EDITORIAL: Jobless rate falls, but the outlook remains bleak

Nevada’s unemployment rate fell to 15 percent in June. This is supposed to be good news. In fact, it’s somewhat of an illusion.

On Wednesday, the state Department of Employment, Training and Rehabilitation reported that the Silver State added 980,000 jobs in June, lowering the jobless rate by almost 40 percent from May. In April, when coronavirus closures were rampant, the state’s unemployment rate hit a national high of 30.1 percent. Prior to March, when the pandemic began, unemployment numbers were below 4 percent.

A state official called the June figures “encouraging” but admitted that may be an overstatement.

“It is important to remember that conditions have changed since the middle of June,” said Dave Schmidt, DETR’s chief economist, “and the evolving public health landscape and necessary restrictions will continue to impact Nevada’s labor market for several months to come.”

Indeed, it will be a surprise if the July jobless figure doesn’t reflect a reversal for the worse. Gov. Steve Sisolak last week ordered bars to shut down once again in most of the state, sending thousands of workers back to the bread line. Restaurants remain limited to half capacity, which means hundreds of establishments exist on a financial shoestring. How long they can stay viable under government restrictions is in question.

Meanwhile, many casino companies — including Boyd Gaming and MGM Resorts — have informed workers that layoffs may be coming if the tourism and gaming industries don’t rebound in the near future. That’s a long shot with airlines now rethinking schedule expansions as analysts expect demand to remain depressed.

All this should be front and center in Carson City, where lawmakers have convened in special session to close a $1.2 billion budget hole this fiscal year. The gap, however, will only worsen the longer state businesses remain closed or hampered by government restrictions combined with tepid consumer enthusiasm. Lawmakers have spent the first week of the special session avoiding the hard labor, prefering instead to emphasize minor savings around the edges. That’s like focusing on punctuation while trying to trim a 1,000-word essay by one-third.

The state’s private economy is in no condition to endure tax hikes. As the budget outlook worsens, the problems will leach into the next fiscal year and the one after that. At some point, lawmakers will have to require more of the state government workforce, which so far has been asked to contribute virtually nothing in terms of pandemic sacrifice while their private-sector counterparts endure daily gut punches. And that’s an outrage.