Diversification key to economy
Northern Nevada – and Reno, specifically is on track to becoming one of the healthiest local economies in the country as long as it continues to diversify and move away from its historic dependence on services industries, according to an independent economist.
Reno “has the potential over time to become one of the most dynamic economies in the nation,” said William H.
Fruth, president, Policom Corp., an economic research firm based in Stuart, Fla., speaking last week at Directions 2004, an annual conference put on by the Economic Development Authority of Western Nevada.
But Fruth warned that while gaming is on the decline, a rush of retirees into the area could foster other service industries with equally low-wage jobs, hurting the region’s overall outlook.
In the last five years, the area economy has successfully diversified by attracting a spate of manufacturing companies, which bring higher wage jobs, said Fruth.
The change has buoyed the area, he said.
“Otherwise your economy would be in the crapper.” That’s because despite a decline in gaming the area still relies heavily on services industries such as gaming and retail that pay low wages.
“Your economy is overwhelmingly dependent on services,” he said, showing a graph that showed that between 1972 and 2000 services accounted for the majority of jobs here.
While gaming may be on the wane, however, another phenomena could take it place as a driver of low wage service-oriented jobs.
The influx of retirees into the area is a double-edged sword, said Fruth.
“There is an initial gush of money into housing,” he said in an interview after his speech.
“The downside is the nature of jobs created are low-wage service and retail jobs.”
He said that is happening all over the country as Baby Boomers begin to move from areas with a high cost of living, such as California, to retire to cities and towns where they can get more for their money.
“It means it’s more important than ever to get higher wage jobs, non-retirement, non-gaming jobs that pay a good wage,” he said.
To do that, he said, area officials need to take advantage of the University of Nevada, Reno, and other schools to foster new technologies and startup companies and to encourage cooperation between academia and business.
He also said the recruitment of new companies is highly competitive now.
“Site selection depends on cost, time and community attitude,” said Fruth.
“And time is increasingly important.
Companies want to locate quickly.”
Anything government and economic development officials can do to expedite the relocation process will give the area a leg up on other sites.
Most important, he said, is to keep Nevada a business friendly environment, unlike its neighbor to the west.
“It used to be economies declined because of unreliable workforces,” he said.
“Today it’s regulations, fees and taxes.
You must resist with vigor the promulgation of regulations that add costs,” to businesses.
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