The Shrinking Las Vegas Labor Force

The Bureau of Labor Statistics reported last week that year-on-year the Las Vegas metro area experienced “the largest unemployment rate decline from June 2011 (-2.3 percentage points).” That turns out, however, not to be driven by a surge in Vegas employment. Instead the size of the Las Vegas labor force is shrinking rapidly, as seen above.

Declining labor-force participation has been a national trend, driven by a confluence of demographics and the weak state of the national labor market. But the size of a metro area labor force is also driven by internal migration. During the Las Vegas construction boom, lots of people moved to Sin City in part because there were a lot of jobs to be had there. Once Las Vegas turned into an unusually weak labor market, the population flow moves in reverse. Overall, the ability to move from place to place makes the American economy more resilient. But it’s one reason specific places can have a very hard time recovering from a bad shock. Most Americans are employed in local service provision—they work in schools or medical facilities or retail stores or restaurants—so when their neighbors move away, it deals a blow to their own employment prospects.