Nevada Unemployment: The Worst Gets Worse
The Labor Department puts out numbers on state unemployment about two weeks after it posts the national number. Nevada ranked No. 1 in December 2010 for the highest unemployment rate in the country -- again -- at 14.5%, up from 14.3% the previous month and 13% at the beginning of last year.
Not all of the states with the highest jobless numbers suffered as badly. The unemployment rate in Michigan dropped from 14.5% in January of last year to 11.7% last month. Some of that "improvement" may be because workers have left the state in search of new jobs.
The unemployment rate in 20 states rose in December; fell in 15; and stayed flat in another 15. But Nevada remains a case all its own. Because of unique circumstances, it's a state that may be mired in high joblessness for many years.
Nevada has been hit by two forces from which it can't easily recover. The first is a drop in tourism. The gambling business will probably rebound along with the economy, so that sector will become less troubled as the overall economy improves. It's housing, however, where the most employment damage has been done, and that may not improve for a decade. RealtyTrac and several other services say that foreclosures and mortgage defaults in Nevada are the highest in the country. Prices of homes in parts of the state are down over 60% compared to the 2006 peak. The Nevada home market was remarkably overbuilt as the industry expected an influx of people into the state to continue and property values to soar alongside that.
Nevada may be the best example of the intransigence of unemployment in some regions nationwide. The home construction business was one of the largest employers in several states. It was very important to the California economy. The jobless rates in some cities in the country's largest state are above 15%. Real estate values in those areas will not rebound any time soon, and may never get back to the levels of five years ago.
The woes of the housing market may be the single largest drag on unemployment. New S&P/Case-Shiller data shows home prices are still falling, at least in many of the large cities. Nevada's problems are not nearly over.