Casino economies continue their downward spiralApril 1, 2014
Local casinos are a losing betApril 3, 2014
By David Frum
April 1, 2014
(CNN) — The expensive casinos of Las Vegas look crowded. Tickets to the popular shows sell out. To the tourist, things look back to normal.
Yet as the state’s junior U.S. senator lamented in February, “I can tell you right now Nevada is nowhere close to a normal economy.” Nevada’s unemployment remains the second-highest in the nation, nearly 9%. The housing market there still languishes. New Federal Reserve Chair Janet Yellen acknowledged to Nevada Republican Sen. Dean Heller that full recovery for Nevada glimmers “years away.”
Nevada’s troubles are more than a local concern. They reveal something important about the condition of the whole U.S. economy.
Nevada makes its living from tourism, the state’s most important industry, and the tourists come — or came — for the casinos. Before 1990, the state of Nevada and Atlantic City, New Jersey, enjoyed something close to a monopoly on the casino industry.
As more states legalized casinos, the Nevada casino industry — and especially the Las Vegas industry — responded by moving up-market. Dazzling theme hotels housed lavish theatrical shows and outstanding restaurants. Las Vegas, once a rather seedy place, repositioned itself as a center of glamorous entertainment.
Building the new hotels generated jobs. The people who worked in the hotels needed places to live, and building those homes generated more jobs. All that construction shaped an unusual local economy: Here was a state with low average educational attainments(only about 22% of Nevadans have a college degree, 45th in the nation), yet a median income higher than the national average.
Nevada’s blue-collar prosperity was built on a faulty premise. All those glitzy Las Vegas hotels and resorts, containing typically up to 5,000 rooms each, depended on a huge influx of high-spending visitors.
And now, six years after the crash, it’s hard to see a way forward from the disaster.
Read the full CNN Opinion piece here.