Nevada's and Las Vegas' Jobless Rates Fall - For the Wrong Reasons

Nevada’s unemployment rate dropped significantly in January, but not because of improving economic fortunes, but because discouraged workers have stopped looking for work or have left the state, the Nevada Department of Employment, Training and Rehabilitation announced earlier this morning.

“Unfortunately, the decrease was not driven by significant improvement in the labor market” said Bill Anderson, the DETR's chief economist. “It appears likely that some jobless Nevadans are becoming discouraged and giving up their search for work and dropping out of the labor force. In addition, given stagnant population levels, it is also likely that some Nevadans are leaving the state.”

Nevada’s jobless rate fell from a revised 14.9% in December to 14.2% in January.The unemployment rate in the Las Vegas area fell from 15.1% in December to 13.7% in January.

However, roughly 10,700 workers dropped out of the labor force in January, which was nearly the same decrease in the number of unemployed. Household employment remained virtually unchanged, the department reported.

The sobering announcement came after improving Nevada economic news in recent months. For instance, key indicators of the state’s economic well being, such as visitor statistics, gaming win and taxable sales, have exceeded expectations. A number of workforce indicators have stabilized, too, including the unemployment rate, although it's still inflated. “Not all is positive though,” Anderson said in the statement. “The recent surge in gas prices will undoubtedly affect travel to Nevada and continued pressure on government payrolls will likely offset any near term improvement in private sector hiring. It appears Nevada will continue to move sideways, bouncing along the trough of this recession for the foreseeable future.”