A report from the Pew Charitable Trusts ranks Nevada last among all 50 states in personal income growth since the Great Recession. While the report, which analyzed data from the U.S. Bureau of Economic Analysis, finds that personal income in all states is now above pre-recession levels, Nevada’s growth was just 0.1 percent for over the period 2007-2015, lower than the national average growth rate of 1.6 percent and lower than other states in the Intermountain West.
Figure 1 shows the personal income growth for all states in the Intermountain West.
Figure 1: Personal Income Growth Rates in the Intermountain West (4Q 2007 – 3Q 2015)
|State||Personal Income Growth Rate|
Nevada is one of only five states with reported growth rates below 1.0 percent. The others are: Illinois with 0.5 percent, Maine with 0.8 percent, Arizona with 0.9 percent and Connecticut with 0.9 percent.
According to the study, 22 states in total had personal income growth higher than the 1.6 percent national rate. Oil-producing states had the fastest growth rates. North Dakota had a 5.1 percent growth rate, the highest in the county, followed by: Texas with 3.1 percent, Alaska with 2.8 percent, Oklahoma with 2.4 percent and Colorado with 2.2 percent.
Falling housing prices and a massive decrease in construction activity statewide are to blame for the slow recovery in Nevada, the report says. Not only did the Silver State have the slowest growth, but it was also the last to reach pre-recession levels, arriving there in mid-2015.
The news in the report is not all bad, however. Nevada is one of 49 states where personal income adjusted for inflation has grown for the most recent year through the third quarter of 2015. The state’s 5.0 percent inflation-adjusted growth rate is higher than the national average growth rate of 3.7 percent. In fact, Nevada is one of 18 states with a higher growth rate than the national average.
The report lists Nevada and several other Western states as having the fastest inflation-adjusted growth rates in the country. Figure 2 lists the states with the highest growth rates in personal income. Most of these states are located in the West.
Figure 2: Personal Income Growth Rates Adjusted for Inflation for Year through Q3 2015
States that had the lowest inflation-adjusted growth rates in personal income (North Dakota, -3.2 percent; Iowa, 0.4 percent; Wyoming, 0.5 percent; and South Dakota, 0.5 percent) were affected by declining earnings in the farming and mining industries.
The Pew Charitable Trust report emphasizes that economic recovery has been uneven across the country. The steady increase in the national growth rate since 2007 masks the volatility in personal income from year-to-year. In addition, 21 states, including Nevada, are collecting less tax revenue, after adjusting for inflation, than at any point before or during the recession. Nevada is also one of 22 states with an employment level lower than the pre-recession rate.
While the data, especially the 5.0 percent inflation adjusted growth in personal income last year, suggests that Nevada is slowly rebounding from the recession, more work needs to be done not only to continue supporting economic growth but also to protect residents from the damaging effects of market volatility and future economic downturns.
Some possible measures to help improve the personal income growth rate in Nevada:
- Continue to attract new industries and businesses to the state. Relying too heavily on one industry — namely the tourism and hospitality industry — leaves Nevada vulnerable to the ebbs and flows of the national economy. The Silver State must continue efforts to build knowledge and capacity in new sectors – such as advanced manufacturing, aerospace engineering, and energy. Companies such as Tesla and Faraday are building multi-billion dollar complexes in Nevada, which will accelerate existing efforts to create new jobs in new sectors.
- In addition to new jobs, high-quality, better paying jobs are also needed to help strengthen the State’s workforce. Senate Bill 74, passed during the 2015 legislative session, changes eligibility criteria for businesses receiving tax abatements from Governor’s Office for Economic Development for local sales taxes, property taxes, and Modified Business Taxes. Specifically, the bill requires that new businesses requesting tax abatements pay an hourly wage that is at least 100 percent of the average statewide hourly wage.
- Expand access to capital for small businesses and entrepreneurs and provide technical assistance to small businesses that are interested in expanding. In 2015, the Nevada Legislature passed the Nevada Grow Program (Assembly Bill 399), whose primary purpose is to work with existing businesses within economically depressed areas to help them expand. The program is based at the Nevada Workforce Development Center, a partnership between the College of Southern Nevada’s Division of Workforce and Economic Development and the Nevada Department of Employment, Training and Rehabilitation. The partnership is designed to help employers with their recruitment and training needs and has four areas of emphasis:
- Individualized and tailored business assistance;
- Regularly scheduled group seminars that address general business issues;
- Business development grants and loans; and
- A business barter and discount network.
(Small businesses located in the geographic area that encompasses parts of downtown Las Vegas, unincorporated Clark County and North Las Vegas will be able to apply for the technical assistance provided by the Nevada Grow Program.)
- Create a qualified workforce that can fill jobs in new industries. One way to improve this process is by increasing funding to higher education programs, such as:
- The STEM Workforce Challenge Grant, housed in the Governor’s Office of Science, Innovation and Technology, aims to build partnerships between industry and workforce training providers. Nine such grants totaling over $1.3 million in investments from the State, higher education institutions and their partners were awarded to create STEM workforce training programs in all parts of the state.
- Workforce Innovations for a New Nevada (WINN), part of an incentive package under Assembly Bill 1. WINN is a $2.5 million program designed to help new businesses moving to the state, particularly Faraday in North Las Vegas, design customized job-training programs. In the case of Faraday, the partnering school will be the College of Southern Nevada. The Nevada System of Higher Education is requesting more money be added to this program in 2017.