Tourism slump pushes Las Vegas unemployment to second-worst in nation

Tourism-dependent economy continues to struggle as visitor numbers decline

Las Vegas finds itself in a familiar but unwelcome position: holding one of the highest unemployment rates among major U.S. metropolitan areas. With joblessness at 5.8% in June 2025 — compared to the national rate of 4.1% — the city’s ongoing struggle highlights the persistent challenges of an economy heavily dependent on tourism.

Stubborn unemployment persists

The latest data from the Nevada Department of Employment, Training and Rehabilitation shows Las Vegas’s unemployment rate has been climbing for two consecutive months, rising from 5.2% in April to 5.5% in May and now 5.8% in June. This places the Las Vegas metropolitan area second only to Fresno, California (7.8%) among large metro areas with populations exceeding one million.

“What’s happened in Las Vegas after the pandemic is that there’s restructuring going on in the labor market,” explains Stephen Miller, professor of economics and director of research at the Center for Business and Economic Research at the University of Nevada, Las Vegas.

The troubling statistics come as no surprise to those who’ve watched Nevada maintain the highest state unemployment rate in the nation at 5.6% as of April 2025, according to the Bureau of Labor Statistics. Clark County, home to Las Vegas and 70% of Nevada’s population, mirrors this elevated joblessness.

Tourism slump drives job losses

The root cause of Las Vegas’s unemployment woes is clear: a significant decline in tourism. Visitor volume through May 2025 dropped 6.5% compared to the same period last year, with only 16.5 million people visiting America’s entertainment capital. This represents a continuation of a troubling trend that began earlier in the year.

Casino analyst David Katz of Jefferies described the situation bluntly in a recent report, saying Las Vegas is “bracing for a grindy summer.” Fellow analyst John DeCree of CBRE Group pointed to multiple factors dampening tourism:

• Lower visitation from key international markets, particularly Mexico and Canada
• Economic uncertainty and tariff threats weighing on leisure travel
• Rising costs in Las Vegas deterring “value-oriented visitors” who are crucial during the summer off-season

The impact on the Strip has been particularly pronounced. Major operators like MGM Resorts International and Caesars Entertainment have resorted to offering free parking, reduced room rates, and waived resort fees to attract visitors — measures typically reserved for periods of severe economic distress.

A vulnerable economy exposed

Las Vegas’s current predicament underscores a fundamental vulnerability that economists have warned about for years: the city’s overwhelming dependence on tourism and gaming. According to the American Gaming Association, Nevada’s casino industry generated $59.4 billion in economic impact in 2023, supporting more than 330,000 jobs — roughly 27% of the state’s total employment.

“Imagine going ‘all in’ in poker, a very risky situation right?” notes Anirudh Polagani, a researcher with Brookings Mountain West. “Well, that’s the state of Las Vegas’s economy as it is going ‘all in’ on tourism and gaming, making the region very vulnerable to economic shocks.”

This vulnerability was starkly illustrated during the COVID-19 pandemic when tourism dropped 55%, employment in tourism sectors plummeted over 32%, and a mere 78-day casino closure resulted in losses exceeding $6.2 billion.

Diversification efforts lag

Despite decades of discussion about economic diversification, Las Vegas remains one of the least diversified economies in the United States. The city’s diversity index — where 100 represents perfect economic diversity mirroring the national economy — sits at approximately 75. While this represents improvement from 54 two decades ago, progress has been frustratingly slow.

The Las Vegas Global Economic Alliance’s “Vision 2025: A Comprehensive Economic Development Strategy” identifies promoting a resilient and diverse economy as Southern Nevada’s most important goal. However, recent policy decisions suggest the state continues to double down on tourism rather than meaningful diversification.

The Increasing Our Nation’s Value Through Economic Support and Tourism (INVEST) Act and the Destination Development Demonstration (3D) grant both funnel more resources into tourism infrastructure and promotion. While these investments create positive short-term impacts, critics argue they perpetuate the dangerous cycle of tourism dependency.

National context and outlook

The elevated unemployment in Las Vegas comes amid mixed signals in the national economy. The U.S. added just 73,000 jobs in July 2025, well below expectations, with the national unemployment rate ticking up to 4.2%. This weak jobs report, combined with dramatic downward revisions to previous months’ data, has raised concerns about the broader economic trajectory.

For Las Vegas, the implications are particularly concerning. As tourism is directly tied to discretionary spending and consumer confidence, any national economic weakness tends to hit the city disproportionately hard.

Barry Jonas of Truist Securities predicted a “choppy summer” for the Las Vegas Strip but suggested a potential rebound later in 2025 or early 2026. However, such optimism must be tempered by the reality that Las Vegas has yet to return to pre-pandemic visitor levels, and current trends show continued decline rather than recovery.

The human cost

Behind the statistics are real consequences for Las Vegas residents. The persistently high unemployment rate means thousands of families struggle with job insecurity in a city where the cost of living continues to rise. The tourism industry’s feast-or-famine nature creates additional stress, with workers facing reduced hours during slow periods and overwhelming demands during peak times.

The situation also impacts the state’s fiscal health. Tourism generates 35% of Nevada’s general fund revenue, contributing $2.1 billion in industry-specific taxes and fees. This dependency means that when tourism suffers, so do public services, education funding, and infrastructure investments.

Looking forward

As Las Vegas grapples with its unemployment challenge, the path forward remains unclear. While some analysts predict improvement in late 2025 or 2026, such forecasts assume a rebound in tourism that may not materialize given global economic uncertainties.

The more fundamental question is whether Las Vegas will finally heed long-standing calls for genuine economic diversification or continue its high-stakes gamble on tourism. With each economic downturn exposing the same vulnerabilities, the case for diversification grows stronger — yet the political will and practical pathways to achieve it remain elusive.

For now, Las Vegas residents must contend with the reality of living in a city where economic security remains tied to the whims of tourists and the global forces that influence their travel decisions. Until that changes, headlines about Las Vegas having among the nation’s highest unemployment rates will likely remain a recurring theme.

Image Sources: https://www.reviewjournal.com/business/tourism/las-vegas-unemployment-rate-rises-again-amid-tourism-slump-3399759/

Category: Business
Subcategory: Economy and Finance
Date: 08/06/2025