Is Vegas really doomed?

I want to write about something I said but (I don’t think) got on the air in the KVVU story last Friday. Since everything about Las Vegas has to run to extremes, it’s almost impossible to have a realistic discussion of its evolution as a city, both economically and socially. With doom-mongering the current rage, those who, only a few years ago, were anointing Las Vegas as the first postmodern metropolis are now asking if the city is doomed.

On the face of it, it’s not a bad question. The city of Las Vegas is built on tourism and gambling. When people have less money, they travel less and gamble less. With some fearing that happy days are not going to be here again for a while, is it possible that Las Vegas is fated to decline indefinitely? Will the 2010s be the 1990s in reverse, with a steady slide of visitation and revenue numbers?

Not unless the general economic outlook for the country (and the world) is so gloomy that we see an unprecedented erosion of the global economy. In that case, depressed room rates on the Strip will be the least of anyone’s problems.

But if we see a recovery, even if it is slow and gradual, Las Vegas is in far better shape than many other cities. The city is based on tourism, a service industry that can’t be outsourced. The rule of thumb in seeing if your job is outsource-proof is touch: if you have to physically touch the customer or client, you are safe. Call center reps and computer programmers don’t have to touch their clients, so those jobs can be done anywhere. But you can’t hire someone in Bangalore to pour drinks or change linens in Las Vegas. While casinos are getting less labor intensive, hiring fewer people as technology permits, they can’t outsource to the extent that other industries can.

The situation is even worse for Rust Belt cities with manufacturing bases. Unless they make the transition to something else, they really do face decline. If it’s cheaper to make cash registers in Taiwan–or Alabama–there won’t be too many jobs at cash register factories left in Dayton. This is an existential crisis: these cities came to be because they were at a nexus of raw materials, labor, capital, and transportation. When it becomes cost effective to relocate production, they have real problems.

Las Vegas won’t necessarily face this kind of decline. There’s no reason to think that, suddenly, people are going to stop traveling for business and pleasure. If Las Vegas operators can adjust to changing market conditions, they can stay in business.

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