LAS VEGAS -- Drew Johnson and his wife, Tina had the life many Americans only dream of: A big house in a swanky suburb, a backyard hot tub, and a $100,000 deposit on a new condo with views of the Las Vegas Strip and 24-hour concierge service.

They did it all on the salaries of a construction-equipment salesman and a cocktail waitress who brought in $1,000 a week in tips alone. But the recession has slashed their incomes by nearly half, and financing for the condo might not come through.

"It's Vegas," says Mr. Johnson, who fears he could lose most of his deposit. "We gambled."

During the boom years, Las Vegas wasn't just a place where gamblers could hit the jackpot, but where hard-working hotel maids and cocktail waitresses could, too. The city offered something almost no other place in America did: upward mobility for the working class.

Now, that is evaporating.

The recession has jolted Las Vegas in a fundamental way. Like other job-creating cities in the Sunbelt, Las Vegas saw its population, income levels and housing prices surge over the past decade. And like those cities -- including Phoenix, Orlando and San Diego -- it's been battered in the bust.

But by many measures, Las Vegas's rise and fall has been more dramatic than most. Last year, Clark County's population declined for the first time in more than two decades. More than 10,000 people left Las Vegas between July 2007 and July 2008, according to Keith Schwer, director for the Center for Business and Economic Research at the University of Nevada Las Vegas. The unemployment rate in the metropolitan area tripled from 4% in May 2007 to just over 12.3% in June 2009, higher than the national rate of 9.5%. And after the median price of existing homes rose by 122% in sales between 2000 and 2006 -- more than double the national rise of 49% -- sale prices fell by 30% between last year and this year.

The big bet that fueled Las Vegas's growth for so long is the same one that's now going bad: tourism. Vegas expanded into the lucrative market for business meetings and conventions, building massive exhibition halls and new hotels and casinos. Construction jobs multiplied and the housing market bubbled over. Now that tourism and business travel have collapsed, Vegas has little else to cushion the blow.

Even some long-time Vegas stalwarts now believe the era of astounding growth is over.

"I don't see any opportunities for any development in Las Vegas," said Las Vegas Sands chief executive Sheldon Adelson in an interview. Mr. Adelson, who in 1999 opened the Venetian, a Vegas-style replica of Venice complete with indoor canals, rattled off a list of U.S. states he has his eye on now: Massachusetts, Florida, Kentucky, Ohio, Texas.

All along the Las Vegas Strip, massive, half-finished edifices may never see a grand opening. Last month, the $3.5 billion Fontainebleau Las Vegas hotel and casino declared bankruptcy, and 3,500 construction workers lost their jobs. Other projects, such as the $5 billion Echelon resort, a hotel tower at Caesar's Palace and a luxury condo tower at the Palazzo, also halted construction.

"There won't be another [casino] property built in Las Vegas for a decade," says Jim Murren, chief executive of MGM Mirage, Nevada's largest employer.

Mr. Murren's company plans to move forward with the opening of City Center, the $8.4 billion resort and residential project that the Johnsons bought into. When it's completed later this year, City Center is expected to employ 12,000 workers, a bright spot for Las Vegas employment. But many casino operators are worried the nearly 5,000 new hotel rooms will flood the market with new supply while demand is down. That could further depress prices at a time when visitors are already spending less on food, gambling and spa services, say casino executives.

Much in the way jobs on Detroit's assembly lines allowed poor Southern blacks a route out of poverty two generations ago, Las Vegas provided a shot at the middle class for workers fleeing dying industrial centers, or for immigrants arriving from Latin America and Asia.

While average wages stagnated throughout much of the country over the past decade, pay in Nevada skyrocketed. Wages in the state grew at nearly double the national rate between 2000 and 2008, according to an analysis by the Economic Policy Institute, a Washington think tank.

Union workers -- who account for the bulk of employment along the Las Vegas Strip -- saw their pay grow by 12.6% between 2000 and 2008, while union workers nationwide saw an increase of 2.9%, according to the Economic Policy Institute. Nevada's non-union pay increased by 5.4% in the same period, while wages for all workers in the U.S. increased by 1.6%.

The union made upward mobility part of the Vegas allure. In Vegas, the union-negotiated salary for a hotel maid is still $14.25 an hour. In contrast, the median wage for the same worker in Orlando is $8.84 an hour; in Phoenix, it's $9.25, according to the Bureau of Labor Statistics.

While the union sent casino workers' salaries and benefits up, tips were often what helped push ordinary workers into the world of posh condos and sports cars. Tips could triple the base pay of casino workers who dealt directly with guests. Gamblers who hit it big on the tables; young visitors who spent thousands for bottle service at night clubs; and businessmen treating clients to lavish dinners, were all free and easy with gratuities, say current and former casino workers. Valet attendants could take home an average of $500 a week in tips, while room-service waiters at swankier properties could earn $600 a week in tips, often outstripping their weekly base salaries.

Such excess turned Las Vegas into one of America's biggest boomtowns. From 2000 through 2006, Clark County -- home to the Strip and three quarters of the state's population -- was the fastest-growing county in the U.S.

