Q2 numbers are in! GOED Research Manager Steve Scheetz joins "Diversify Nevada" to share key data and other takeaways that were presented during our agency's board meeting in August 2025.
You can dive deeper into the numbers here with GOED's quarterly performance report:
https://goed.nv.gov/wp-content/uploads/2025/08/10.-GOED-Performance-Report-August-2025.pdf
Speaker 1 (00:00)
Welcome. You're listening to Diversify Nevada, a podcast produced by the Governor's Office of Economic Development. Diversify Nevada provides insightful discussions and expert analysis on the driving forces behind our state's business, workforce, and community development. I'm Tom Burns, the executive director of the Governor's Office of Economic Development.
Speaker 3 (00:08)
We're your hosts, Evan Haddad.
Speaker 2 (00:22)
And Carli Smith. We're happy to welcome a returning guest, GOED's research manager, Steve Scheetz. Steve supports Nevada's economic strategy with research that helps drive policy and business decisions. He joins us today to give a recap of some of the data he presented recently at GOED's quarterly board meeting. These facts and figures are presented at each GOED board meeting to provide not only GOED program highlights, but also economic insight on where Nevada currently stands and what's possibly around the corner. Steve Scheetz, welcome back to the show.
Speaker 3 (00:52)
Welcome!
Speaker 1 (00:53)
Hey, thanks for having me.
Speaker 3 (00:55)
Awesome. So before we jump more deeply into this quarterly report, give us an idea of what's in it. What time frame are we looking at and what facts and figures did you analyze?
Speaker 1 (01:05)
Sure. The first couple of pages, we kind of dive into mostly our business development efforts and business development pipeline. And that is going to primarily consist of year to date figures for the calendar year 2025 on the summary page, but then in subsequent pages, pages two through three, I believe, we actually kind of dive a little bit deeper into the quarterly metrics and what compiles those. For instance, the summary page at the very beginning really just kind of gives you a snapshot of again, year to date figures and how we stacked up against our prior year to date figures. For instance, we have, you know, the number of companies that we assisted and this is in some meaningful way, whether it be, you know, helping find land, acquire leases, helping, you know, get through the permitting process, you know, any ⁓ meaningful way in helping a company either establish or expand their operations here in Nevada. And that doesn't necessarily mean just abatements, right?
That can also be, you know, non-incentivized companies that utilized our help through either GOED specifically or through one of our regional development authorities, our RDAs throughout the state tend to be our boots on the ground. They're much more enveloped in the community aspect of things. They know the ins and outs and the people to deal with. It's a lot more efficient to have somebody who's familiar with the region kind of facilitating those things.
But yeah, so we track those companies. Some of the metrics that Nevada has deemed what we want to track in terms of metrics include the number of jobs created. They wanted us to track our statewide average wage and as well as the average wage of the companies that we've assisted. Now that's a weighted average.
You know, if you have a company of, let's say, 100 people and a few of them are managers at a higher tier, but a majority of them are, you know, kind of operational folks that are maybe at a mid or lower tier, you know, it's not just taking them all and then dividing it by that number. It's actually going to be weighted based on the number of jobs. So, and then we also like to track our overall capital investment to the state, which, you know, these days, as we'll see, is becoming quite large now that we're focusing on things like data centers. They bring in a ton of investment into the area. Maybe not as many jobs as let's say a manufacturing or logistics company, ⁓ but ⁓ they're extremely capital intensive to set up here.
Speaker 2 (03:47)
Great, so from the quarterly report that you can find attached to our show and also on our website, what are some of the main takeaways that you'd like to highlight for our listeners?
Speaker 1 (04:01)
Yeah, some of the, I mean, we'll get into the business development stuff here in just a second. But one of the takeaways that I wanted to kind of emphasize is a couple of pages back, you know, again, we kind of went over the business development pipeline, but we also get into, you know, the composition of the types of companies, the industry mix within the, within the state. We track, you know, our abated companies, the companies that received tax abatements.
