Jeremy Aguero, a principal analyst with Applied Analysis, gives a presentation on the U.S. and Northern Nevada economy during the EDAWN State of the Economy luncheon on Thursday, Feb. 7, at the Atlantis Casino in Reno.
RENO, Nev. — Reno has never been bigger — and its reputation has, arguably, never been better.
In 2018, the Reno metro area saw its job growth jump more than 5 percent and its unemployment rate drop to nearly 3 percent. In all, 29 companies, many of them technology-based, relocated or expanded to Reno-Sparks, leading to nearly 900 new jobs with an average wage over $30 and hour.
But how does the Biggest Little City make sure it doesn't get too big for its britches? After all, more jobs requires more housing, and Reno-Sparks isn't building fast enough — not even close. Consider this: For every new job in Washoe County, there were a mere 0.21 new single-family homes and 0.43 new residential units built in 2018, according to previous reports.
And so at the Economic Development Authority of Western Nevada annual State of the Economy luncheon on Thursday, Feb. 8, it was no surprise that job growth and housing demand were the headlining topics.
A SLOWDOWN LOOMING?
All told, Reno-Sparks added a whopping 48,800 new jobs across a wide spectrum of sectors in the last five years. In 2018 alone, the region saw an uptick of more than 12,000 jobs, making for a 5.2 percent jump in employment growth, which ranks No. 1 in the nation.
“We had a great year,” EDAWN CEO Mike Kazmierski told the NNBV. “But we need to make some changes and adjustments to accommodate the new year.”
Retention. Education. Housing. These were just a few of the key areas that Kazmierski said need attention in order to sustain Reno's booming economy. He said EDAWN is projecting at least 50,000 jobs will be added to the area over the next five years, adding, “We don't see a whole lot of slowing down in the near future.”
However, with the U.S. economy starting to lose steam, concerns of a recession begin to grow, said Jeremy Aguero, principal with Las Vegas-based Applied Analysis, who presented at the EDAWN luncheon.
“I think there is some instability at the national level,” Aguero told the NNBV. “Uncertainty in terms of Washington, D.C., uncertainty in terms of terms of foreign policy, questions relative to, domestically, how we're going to handle some of the challenges that we're dealing with? That's added a cloud of uncertainty over the economy in terms of what's going to happen in late 2019 and 2020.
“Nevada is not, by any stretch of the imagination, recession-proof.”
DIVERSIFICATION FACTOR
Helping matters for Northern Nevada, however, is its increasingly diverse economy, Aguero added. Fact is, Reno-Sparks no longer survives on gaming and tourism as it did in years past — the area's leisure and hospitality sector ranked sixth in job growth since 2013, according to the BLS.
“If you look at the talent in our region and the jobs in our region, it's not just one economy, it's not just one job,” Kazmierski said. “Whereas 20 years ago it was mostly gaming and visitor, now you look at the jobs and opportunities and it's incredibly diverse.”
The leading driver for new jobs in Reno-Sparks is trade, transportation and utilities, which added 11,400 jobs over the last five years. The area's other top employment sectors are professional and business services (9,000), manufacturing (8,400), construction (7,900) and education (3,700).
Kazmierski said the region's schools have to put more of an emphasis on robotics to meet the workforce needs of “employers of the future” in the 4th Industrial Revolution, which is driven by emerging technology breakthroughs.
He pointed to the fact that, by 2022, roughly 30 percent of all companies plan robot adoption, and 50 percent expect to reduce their workforce because of it, according to the World Economic Forum. The Washoe County School District, Kazmierski said, is supportive of having robotics in every school, but it lacks the necessary funding.
“The whole robotics program is something that we have to integrate throughout,” he continued. “From grade 1 through grade 16 — every classroom, every student —should be involved in some way in robotics.
“The whole growth of technology is really what the next generation of jobs will consist of and the sooner we get our kids and our institutions on board to align our talent with those jobs, the better.”
HOUSING HURDLE
Still, there needs to be available — and affordable — housing for the employees of the future (and present), especially those making median-wage. Nevada had the fastest housing price growth in the nation last year at 15 percent, per the Federal Housing Finance Agency, while the single-family median home price in Reno-Sparks is $385,800, according to the National Association of Realtors.
“If we get to a situation where we cannot attract workers as a result of the fact that there is nowhere for them to live?” Aguero said. “That will put the breaks on this economic prosperity that this community sees.”
Further illustrating his point, he noted that the Reno metro area's score on the Housing Opportunity Index, which measures affordability, has dropped from 86.4 to 37.8 over the last six years. A score of 100 signifies that a family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, according to the National Association of Home Builders.
“There's going to have to be new master plan communities, we're going to have to build additional infrastructure, and it's going to cost some money in order to do it,” he added. “But the cost of not doing it is going to be way more expensive.”
