(Dan Schwartz) —the number of jobs Nevada will need to return to 5% unemployment and how to start the process.
Recently, Governor Sandoval, backed by the Nevada Development Authority, signed AB 449, the Nevada Jobs and Economic Growth Plan. The bill outlines several initiatives to reverse the state’s high unemployment rate.
Our leaders regularly talk about “creating jobs” or “getting the economy going again.” These words, however, restate the problem but don’t solve it. How do you create jobs in an economy that has basically stopped growing? How do you fire up cranes for an industry that has stopped building? How do you rehire workers who have been replaced by machines? The blunt answer to all of the above is, “It ain’t easy.”
Let’s do some math: According to the US Bureau of Labor Statistics, the total Nevada work force in June was 1,309,452. If we can tolerate 5% unemployment, that number is 65,473. As current unemployment stands at 162,863 persons, that means we have to find or create 97,390 jobs in Nevada.
We are a “can do” country, but how do we create these jobs? Here are some suggestions.
For starters, the state’s gaming industry, the biggest revenue source, is running in place. Though revenues are up, executives are closing casinos, not building them. Given Macao’s growth and the explosion of gaming sites in other states, such as Illinois (not to mention California), that will not change anytime soon. So where else do we look?
First, consider foreign investment. In my experience, many countries in the world are eager to invest in the United States. Our enormous domestic market, advanced legal and financial infrastructure, and efficient transportation system are just a few of the reasons. Among Nevada’s many attributes are minimal regulation, no personal income tax, and no corporate income tax. As a small state, our leaders are available to meet with potential investors. Marry the national and state benefits, and there are compelling reasons to invest here.
Much is made of Texas’s job growth. According to the Dallas Fed, Texas contributed 43% of net job growth nationwide from June 2009–May 2011. But a more disturbing—and accurate—figure is that Texas is among four states that have more jobs than when the recession began in December 2007. The others are North Dakota, Alaska, and the District of Columbia. North Dakota and Alaska, like Texas, are energy states. D.C. payrolls are up 18,000 jobs, while Texas is up 30,800 jobs. Texasis home to 25 million people; DC has 602,000 people.
You can do the per capita math, but adding to the federal bureaucracy is exactly the kind of job growth we don’t need. There are no silver bullets to solving our employment crisis.
Second, there’s small business. Beyond recruiting large corporations, the state should target small business. Small businesses make up more than 99.7% of all employers and create more than 50% of all non-farm GDP. Mr. Governor, how about calling a special session of the legislature to address this issue? It’s serious, and it’s not going away.
Third, there’s urban transformation. Las Vegas is littered with half-finished buildings and empty lots where casinos, sports stadiums, and housing projects were projected. Why not cut a deal with the current owners to plant trees, make parks, and open small shops? This idea may or may not work, but it’s a start. AND, it will create jobs.
Finally, there’s education. The subject is broad, complex, and involves some of the states’ biggest political players—the teachers’ unions. The Governor signed several initiatives during the past Legislative session, but employers will not come here if 50% of our children fail to graduate from high school.
We need to reassess how we evaluate teachers, and for those who qualify, we need to pay them more. We need smaller class sizes, courses in auto mechanics as well as music, and more parental involvement. All of that translates to better schools and more jobs.
Our target is 97,390 jobs. We need to calculate what it will take to get there and then do it. Half measures will simply not work—we can no longer apply bandaids to a patient on life support.
(Dan Schwartz is Chairman Emeritus of the Asian Venture Capital Journal and has published The Future of Finance: How Private Equity and Venture Capital Will Shape the Global Economy.)