And we also track some of our divisional metrics, whether it be our film office or our apex accelerator, ⁓ emerging small business, et cetera. But one of the graphs that I really like to point to, and it really, it kind of points to the importance of entrepreneurship and the reason that the Office of Entrepreneurship is under our roof because on page four of the report, we have a nice little bar chart that shows the size class of companies that we've abated. And of the 306 companies that we've abated that have either not withdrawn or have been found non-compliant, these are still participating companies. Over half of them, 53 % of them, have fewer than 50 employees. So a majority of those companies that we help, I mean, of course we get the home runs, like the Teslas and the Apples. Headliners. Exactly. But a majority of them are more base hits, right? They're the small companies. And I think that that's a point of pride for the state of Nevada that we, of course, we're going to welcome these big companies, but we do focus a lot of our energies on helping these small to medium-sized companies.
Speaker 3 (05:41)
So talking about the different types of companies that we see, let's talk about our business development pipeline. What's been going on in the last few months?
Speaker 1 (05:49)
Yeah, the last few months, when we compare our business development efforts, in this time period compared to the same time period last year, we are pretty significantly down. There's no doubt about that when you look at the report. But then when you kind of zoom out a little bit and you're like, okay, well, why is that? know, we look at the same time period last year. And so right now, we've for the first six months of 2025, we've assisted 26 companies that led to 604 initial jobs, over 1000 build out jobs -- those are the jobs that happen within the first five years, kind after that ramp up period -- and in all three of those metrics, we are like...over or close to halfway down compared to last year. But then when you zoom out and you look at the companies that we facilitated or that we helped in the first six months of 2024, you know, we had one logistics company, two manufacturers, a natural resources company and an aerospace company. And just those five companies alone consisted of over a thousand jobs with, you know, over half a billion dollars in capital investment.
You know, it's a little too early to see if there's a trend. That's part of the reason that we do this. We track this over time and we compare it side by side to the same time period last year to see, okay, is there something concerning on the horizon? Are we seeing something, you know, in the market that we need to pivot and adjust our strategies? I think it's a little too early to tell at the moment. I believe that there's a lot of macro economic issues that may be at play. But at this point, I will note that ⁓ the difficulty between comparing such short time periods is you look at this quarter's quarter three, right? That's going to be July through September, right? Well, July through September is not captured in the data. That's Q1 through Q2. But even in this quarter, we have seven companies that are up for abatements. those companies consist of over, I want to say, 1,000 initial jobs. And it almost doubles our capital investment to date.
Speaker 3 (08:18)
So it's pretty good is what you're saying, like it's nothing to sneeze at.
Speaker 1 (08:22)
Exactly.
Speaker 2 (08:23)
A lot more to the story than just what's on...
Speaker 1 (08:25)
Exactly, and that's, you know, it's kind of part of the fun, but it's also kind of part of the difficulties of tracking this kind of stuff because you might have a company in your pipeline that you've been fostering relationships with for 10 years before, you know, it actually materializes here in Nevada, but then you might have companies that, you know, they call and between their first initial inquiry to when they have, you know, a lease in place, you know, it could be six months. So there's a lot of factors when it comes to the time and the speed at which people can get operations set up here in Nevada.
Speaker 2 (09:02)
Yeah, no, that was great insight. So in July, the Nevada Department of Employment Training and Rehabilitation, also known as DEDR, released their updated statewide average wage. Can you give us some insight about what that is, why it is, why we do that, what's interesting about it?
Speaker 1 (09:21)
Yeah, absolutely. You know, by statue are abatements have certain wage requirements. So in order to receive the full abatement, you have to meet a certain criterion, and I'm not a profound expert in that. That would be something that Alex and Mel in our office would be able to speak to. However, the wage requirement is you need to meet or exceed the statewide average wage. That's why we track this, in addition to it just being good data to have.
Speaker 3 (09:52)
So what is the current statewide average wage just before we jump into it?
Speaker 1 (09:56)
Yeah, absolutely. So they just released it in July and it was $31.57.
So if you compare that to last year, it's slightly down. However, I do need to note that we've had some extensive conversations with theater as to why that is. And there's gonna be a certain level of normalization. If you look at the graph over time, you know, it really in the last five years has hockey-sticked up, right? And so that's really kind of unsustainable. So we will see a certain level of normalization. However, what I will also mention is we're not necessarily down because of exclusions, normalization or anything ⁓ inherently bad in the economy. In fact, the biggest contribution to the reason that we see a downward revision, a downward trajectory is just the way that we've tracked things. As you know, Nevada being so heavily involved in the hospitality industry, which tends to be very high in tips.
