stayed involved in regional health care discussions with groups like Las Vegas HEALS and the City of Las Vegas Medical District advisory committee. In addition, we worked with a broad group of stakeholders in 2014 to publish a medical tourism report identifying opportunities to enhance our health care market through medical tourism. Last year, we also added Shelley Berkley of Touro University to our board of directors, and we are committed to supporting both Touro and Roseman University as they help our region train tomorrow’s health care workforce. Generally, we have a smaller health care sector than most U.S. metros of a similar size to the Las Vegas MSA, so health care is a big growth opportunity for us.
the Stat Pack: Nevada has one of the most highly centralized systems of higher education in the country. How does this affect workforce development efforts? Would local autonomy of the governance and administration of the state’s two and four-year colleges allow for more effective engagement between these institutions and the business community?
This is an interesting question that has been playing out for several years now in Nevada. I’ve been a part of that discussion as a member of the CSN Institutional Advisory Committee. To a certain extent, changes to board structures and governance are not going to automatically lead to better industry partnerships. The current structure where the Board of Regents oversees all of the state’s two and four year colleges and isn’t having a negative effect on our ability to work with state higher education institutions. At the LVGEA we work within the current structure by having higher education Presidents on our board of directors. We also work directly at a staff level with UNLV, Nevada State College and the College of Southern Nevada. The community emphasis on education and workforce development has forced our relationships to be stronger and the LVGEA looks forward to even closer relationships with our higher education system partners in the future.
the Stat Pack: Despite a recent development successes and a headline unemployment rate of around 7%, Nevada’s U-6 unemployment rate – a number that includes not only the jobless but also discouraged workers and part-time workers who would rather be working full-time — is the highest in the nation at more than 15%. Why is this so number so rarely talked about? How important is it to Nevada’s overall economic success to bring the U-6 rate down?
The unemployment rate can be measured in several different ways, and it’s federal and state-level officials who report the headline rate, which I think the media writes about more often than the other measures of unemployment, including the U-6 rate. That said, it’s critical for us to bring that U-6 rate down and increase labor force participation. If you look at highly successful metros around the United States, there’s a direct connection between education — oftentimes at highly specialized research institutions and technical education programs — and industry. Developing that education to workforce pipeline here is critical if we want to see a labor force that is empowered to work full-time in industries that are globally competitive.
the Stat Pack: The Kids Count profile just released by UNLV and the Annie E. Casey Foundation reported that 34% of Nevada’s children and youth live in families without secure employment, which is defined as a household in which no parent has regular, full-time employment. What is primarily driving the lack of employment security in Southern Nevada?
It’s very unfortunate that about one in three children live in that situation. Part of what is driving that higher percentage is what we just discussed above in the context of the U-6 unemployment rate. Those who are in part-time or itinerant work situations are more likely to live in poverty. So to the extent that these are the types of jobs available in the community, we’re going to see people in the workforce in these untenable situations. To solve for that, we need to address education and workforce training.
To the credit of the Governor and the Legislature, we make sure that the companies we bring in through the state incentive process meet state qualifications for average wage and health insurance. The average starting wage of the new companies we’re bringing to the market right now is north of $23/hour. That’s pretty good, but to make it even better, we need to make sure that the companies that are here know we have the skilled workforce to meet their needs. One example of this was our recent work with Barclaycard. Last year, they moved a significant amount of call center employees here from Delaware. This year, they worked with both us and our partners to look at the workforce. They ultimately decided that we could support some of their higher tech operations, so they’re moving hundreds of more people here. The average wage of those jobs is $33/hour. That is the type of change we need to see to really make a dent in rankings like Kids Count.
the Stat Pack: LVCVA’s June numbers were a mixed bag. Visitor volume was up 2.4% and hotel occupancy rose 0.4% over last June, but the average daily room rate was down 0.7% and convention and meeting attendance was down 16.6%. Are we losing our “mojo” due to competition from other convention destinations?
I’m confident that the LVCVA and the Strip properties are more than competent when it comes to forecasting for our future as the nation’s top convention destination. We’ve had that title for two decades now, and it’s no secret that other major convention destinations have taken notice and are planning or implementing upgrades in their metro areas. Whether it’s Phoenix with their new light rail connection or the Orlando with their transportation connectivity project that’s getting underway now, our competition is moving forward with major projects around connectivity and facilities. Phoenix, for instance, just passed a sales tax hike to fund $31.5 billion in transportation projects. At the same time, we have our own initiatives moving forward. I have full confidence in Steve Hill at the Governor’s Office of Economic Development as he leads the Southern Nevada Tourism Infrastructure Committee. What I hope we see from that is consensus and a path forward for improving our own facilities and connectivity.
the Stat Pack: Do you agree or disagree with the following statement?
“While I-11 is an important project, improving I-15 is even more important to Southern Nevada because of the size of the California economy and its ports.”
I agree with that statement in the short term. Our residents want to see improved connectivity between Southern Nevada and Southern California, and we have long recognized that our relative global position is as a satellite of the massive Southern California economy. That said, what’s important in the long-term is diversifying that relative position to make Southern Nevada the true crossroads of the Southwest. The Interstate-5 corridor is very congested. From Canada to Mexico, you’re likely to hit major congestion around the many thriving urban centers that the Interstate-5 passes through. It’s critical that we keep up the pressure on Interstate-11 and ensure that, first, we have better connectivity with Phoenix, and, secondly, that we have better connectivity with the Reno and Tucson markets. We need I-11 for our long-term economic sustainability.
In the shorter term, what steps can we take to facilitate the development of I-11? Where can we partner with Arizona to make sure that the highway from Vegas to Phoenix is four-lane divided freeway with no stoplights? How can we better connect to I-40? These are questions that we have to answer if we truly want be that alternative north-south corridor that can relieve the congestion on I-5. .
the Stat Pack: And finally… What Keeps You Up At Night?
Missed opportunities keep me up at night. When a company should be a win for southern Nevada but another state or region wins out simply by offering more incentives, that’s frustrating. However, what allows me to get back to sleep is the incredible commitment by public, private and education leaders we have to support economic development. With the leadership we have in place, we have a very bright future ahead!
Jonas Peterson currently serves as President and CEO of the Las Vegas Global Economic Alliance (LVGEA). Prior to joining LVGEA, Peterson served as President/CEO of the Santa Clarita Valley Economic Development Corporation (SCVEDC).
Jonas received a M.S. in Community and Economic Development from Pennsylvania State University and a M.B.A. from North Dakota State University. He is a Certified Economic Developer (CEcD), graduate of Oklahoma University’s Economic Development Institute (OUEDI), graduate of Stanford University’s Executive Program, Leadership Series graduate at Harvard’s Kennedy School of Government and a Certified Business Retention and Expansion Consultant.
Peterson has conducted considerable research on comparative advantage and quantitative marketing. Previous publications include “Vegas 2.0: Rebooting Nevada’s Economic Engine” and “Minding Our Own Businesses: a Practitioner’s Guide to Regional Business Retention.”
Photo courtesy of LVGEA
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