Sluggish

Nevadans are still “underbanked.”

It shouldn’t be a surprise—there have been studies that said the same thing for years (“Nevadans ’underbanked,’” Dec. 10, 2009; “Nevada still underbanked,” Sept. 20, 2012), but it’s one more indice that shows the state’s economy remains in the doldrums. Of greater concern is that this time, the news comes as part of a broader study that shows Nevada’s economy and quality of life are dragging. It’s one of a whole complex of factors that are delaying recovery.

Unbanked individuals do not use banks or credit unions for their finances. Underbanked consumers have either a checking or savings account, but also rely on alternative services like payday loans, rent-to-own agreements, convenience store or postal money orders, pawn shops and check-cashing services. And underbanking can hamper a state’s economy.

“It certainly doesn’t help it,” said Heritage Bank of Nevada president Stan Wilmoth.

To the highest foreclosure rate in the nation can be added the shaky financial state of those who have managed to hang onto their homes—4.22 percent of them are 90 days or more delinquent on their mortgage payments, the worst rate in the nation except for New Jersey.

These figures come from the Assets and Opportunity Scorecard, a set of rankings compiled by the Corporation for Enterprise Development, an organization that studies household finances and relates them to public and business policies. Nevada ranked 50th among the 50 states and the District of Columbia. Mississippi kept Nevada out of last place, but not by much.

Most of the state’s households—55.6 percent—are “in a persistent state of financial insecurity.”

Two-thirds of Nevadans—67.7 percent—have subprime credit.

Nearly a fifth—18.8 percent—are in jobs with median annual pay below 100 percent of the poverty threshold for a family of four ($22,314).

The average Nevadan is carrying a credit card debt of $9,915.

Until the Affordable Care Act came along, Nevada was dead last in the number of health insured in the nation—25.2 percent were uninsured. Among low income children the figure is 22.6 uninsured and among parents, 46 percent.

A whopping 41 percent of college graduates are carrying student loan debt that averages $20,568, but that’s the lowest student debt average in the nation, which may be explained by the facts that only 29.9 percent of Nevadans have a two-year college degree (46th in the nation) and only 22.4 percent have a four year degree (37th).

All of this helps explain how a state’s economy is an interlocking complex of factors. Unemployment is a symptom, not a cause. Some of these other factors are causes.

“I was pretty shocked at the number of bankruptcies being almost twice what it is in the national average,” Wilmoth said.

He said that in normal times that would be even more distressing. But because of the way the housing market went over the last decade, there is probably less to that bankruptcy rate than meets the eye.

“What I ask myself is, the first thing that comes to my mind is, how far did the home value drop in Nevada—Las Vegas and Reno—over the last four or five, six years, that would cause that to happen? Now, does that mean there’s a lot of people out there that aren’t paying their other bills? I don’t think so. I think that some of them must have had to go bankrupt to get away from making that mortgage payment. So is that an indication that we got a lot of bad payers in Nevada? It could be. But it also could be just the fact that we had equities drop so fast in Nevada that it forced people to do something that they normally just wouldn’t do.”

Wilmoth said that at his bank, and he believes at other banks as well, bankers are more likely to overlook bankruptcies—or put them in perspective—than they would have been in past hard times. When bankruptcies were driven by toxic mortgages of the era after 2006, it can draw surprising understanding from bankers.

The problem for the state is that so many of the factors identified by the Assets and Opportunity Scorecard are deep rooted in Nevada, which suggests a continued achingly slow recovery. There is a whole complex of interrelated factors holding the state back. The state’s weaknesses reinforce each other. Nevada’s low education rate, for instance, blends with the collapse of the state’s construction industry, which (with the casinos) was once one of the state’s most powerful economic engines. Nevada high school dropouts at one time could expect a soft landing—a construction job that is no longer necessarily there. Neither of those factors appears likely to improve at more than a snail’s pace.

In addition, the state’s limp efforts at economic development must compete with more dynamic programs in adjoining states. Arizona and Utah invested more and earlier in beefing up their economies, and while Nevada officials like to tout the occasional company they lure over from California, the Silver State has never been in the same league with the Golden State in competing for the high tech industry that state officials have often said they wanted and which candidates continue to hold out as a goal—“the new Nevada economy.”

Where Utah can track its growing economy in growth in whole sectors, Nevada officials frequently indicate progress by boasting about single companies’ arrivals.

Currently, Nevada’s jobless rate is at 8.8 percent, the next-to-last in the nation, with only Rhode Island experiencing a worse ranking. That figure was up, likely as a result of holiday hiring during the last quarter of 2013. The state added 14,100 jobs during that period, with retail providing the largest portion of those jobs.

The website Politico has also issued a state ranking list that put Nevada at number 40, but the site never spelled out exactly what they were ranking, except a vague reference to which states are “strongest.” In addition, its methodology seemed to be simply taking the average of rankings from other places like the Centers for Disease Control and Prevention and the FBI and then averaging them all out. The result seems to be a sort of quality of life index.