Tips have always been kind of a difficult thing to track because, you know, a lot of this data comes from employer surveys. In the employer surveys, the way that they track their data is, you know, you might have, let's say restaurants or casino employees that are signed up for tip compliance. Some opt out of that tip compliance and then they report theirs manually on their tax return.
Speaker 3 (11:21)
What is tip compliance?
Speaker 1 (11:23)
And I might be using an incorrect term there. However, when I was going through college, I worked in a restaurant, right? And I was 19, 20 years old. I'm not keeping very good records of the tips that I cash at the end of the night.
Speaker 2 (11:38)
With cash in your pocket, you're doing good.
Speaker 1 (11:39)
Exactly.
But the way that they got around that so that I didn't have to track that on a nightly basis was they would kind of estimate and assume how much I would earn in tips and then I would be, those tax withholdings would be associated with that as an income. And so as you can see, there's, especially when you have two methodologies of reporting tips, there can be a lot of nuance and difficulty and a certain level of double counting when it comes to ⁓ collecting that data. they, and I'm not going to claim to be an expert in how they operate, however, at DETR, they've kind of refined their way of calculating the tips. And so if you actually use the same methodology this year compared to last year, we did actually indeed see an increase in the state of wide average wage. But with regards to the way that it is in statute and the abatements and things like that, you know, we're kind of hold into the way that the data was collected previously.
Speaker 3 (12:45)
So what's happening with unemployment across the state, right? I feel like there's articles daily, weekly, just about where the country's at and especially Nevada. So what are we seeing across the state? I mean, if you could take us from north to south to rural, what's going on in our state?
Speaker 1 (13:02)
Sure. So yeah, don't think that it's any secret that for quite a while now, ⁓ Nevada has been ⁓ the highest unemployment in the nation. There was a few months there where we dipped below. were like number three or four, but then, you don't even remember. I'll have to go back and check. But when it comes to the, and we can talk about the statewide ~ unemployment rate, but when it comes to like our sub state levels, I like to point out like the reason that we track that and how we track it. So we do kind of track our unemployment or we estimate the unemployment rate at the county level. Again, it kind of ties back to our incentives. So when it comes to our tax abatements, we have a rule in statute that says if the unemployment rate of a certain county falls below, I'm sorry, goes above 7%, then the wage restrictions on receiving full abatements is actually relaxed a little bit. And that's meant to be kind of incentive to a company that might, let's say, Churchill County or Mineral County goes above that 7%.
Well, now, there might be a slightly additional incentive for company to look at those counties to establish and bring jobs there and kind of improve the employment situation there. And, you know, when it comes to the county level data versus the statewide data, there's a little bit of nuance there. We track that based on a 12 month rolling average.
And it's collected a little bit differently, or it's calculated or estimated a little bit differently at the county level, which leads me into some of the nuance that when we compare, let's say, our urban areas to our rural areas, when it comes to the county level data, we use ⁓ basically a model-based estimation called the handbook method that takes into account the county level unemployment claims, population estimates, and a couple of other metrics.
Again, I'm not an expert in that. kind of leave that up to the folks over at Dieter. However, what that would suggest is that, you know, a smaller population, you can imagine, is going to have slightly higher volatility. let's say, you know, it's 10 or even 20 people in a smaller county of let's say a couple thousand, that percentage of unemployment if they find themselves unemployed is going to sway much more than let's say Clark County or Washoe County, 10 or 20 is a blip on the radar, right? Likewise, you know, we are very industry specific when it comes to our counties. Some of our rural counties tend to be much more agriculture oriented or mining oriented. like let's say we have a county like Elko or that's very much oriented around the mining industry, ⁓ they're going to be, you know, kind of subject to price fluctuations in the market for those minerals that are being mined.
And so...There's a little nuance there. Also commuting patterns, as you can imagine, as we've built out the Tahoe-Reno Industrial Center trick, a lot of the folks that work out there live in Washoe County. So there's this difficulty, this nuance between the place of work versus place of residence. And then also, like I said, the seasonality of agriculture, let's say for instance, in Churchill County. But we do try to account for that using the 12-month rolling average.
