Nevada’s home foreclosure rate is still not a pretty picture. The state still exceeds the national average. This is not an argument to slather on the Doom and Gloom economic message with a trowel, but it is a cautionary item in the prolonged narrative of the effect of the housing bubble, and the continued pressure from low wage employment.
One in every 702 properties is in some phase of foreclosure, with one in every 373 in Lyon County, one in every 448 in Nye County, one in every 468 in Churchill County, one in every 643 in Clark County, and one in every 657 in Elko County. [RealtyTrac] Dismal as this may seem, it does represent an improvement over Nevada’s record breaking performance in 2008-2010. [LVSun] At the end of 2010 Las Vegas saw one in every 9 home receiving some form of default notice. [moneyCNN]
The good news:
“The December surge in foreclosure starts is not a cause for concern, as it comes from a previously existing supply of distressed properties,” said Andres Carbacho-Burgos, Senior Economist at Moody’s Analytics, which analyzes RealtyTrac foreclosure data to forecast foreclosure trends. “The national pool of distressed mortgages has not increased despite the surge in foreclosure filings.” [RealtyTrac]
The astounding appetite of the Wall Street Casino for a supply of home mortgages to slice, dice, tranche, and securitize seems to have mellowed given that the “national pool of distressed mortgages” (of which Nevada contributed more than its share?) hasn’t increased. National foreclosure statistics illustrate an effort to “clean up” previous backlogs. So, if housing isn’t the big downer, what might be?
The Not So Good News: Nevada’s wage growth from 2007 to 2012 was a –6.5%. Yes, that’s a minus sign in front of the percentage. This is not the sort of chart that warms the hearth:
In short, whatever general wage growth there was between 2002 and 2008 was given back in the wake of the housing bubble collapse. The average weekly earnings of $835 in 2002 dribbled down to the average weekly earnings of $840 in 2012, a $5 increase in five years isn’t much to applaud.
There’s a bit better news for 2016. Weekly wages in the 3rd quarter of 2015 were $860, compared to the $840 of a year ago, up 2.6%. [NWF pdf] Even better, the unemployment rate in Nevada is now reported at 5.8%, a significant improvement over the +/- 14% we were looking at during the Recession. [NWF] And now, another note of caution. The greatest demand for employees in the state is for wait staff (2,229 openings), retail salespersons (2,113 openings), combined food prep including fast food (1,793 openings), and cashiers (1,420 openings) [NWF pdf]
More food for thought: Only two of the jobs listed with more than 500 potential openings offer wages or salaries above the median income in Nevada. General and Operations Managers (571) has an annual average wage of $104,832, and Registered Nurses (608) can expect an average about $78,811. By contrast, wait staff averages $22,277, retail salespersons about $27,040, food prep about $19,781, and cooks $27,456. [NWF pdf]
Not to put too fine a point to it, but the occupations most in demand in Nevada aren’t the ones which will do much to improve either the housing market or the actual level of wage growth.
Nevada’s current $8.25/$7.25 minimum wage is not helping the situation. A informative graphic in the Las Vegas Sun illustrates that a studio apartment rental in Clark County is affordable for someone working full time at $12.12 per hour, 1 bedroom requires $15.13, a 2 bedroom $18.63, a 3 bedroom unit $27.46, and 4 bedrooms $32,60. Want a 2 bedroom apartment in Clark County? It requires 2.25 jobs at $8.25 per hour.
One of the least helpful suggestions made to the last version of the Nevada legislature came from Senator Joe Hardy (R- Boulder City) who offered the following resolution:
The resolution would repeal a constitutional amendment approved by Nevada voters in 2006 setting a standard minimum wage. Hardy said he would also propose legislation giving the Legislature the power to control the state’s minimum wage and tie the wage to the Consumer Price Index. [LVSun]
Republicans offered up a proposal for $9.00 per hour, still well short of what it would take a minimum wage worker to afford a studio apartment. Democrats proposed a $16/$15 minimum wage – which would just about get someone into a single bedroom rental unit. Hardy’s proposal went nowhere, as did the other two offerings.
Meanwhile, the income inequality gap increased in the state.
“The states in which all income growth between 2009 and 2012 accrued to the top 1 percent include Delaware, Florida, Missouri, South Carolina, North Carolina, Connecticut, Washington, Louisiana, California, Virginia, Pennsylvania, Idaho, Massachusetts, Colorado, New York, Rhode Island, and Nevada.” [EPI]
If there were ever a way to insure that an economy based on consumer demand could stagnate, then it surely must be related to the incongruous notion that if a few rich people get richer then everyone will be better off. Let me suggest a re-reading of the old classic, “Where Are The Customer’s Yachts?”
Let me also suggest a review of the Department of Labor’s myth-busting publication on the effects of raising the federal minimum wage. Conservative sites have their own “myth-busting” reports but their conclusions are highly questionable, and just as highly generalized, and none effectively challenges the research from Kruger and Card which demonstrates that there’s nothing “job killing” about increasing minimum wages. [HuffPo]
Nevada’s economy could be improved by:
- Increasing the state’s minimum wage to at least $13.00 per hour.
- Continuing to restrict the activity of bankers who want to securitize mortgages, under the terms of existing banking laws and regulations.
- Continued implementation of the Dodd-Frank Act.
Nevada’s politicians might be improved by asking some pointed questions:
- Do you support an increase in the State’s minimum wage to $13.00 per hour?
- Do you support the continued implementation of the Dodd-Frank Act