Balancing act

Low wages long have been one of the cornerstones of northern Nevada's economic growth, but now they're becoming a problem.

The region's low cost of living low, at least, compared with neighboring California is disappearing.

And a workforce that isn't as well educated as those in other regions is likely to present a challenge to economic policymakers.

Those are among the observations of residents of northern Nevada including a good sampling of business owners and executives as they began the process of developing a plan for the region's economic future.

As they filled out on-line surveys, visited with researchers from the consulting firm AngelouEconomics and participated in focus groups, residents were quick to spotlight the region's economic growth and its increasing diversity.

But they also voiced worries about issues that need to be addressed in the "Target 2010" planning effort spearheaded by the Economic Development Authority of Western Nevada.

Low wages, for instance.

Researchers from AngelouEconomics, the Austin company that's handling the planning effort, found that the average annual wage in the 30 largest occupational categories in northern Nevada is relatively low $28,573.

Wage levels in the region run 10 percent lower than the national average, even though household income in the area is higher than national figures.

(It's possible that tips earned by workers in the casino and hospitality industry may account for the higher household income figures, said Chuck Alvey, the president and chief executive officer of EDAWN.)

The three largest occupational categories in the region, AngelouEconomics noted, are retail salespersons, maids and housekeepers and cashiers.

"Although [the] top 30 occupations are fast growing, their low wages and educational requirements will not help the region attract a more skilled workforce," the researchers wrote. But even among professional and technical jobs that are considered to be higher-paying, the average wages in northern Nevada are only 90 percent of the national averages.

That may reflect the relatively small number of companies in fields such as technology.

"Because there are limited employment options, these employers are able to pay lower wages because they hold a captive employee base," AngelouEconomic researchers wrote. "High-tech workers cannot simply change employers for higher pay because there is a lack of other high-tech jobs in the region."

And employers, faced with tight labor supplies in the region, are having trouble recruiting elsewhere in the country because of relatively low wages.

The issues with low wages became even more pronounced as the region's cost of living housing prices, in particular rose sharply in recent years.

Said one respondent to the Target 2010 survey: "The cost of living is the greatest barrier to business growth ... it is beginning to outweigh the region's tax benefits."

In turn, AngelouEconomic researchers said, higher costs of living may erode the cost advantages that had been a cornerstone of the region's economic development strategies.

"By positioning itself as the 'low-cost' location, northern Nevada runs the risk of losing its business base to a lower cost region in the United States or abroad," the researchers cautioned.

Efforts to attract higher-skill, higher-paying jobs, however, may hang up on the relatively low educational attainment of its workforce.

Only 13 percent of the region's residents have a bachelor's degree compared with nearly 17 percent nationally and the northern Nevada figure hasn't changed for more than 15 years, the researchers said.

And the percentage of high school graduates in the region who take the SAT remains far below the national figure.

Meanwhile, young professionals those aged 25 to 44 are a shrinking portion of the region's workforce. Although the demographic is growing, it hasn't been growing as fast as the rest of the population.

In fact, the researchers noted, the region's population is growing older. The median age in northern Nevada is 37.4, significantly higher than the state and national medians, and the median age in the region is rising much more rapidly than the state as a whole.

Alvey said one of the primary goals of the Target 2010 study finding ways to develop higher-paying jobs in the region by itself will begin to address issues with wages and cost of living.

And he said the study's finding that the area has a relatively older population is likely to spur thinking about ways to harness that group's economic power.

Among other findings in the AngelouEconomics study:

* The region has made good progress in diversifying its economic base in the past five years.

* Relatively few jobs in the region are at risk of being moved offshore.

* Employers don't appear to be using workforce development programs as well as they might.

* Residents believe growth is straining the local transportation infrastructure.

* The aggressive statewide efforts to market Nevada to businesses in California need to be followed up with campaigns that target specific California markets.

* Outsiders and a fair number of current residents as well are unclear about the definition of "northern Nevada."

(The full study is available as a PDF download at Click on "Target 2010 Report One: Comprehensive Assessment" in the Reports area.)

Ben Loftsgaarden of Angelou Economics noted that the study, the first of five to be generated by his company during its analysis of the regional economy, is intended to establish some baseline data. Next up, he said, is work on identifying industries that the region might target.

"That's the crux of the whole process," Loftsgaarden said.


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