So yeah, there is nuance. Having said all that, we do actually have, I think, three counties. Yeah, we have Esmeralda County, Mineral County, and Nye County that all exceed that 7 % threshold that we use for our abatement determinations. And as you can imagine, those being the smaller counties, they are subject to a lot of those kind of nuances that I just described. But it's kind of, you know, again, moving on, is it over 7 %? Yes. Okay. Those regions, then they might have relaxed wage requirements to qualify for a base.
Speaker 2 (17:49)
And is it something that we track quarterly? If so, it were to go below the 7 % or whatnot or kind of even out, do we go back to how it was for the tax incentives or how does that work?
Speaker 1 (18:00)
Exactly. Yeah, we track it on a quarterly basis.
Speaker 2 (18:04)
⁓ Very interesting.
Speaker 1 (18:06)
Yeah.
Speaker 2 (18:09)
And there's a lot of uncertainty right now. So it's kind of just keeping up with what's going on in the nation. And then obviously Nevada takes a little bit more of a hit, I think.
Speaker 1 (18:18)
Right. And you asked about the North versus South, right? And obviously South being kind of driven by Clark County consists of, you know, 75 % of our economy, 75 % of our population, right? And so, you know, looking at the composition of ⁓ employment in that region, naturally, you know, being the hospitality industry, they're going to, it's going to be a lot more churn. It's going to have just by virtue of being larger, you're going to have more entrants and job seekers in that. And you might notice if you look at the report, I do call out specifically part of the reason that we have an elevated unemployment rate is on account of job seekers, not necessarily job losers, right? There's different reasons for people to be unemployed. And it's actually a good thing in the sense that, you know, people are seeking opportunities, though I will, you know, mention that over the last several months, there's definitely been signs of weakening in the in the market. ⁓ Companies are slower to hire.
People who are on unemployment, who are collecting unemployment claims tend to be collecting them for longer. So those who are unemployed tend to be unemployed for a little bit longer. So we're keeping an eye out on things like that. But, you know, as of now, the story stays the same. The reason for that elevated unemployment rate is on account of an improving labor force participation rate, not necessarily layoffs.
Speaker 2 (19:40)
I think that's good to touch on. That's interesting. So to wrap it up, what are your predictions for the next quarter based on what you're seeing now?
Speaker 1 (19:47)
So based on what I'm seeing now, as I kind of mentioned before, companies that receive abatements are not captured in ⁓ the quarterly report that we're discussing now. They're gonna be captured in the actual quarter that they receive the approval for abatements. And so, as I mentioned before, we have seven companies on the docket to receive abatements, and so that's going to almost kind of double our year-to-date statistics in just one quarter. ⁓ And so that's a positive thing. And as I mentioned, we tried to track this over time to see.
Is there something concerning that we need to really look at that's on the horizon that's coming? Do we need to pivot our strategies? And at this stage, I think it's still a little too early to make predictions. However, I will say with.
⁓ Everything going on nationally, some of the geopolitical uncertainty and also, you know, I'll say with the rapid adoption of AI, there's been a tremendous amount of interest in the IT sector, right? And the data centers, which will likely bring a lot of investment to the area. Some of the things that we're bumping up against is, mean, they're huge power, power hungry companies, right? Because they generate or they,
require a lot of power to generate all the output that they use. I think that if I had to make a prediction, we're going to see, well, I already have the data, we're going to see roughly double what we have here today in the third quarter, but also I would imagine that we're probably also going to see a ramp up in our investment as well.
Speaker 2 (21:28)
Awesome. Well, we're going to have you back next quarter. we'll see if those predictions come true.
Speaker 3 (21:32)
Yeah, we're gonna hold you to it. Well, Steve, thanks so much for joining us. It's great talking to you as always.
Speaker 2 (21:37)
Yeah, thank you, Steve.
And that's all for this episode of Diversify Nevada. This podcast was created by the Governor's Office of Economic Development with the help of our sound editor, Michelle Rebaleati. If you'd like to learn more about our agency, can visit our website at goed.nv.gov. And if you'd like to share feedback about the show or suggest a topic you'd us to cover, send us an email to goed@goed.nv.gov. Thanks for joining us and we'll be back soon.