Las Vegas has become the poster child for U.S. unemployment, the devastated housing market, and what can happen to a city when it does not diversify. Due to the lack of diversification the media seems to want to portray Las Vegas as the next Detroit. Detroit relied on one industry, manufacturing, with most of that manufacturing being auto related. Las Vegas relies on tourism for its number one industry. Up until recently Las Vegas had a second industry which was construction. The construction industry has all but vanished in Las Vegas.
It is certainly best when cities have a well diversified economy. If a city is diversified and one part of the city’s industry crashes the city can still function with the other industries. In Las Vegas and Detroit everything is based on a single industry. Even the Las Vegas banking and construction industries are based on tourism. Without the casinos there would be no reason to have a banking industry in Las Vegas. The construction industry boomed until 2008 building new casinos, shopping centers and housing for the boom town. Much like Detroit, by 2009 Las Vegas had imploded. The world economies crashed and a lack of demand for new cars hurt Detroit and a lack of demand for extravagant vacations hurt Las Vegas. To me the single industry scenario is the only place that Las Vegas and Detroit are similar.
According to the U.S. government census Clark County, the county Las Vegas is in, grew by 41.8% during the 2000’s. Wayne County, the county Detroit is in, declined by 11.7%. Detroit has been declining for decades while Las Vegas has been growing for decades. Currently both counties have an almost identical population so the stats are a good comparison.
Las Vegas is a city known around the world. Tourists come from everywhere to see what Las Vegas has to offer. Las Vegas has one of the biggest convention centers in the world, the most convention space of any city in the world, seven of the top ten largest hotels in the world, the intersection with the most hotel rooms in the world and is known as the wedding capital of the world. People go to Las Vegas for 21st birthday parties, bachelor/bachelorette parties, the largest poker tournaments in the world, some of the best restaurants in the world and of course the gambling that made Las Vegas famous. Las Vegas is an exciting town for everyone, even people that do not gamble. Retirees also like to spend their golden years in a warm, dry climate. Detroit does not have any of that to offer.
Detroit is an old city with countless abandoned buildings. Many abandoned buildings are beyond repair and stand decaying and obviously neglected. Las Vegas has some unfinished construction that is abandoned but nothing like the decayed downtown Detroit has. Detroit’s unemployment percent was nearly twice the unemployment is Las Vegas. Today there are still over 235,000 people unemployed in metro Detroit, more than double the people looking for jobs in Las Vegas.
Las Vegas has only been in decline for a few years. The government did not zone land responsibly and the builders built too fast. For now there are too many houses. The housing market collapse is the real problem behind the Las Vegas economy. In time the housing market will fix itself. People from high tax California will look to get away from the highest tax state in the country, retirees will look to retire in the affordable Las Vegas housing market and the overall U.S. economy will recover. Nevada’s lack of corporate and personal income tax is a huge selling point to the wealthy.
It is amazing to me that in just a few years Las Vegas went from the biggest boom town in decades to a city many people seem to have written off just because they overbuilt. It will take years for the housing and labor markets to fix themselves and prices may never make it back to where they were in 2006 but that does not mean that Las Vegas will become a ghost town, 38 million tourists each year will keep that from happening.