Economic Issues Weigh on Minds of Las Vegas Voters

JIM LEHRER:

Now, day two of our "Big Picture" trip to Nevada, one of the early political caucus states. Judy Woodruff and Ray Suarez will be talking to people in and around Las Vegas all week about the issues that matter to them this election year.

Tonight's topic is the economy. Ray Suarez begins.

RAY SUAREZ:

In some ways, Las Vegas has already arrived where America only someday will be. Its economy is dominated by service employment. Its population is 25 percent Latino.

But in many other ways, it's not like the rest of America at all. Think of this place as an enormous vacuum cleaner, pulling in investment, pulling in people from across the country and across the world, some just to play, others to stay. It brings in structural steel, concrete, timber, and billions of gallons of water from across the region to a spot in the middle of a desert.

Tourism is the fuel in Nevada's economic engine. Every year, 38 million visitors flock to places like Caesars Palace. In 2007, visitors spent $39.4 billion here, pulling in new workers to take care of them.

About 85 percent of Nevada's workers are in the service sector, people like Freddie Foisa. Foisa moved from Syracuse, New York, with a high school diploma 11 years ago and, except for a short break after the 9/11 terrorist attacks, has been a Las Vegas casino dealer ever since.

RAY SUAREZ:

You could make this a career?

FREDDY FOISA, Dealer, Caesars Palace:

It is a career, absolutely. It's my last job. That's my phrase. That's what I say.

RAY SUAREZ:

Gambling and hospitality are not only the biggest employers; they are Nevada's biggest taxpayers. Revenues have grown more than 7 percent since 2005. Nationally, legalized gambling has grown at a much faster rate than the overall economy.

To sustain explosive growth, companies like Harrah's Entertainment, which owns Caesars Palace, must constantly reinvent themselves. Marybel Batjer is vice president of public policy and communications for Harrah's.

MARYBEL BATJER, Harrah’s Entertainment:

We're developing right now some very interesting and fun games for the gaming floor that I think will draw some interest in the 30s and 40s demographics of our population. So you have to keep looking at what's exciting — I mean, the new generation is a gaming generation — in terms of fun kinds of games that they like. So that's a challenge to stay ahead of that interest and invent to it.

RAY SUAREZ:

A richer country sends richer visitors here willing to spend a lot more on a good time. No longer is Vegas the land of cut-rate hotel rooms and all-you-can-eat buffets.

In the mid-'80s, the resort owners rolled the dice, hoping to raise profits by luring higher-end customers, and the bet paid off. The hotels became more opulent, each prepared to spend millions to outdo the other. Swanky shops and high-end restaurants moved in.

MARYBEL BATJER:

We've brought some of the finest chefs in the world to Las Vegas.

RAY SUAREZ:

Today, money pouring into retailers, hotels and restaurants outstrips the already enormous profits from gambling.

The industry's growth appears unending. In two years, thousands of construction workers will pack up their tools, and MGM Mirage will open its $8 billion CityCenter, and a predicted 50,000 jobs will be created.

Demand for low-wage workers for both business and residential construction jobs has been a powerful magnet for immigrants, legal and illegal. Launce Rake of the Progressive Leadership Alliance of Nevada says the economy here is absolutely dependent on its immigrant workforce.

LAUNCE RAKE, Progressive Leadership Alliance of Nevada: You know, we're looking at perhaps a 40 percent, maybe half of the people in residential construction are, in fact, immigrants. Many, many of them may be undocumented.

We see very high percentage of folks working in the hospitality industry, which is our only industry in Las Vegas, are immigrants. Again, many of them have documentation issues. If you took those people out of our economy, we would simply shut down.

RAY SUAREZ:

Even so, unemployment in the state is up, partly due to a huge pool of unskilled laborers easily shed in a slowdown. Management and labor often disagree, but they share an interest in a better-trained workforce.

The powerful Culinary Workers Union and major Las Vegas hotels came together to create Nevada Partners, a culinary training academy for unskilled workers entering hospitality jobs. Steve Horsford is CEO.

STEVE HORSFORD, CEO, Nevada Partners:

We're looking at over 250,000 workers through 2020 to fill just the culinary classification workers, workers such as cooks, food servers, you know, bar backs, bussers, really the backbone of the Las Vegas hospitality industry.

RAY SUAREZ:

Good wages and benefits offered in the tourist business have created a new middle class and a wave of new homebuyers. New homebuyers have relied on riskier mortgages, not a big problem as long as the economy stays strong.

STEVE HORSFORD:

We have growing issues related to housing, affordability of housing. You know, people aren't moving here the way they were because they can't find affordable housing. Those who are here, because of the mortgage crisis nationally, workers are — unfortunately, some of them are losing their homes or being, you know, not able to afford the mortgages that they've entered into.

RAY SUAREZ:

In fact, Nevada now has the highest rate of foreclosures of any state. One of every 61 homes is being lost by its owner. People like Tonya Blair, now struggling to save her home from foreclosure, got caught in the middle.

TONYA BLAIR, Homeowner:

We went to sign the paperwork, and then we saw this big balloon payment at the bottom, $207,000. I was like, "What's this?" And he goes, "No, don't worry. In a year, you'll refinance, and it will be a fixed rate, and everything will be fine." "OK." Well, it didn't work out that way.

RAY SUAREZ:

Even though Blair had made 15 years of payments before she refinanced, she was advised to just walk away and start over. That sluggish housing market has meant a loss of property taxes and created a ripple effect on consumer spending.

Since Nevada doesn't have an income tax, 32 percent of general funding for the state comes from sales taxes. That leaves the state budget unusually vulnerable to downturns. And sure enough, sales tax and gambling revenues are down, the largest drop since the 2001 terrorist attacks.

The governor has asked state agencies to prepare a list of possible cuts totaling $184 million for this and next year. Many say it's time to rethink the way Nevada pays for government services.

Steve Hill owns Silver State Materials and provides concrete to both residential and commercial builders.

STEVE HILL, Silver State Materials Corp.:

We're reliant on growth at this point to pay for our public needs. And if that growth slows, as it's doing now, we have budget issues as a result. So we need to have a conversation about how to transition as the community changes, and we'll have to address that.

RAY SUAREZ:

Nevada's voters have had to look no further than the casino to pay the state's bills, but growth has meant more people with more needs, a bigger and more complex government, and Nevada voters will likely watch to see if this year's presidential candidates address such needs.