Check Out Our Sports Photo Galleries Contact Us
Economists: Loss of benefits will affect the Nevada economy
by Sandra Chereb, Associated Press Writer
Dec 03, 2010 | 686 views | 0 0 comments | 3 3 recommendations | email to a friend | print
CARSON CITY — The loss of extended jobless benefits for tens of thousands of Nevadans would have repercussions beyond the unemployed and ripple through the state's already weak economy, experts said.

Bill Anderson, chief economist for the state Department of Employment, Training and Rehabilitation, estimated more than 19,000 Nevadans would lose their benefits by Christmas, taking $21 million directly out of the state economy, unless Congress votes to reinstate their payments. The direct and indirect impacts would mushroom come late winter.

The last extension expired Nov. 30, and Republicans and Democrats in Congress are locked in a political standoff over tax cuts and extending jobless benefits.

Nevada's unemployment rate hit a record 14.4 percent in September before dipping to 14.2 percent in October. It's still the highest in the nation, a dubious distinction earned in May when it overtook Michigan.

Nationally, the jobless rate rose 0.2 percentage point in November to 9.8 percent, the Labor Department announced Friday. Nevada's November rate will be released later this month.

At an average weekly payment of $300, Anderson estimated the direct economic loss would double to around $42 million by early January as more people complete their existing tier of eligibility and are cut.

By March, extended benefits for 65,000 Nevadans would have expired, for a direct loss of $265 million.

"That's equivalent to the loss of about 6,000 jobs at an annual average wage of $45,000 a year," Anderson said.

What's hard to determine is the magnitude of the shock wave through the rest of the economy, experts said.

"It has the potential to have significant impact," Anderson said.

He estimated the total elimination of extended benefits could amount to a loss of $570 million in terms of subsequent spending — money that landlords and businesses receive, and in turn spend, from those who use their jobless benefits to sustain their daily lives.

Elliott Parker, an economist at the University of Nevada, Reno, agreed, and cited another potential downside in a state that, besides joblessness, leads the nation in bankruptcies and foreclosures.

"The second effect is, it will force more people out of state," he said. The state demographer has said about 70,000 people have left Nevada in the past year.

What does population loss mean for a state?

"It depends on who you lose," Parker said.

"If it's people who came to Nevada just looking for work, didn't buy a home, then there's not a lot at stake," he said, though other businesses created to serve them will fail as the population shrinks.

But if those who leave are from a more educated work force, own homes and have established ties to schools and communities, "then the implications for the state are even worse."

That could worsen Nevada's rock bottom housing market, resulting in more foreclosures and houses for sale while further depressing prices as the supply exceeds demand. The ripple effect would further hit the coffers of state and local governments as tax sources continue to erode.

"Some say we grew too fast and therefore a little bit of culling is necessary," Parker said of population loss. "But then something like this happens, the repercussions can be great and unintended."
Comments
(0)
Comments-icon Post a Comment
No Comments Yet
Featured Businesses