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From Top to Bottom and Back Again

The director of UNLV's Center for Business and Economic Research on the economic issues we can't keep kicking down the road.

Business and Community  |  Apr 19, 2017  |  By Matt Jacob
Stephen M. Miller

Stephen M. Miller, director of the UNLV Center for Business and Economic Research (R. Marsh Starks/UNLV Creative Services)

For the past 16 years, Stephen M. Miller has had a front-row seat aboard Las Vegas’ high-speed economic roller coaster, one that’s featured more twists and turns than a Hitchcock flick. It’s a seat for which most economic enthusiasts would have paid top dollar, but one Miller almost passed up. “Both my wife and I were a bit nervous about moving to Las Vegas,” said Miller, who like many an outsider equated Las Vegas with The Strip before moving here in 2001 from the University of Connecticut. Now director of UNLV’s Center for Business and Economic Development, Miller has observed our economy from the heights of immense prosperity to the depths of a Great Recession to a recovery that has residents feeling both hopeful and anxious. 

When I arrived in Las Vegas, we were just starting the housing bubble. By 2005 – which was sort of the peak time – homebuilders were giving potential buyers a lottery ticket that said, “OK, if we draw your number, you can buy our house.” 

As an economist, that doesn’t make a lot of sense. If that’s the case, why don’t you raise the price so you don’t have an excess demand for your product? If I was really smart, that would’ve been the signal that, “This is not sustainable.”

I don’t know that I thought our economy was in peril. Of course, I was new to the scene, but most people thought Las Vegas was immune to recessions. We’d had recessions before, but they didn’t have much of an effect on our economy. 

The new characteristic of this recession was there was a financial crisis triggered by the housing market and mortgage-backed securities. There weren’t many people who knew that when the housing market collapsed and mortgage-backed securities became toxic that it would spread to other parts of the financial market, which it did.

In the next five years, I think the probability is pretty good that we’ll have another recession. The question becomes “How serious will it be?” God forbid it’ll be tied to another financial crisis. More likely it will be just a run-of-the-mill recession.

My concern for millennials is this may be the generation that doesn’t live as well as their parents did. 

I suspect if we asked our new administration in Washington, D.C., they’d say, “Oh, we’ve got the solution. We’re going to grow economically at 3, 4, 5 percent.” Well, maybe for a year or so. But it’s going to be difficult to sustain. We have this group of retirees coming out of the employment market who are going to put a strain on our federal budget through Medicare, Medicaid, and Social Security. 

At some point, Washington, D.C., is going to have to address that issue. They can’t keep kicking the can down the road.

Nevada’s greatest untapped economic source is probably our population. But we face one problem: The level of education of our labor force is not competitive at the moment. 

One way to get a better educated workforce is to hire people from outside Nevada. Another way is to train them internally. It’s better if we could train them internally.

UNLV is going to play a big role in our economic future, certainly as the UNLV Medical School comes online this year. That potentially could have a big economic effect because we have a shortage of doctors. I know I had to go out of state when I had a medical problem, and just this week my friend went to California for surgery.

There’s been discussion for a long time about diversifying our economy. I have a friend who says, “It’ll never happen. This is Vegas, baby, and that’s the way it’s going to be.”

Certainly the governor and his office of economic development are trying to diversify the economy. And they may take some criticism for giving away these tax abatements to entice companies to relocate here. The problem is every state is doing this; if we don’t compete, we’re going to lose out. 

For most cities, a new stadium would probably be economically neutral – it has some positive benefits but also some negatives. Las Vegas is unique because we do have a lot of very large events and tourism is still our major driver. So if the new stadium draws those 50 events they’re talking about, it probably pushes the stadium into a positive for the local economy.

I said there’s a concern about Las Vegas’ lack of an educated workforce, but we really have some good students who come out of UNLV that I would put up and match against students anywhere.

I always tell my students if you stay awake, you can learn something every day.