Nevada has lots of new jobs. Why is unemployment still so high?

Editor's note: This is the second of three stories focusing on how the economy is playing out in November's election. You can read the first one here.

Nevada's August jobs report made history — the state's unemployment rate, among the nation's highest, dropped below 5 percent for the first time since the 2020 COVID-19 pandemic.

Less than an hour after the report was released Thursday, Gov. Joe Lombardo's (R) office highlighted the drop in a laudatory statement, saying it reflects "what happens when you create a business environment built for growth and diversification." 

It's the latest positive trend line touted by the Republican governor seeking re-election, a list that includes the state's rank in job growth (about 100,000 since taking office) and private investment (more than $6 billion).

Yet separately on Thursday, the cost of a gallon of diesel gas hit an all-time high in Nevada, with Lombardo's general election opponent, Democratic Attorney General Aaron Ford, using that statistic along with others to craft a counter-narrative that things have gotten too expensive in the "Lombardo-Trump economy."

With Nevada voters telling pollsters that economic issues are their top priority, it's no surprise that 2026 candidates for governor are both staking their campaigns on the issue. 

But with more jobs, why has the state's unemployment rate remained so high? And what do these macro-level trends mean for everyday people? 

Economists told The Nevada Independent that instead of a single magic-bullet statistical explanation, the answer to the real state of Nevada's economy lies in its growing population, tourism-centric economy and cost of living.

"I like to say it's higher, not high," David Schmidt, the state's chief economist, said in an interview about Nevada's unemployment rate. "I don't look at the unemployment rate and go, 'Wow, that number is really high.' Like, is it among the higher rates in the country? Yes, but I think long term our trend tends to be a few 10ths of a percent, maybe half a percent-ish above the national average."

He added that job growth and unemployment aren't directly related. The statistics come from two surveys that measure different factors, and in Nevada's case, both can rise at the same time.

Economist John Restrepo, who has analyzed regional economies and real estate trends for more than 40 years, shared a similar perspective. Through July, Nevada's labor force grew by 16,116 while the number of unemployed fell by 2,677, he said.

"People keep moving here, and they look for work before they find it," Restrepo said. "Nevada has also run above the national rate for most of two decades, under both parties, because a tourism-concentrated economy generates more hiring churn than a diversified one."

Nicholas Irwin, an economics professor at UNLV, said the 2024 election results indicated voters were unhappy with the high cost of living, and those same issues are bubbling up again. He described the economy as having a K-shaped recovery after the COVID-19 pandemic, where some are doing really well while others struggle to afford basics like rent and food. 

"The stock market is doing wonderful. People who have 401(k)s, it's great for them, but not everyone necessarily has a 401(k)," Irwin said. "A lot of workers are younger in their careers and aren't so much worried about retiring. They're worried about getting there." 

Schmidt added that even with better job numbers, wages still haven't kept up with costs and inflation.

"Why does it feel like things are pinching? Because things are pinching," he said.

Understanding job growth and the unemployment rate

Job growth and unemployment don't measure the same thing.

Specifically, estimates of payroll job growth come from an employer survey known as the Current Employment Statistics program, which conducts a quarterly census of employment and wages, focusing on positions at a given workplace. 

Unemployment data comes from the Current Population Survey, which surveys a national sample of about 60,000 households — Nevada's share being about 800 — and then uses the data to extrapolate a seasonally adjusted figure. 

The unemployment rate is the ratio of unemployed people to the labor force and only includes people who do not have a job, are available to work and are actively looking for work.

Schmidt said Nevada's unemployment rate is right now driven less by layoffs and more by factors such as people rejoining the workforce, new entrants and in-migration. Unemployment rates can fluctuate because of workforce shifts, including retirements or people leaving the job search rather than finding work.

Nevada's August unemployment improved from 5 percent to 4.8 percent, but the labor force also shrank, and Restrepo noted that part of the decline came from people leaving the search rather than finding jobs.

Irwin said that the labor force is decreasing, especially as older workers begin to retire. That population, he added, is not being replaced at the same rate. This issue is compounded in Nevada, one of the fastest-aging states in the country.

One underappreciated variable, Schmidt said, is Nevada's labor force participation rate. As of August, that rate was at 62.6 percent, up from 61.6 percent nationally. Since December 2022, Nevada's labor force participation rate has grown about 0.5 percent.

Schmidt said that a high participation rate with a moderate unemployment rate indicates a deep available worker pool that lets employers keep expanding.

What about job growth?

As of August, Nevada has gained roughly 106,000 jobs since Lombardo took office in December 2022. The data show payroll employment is at a record high, up about 7 percent since December 2022, and Restrepo said job types are diversifying.

Though leisure and hospitality remain the largest employers, data indicate professional and business services and healthcare industries are growing — with healthcare jobs surpassing retail trade in total jobs. 

Job growth rates subtract every layoff from every hire, meaning that if a position is vacated or fired and refilled, the count does not move

But there are other warts as to how job growth is measured. Restrepo noted that the employer survey counts jobs, not people, so someone working two jobs counts twice.

"In Nevada, the two series currently agree closely — payrolls are up 17,500 over the year (as of July), and household employment is up about 18,800, so that gap is small right now," he said. "It is important to note that this gap can widen in the future."

Another limitation, Restrepo said, is that there's not a definitive cause for the growth. Significant changes and national factors between 2022 and 2026, including a national recovery, data center buildout and heavy in-migration from California, all played a role. 

He added that the data also doesn't indicate job quality or who secured which jobs, pointing out that average weekly wages in Clark County were $1,259 last quarter compared to $1,459 nationally.

Heading into Election Day

As voters are thinking about the economy ahead of the midterms, Restrepo said statistics related to unemployment, wage growth and job creation "each answers a different question, and each fails to a certain extent."

The unemployment rate, he said, can fall because people got hired or because they stopped looking, and job growth is the most timely and most revised, so three-month averages are better than just single months. Wage growth only counts in real terms, he pointed out, noting that Nevada's wages have been growing fast but from a below-average starting point.

Though unemployment and job-creation data tell a story, Irwin said not all jobs are equal, and positive reports don't necessarily help someone who's long-term unemployed, fresh out of work or underemployed.

"It's always, 'How do those numbers impact me?' That's how voters make decisions," he said. "I earned my wage increase, but the government's actions have caused prices to go up, so therefore, even though I have higher wages, I'm actually making not as much money as I thought because the wage growth has been eaten away."

And that decision-making, he and Restrepo said, is understandable. 

Kitchen table issues such as the cost of gas and groceries affect quality of life and matter at the ballot box, Irwin said.

"You go with the data you have and tell a story with the economic data you have," he said. "The way that you spin those same numbers on one side could be used as a cudgel against you by the other side, and such is the nature of politics."