A diverse economy can help guard against economic instability and is vital to a region's long-term economic growth and resiliency. Ensuring that a region's economic health is not tied to a single industry or market sector can help communities better absorb the impacts of economic downturns and protect the economic viability of other industries.
The Hachman Index is a commonly used measure of a region or city’s economic diversity. A score of 1.0 reflects a diversified economy, while a score of 0 reflects a narrow economy.
Source: U.S. Bureau of Labor Statistics and Applied Analysis
Southern Nevada's economy diversifying, still trails peer regions
Southern Nevada has long been one of the least diversified economies in the country. However, the region's recent economic growth has been accompanied by an uptick in economic diversification, as the region's Hachman Index score has increased each year since 2011. In fact, with the exception of a dip during the Great Recession, Southern Nevada's economy has steadily diversified since 2000.
However, because the region has historically relied heavily on only a handful of industries, it consistently trails nearly all Intermountain West peer regions by a healthy margin. While Southern Nevada's Hachman score reached .728 in 2019, cities like Phoenix, Salt Lake City, Denver, and Reno all have scores above .90.
The region’s Comprehensive Economic Development Strategy (CEDS), which is referenced heavily in the SNS Regional Plan, identifies a set of target industries that should be the focus of Southern Nevada’s diversification efforts. The region’s target industries, which were initially identified in and adapted from a 2011 report, include:
• Autonomous Systems
• Business Headquarters and Services
• Emerging Technology
• Finance, Banking, and Insurance
• Gaming, Tourism, and Conventions
• Health Care Services and Medical Education
• Logistics, Manufacturing, and Supply Chain Management
Between 2011 and 2017, the region added nearly 100,000 jobs in these industries, reaching a total of nearly 600,000 jobs in 2017, according to the latest CEDS. This rate of job growth (20 percent) was slightly greater than the region’s overall increase in employment, meaning that the proportion of Southern Nevada workers employed in the target industries stayed nearly flat from 2011 to 2017, at roughly 56 percent.
However, closer examination of the industry level trends reveals important developments, namely a shift away from employment in Gaming, Tourism, and Conventions. While overall employment in this industry sector grew 11 percent from 2011 to 2017, the share of workers in the regional economy decreased. The employment share of all other target industries either remained flat or increased (see table at right).
Source: U.S. Census Bureau County Business Patterns