The number of people employed by the casinos crammed along the four-mile Strip shot to 109,000 in 2007 from 40,000 in 1985. Retirees, drawn by low taxes and affordable housing, poured into the area, too.

Many of those who found steady work in casinos or on construction sites were able to harness another engine of prosperity: the area's bubbling housing market. Fashionable new suburbs sprang up. The flurry of new housing starts created even more jobs.

Meanwhile, the casino companies listed on Wall Street had acquired other properties until the Strip was dominated by just a few major players: Harrah's Entertainment, Inc., MGM Mirage, Las Vegas Sands Corp. , and Wynn Resorts Ltd. They began competing with each other and took on billions in debt to build ever-more-lavish gambling palaces. During the mid-2000s, hotel occupancy on the Strip was typically above 95%; room rates soared.

Then, early in 2008, as the mortgage crisis swept the country, the number of visits began to slow. The number of visitors continued to drop every month on record this year, just as casino companies were preparing to unleash thousands of new luxury hotel rooms onto the market. The share prices of the casino companies tumbled, and many sought emergency financing. Even some of the titans, such as MGM Mirage, had begun to sell assets in order to meet debt obligations.

Mr. Schwer, of UNLV, says when he charts the region's economic history, the lines rise then decline so severely, "we call these cliff-diving charts."

During good times, the pull of Las Vegas was so strong that it sometimes drew entire communities. The Bias family -- about 150 aunts, uncles, cousins, brothers and sisters -- moved to Las Vegas from Tallulah, La., over three decades as economic conditions in the mill town deteriorated. More than 43% of Tallulah's 9,000 residents live below the poverty line, according to the latest census.

In Las Vegas, the Bias family found steady, well-paying jobs. The men went to work as cooks in the casinos and the women worked in housekeeping. Sometimes, it seemed that all of Tallulah had relocated to Las Vegas, says Josh Bias, 31. "It got to the point where I'd meet someone here from Louisiana and I'd say, 'Don't tell me, you're from Tallulah,' " Mr. Bias says.

Mr. Bias, the eldest of 10 siblings, was able to go to college. To help pay for school, he found work as a cook, alongside his father and uncles. He took to the profession, and landed a job as a fry cook at a casino. He says he made $17.35 an hour, received full medical benefits, a 401(k) plan, and free training through a union and casino-backed program to upgrade his skills.

His wife was able to stay home and raise their two young children. There was a Chevy Malibu, a spacious apartment, and new clothes and toys. His eight-year-old daughter talked about "going into the family business" and becoming a pastry chef.

But in 2008, business on the Las Vegas Strip was stalling. In early December, Mr. Bias was laid off from his job. His family moved into a cheaper apartment in a sketchier part of town. He negotiated with his car lender to put off payments for a few months.

Mr. Bias recently landed a new job at the M Resort, where he works from 10 p.m. to 6 a.m. as a cook. Even though it's a non-union job and pays less, he's grateful he got it. "I was told I beat 10,000 other people who applied for this position," he says.

Mr. Bias said the family is helping each other, with working relatives taking in laid-off ones.

Las Vegas has experienced ups and downs before. Business dropped off in the 1970s, during years of stagflation. And casinos were hurting for business in the months after Sept. 11, 2001. The city emerged from these downturns when Americans felt confident and wealthy enough to travel as the larger economy grew. But analysts and observers say now, unlike then, Vegas has billions in debt that will make a recovery much harder.

Harvey Perkins, a gambling consultant with Spectrum Gaming, believes the industry can no longer depend on regular Americans to behave like high rollers. "I think people have fundamentally changed in their spending patterns." The casino business model, he says, will have to be "re-engineered." Vegas, Mr. Perkins and others believe, will have to return to the days of being a bargain destination. That's already starting to happen, with hotels throwing in coupons for spa services, and high-end restaurants offering cheaper options.

Others predict that the current downturn will prove to be a momentary hiccup, and that the good times, along with social mobility, will again return to Las Vegas, just as they have in the past.

"I think we'll be like a phoenix," says D. Taylor, the secretary-treasurer for Culinary Union Local 226, which represents 55,000 hotel and casino workers. The union recently agreed to delay a negotiated 34-cent-an-hour pay increase for one year. But Mr. Taylor still expects a turnaround. "People like to kick us around, but we'll come back bigger and stronger and more exciting and vibrant."

That's Raymond Wadsworth's hope, too. For a time, Mr. Wadsworth thought he might be condemned to the underclass. With a high-school education, he bounced from one menial to job to another in Los Angeles. Then he landed in prison on a drug conviction.

In 2003, he moved to Las Vegas on the advice of a relative, and his luck changed. He got a union job in a casino kitchen that paid nearly $17 an hour, and included full medical benefits. He bought a used Toyota Camry, and later, a $191,000 four-bedroom house with his girlfriend.

Then, late last year, the casino cut his hours and eventually laid him off. He hasn't worked since New Year's Eve, and his unemployment benefits are nearly drained. For now, his girlfriend's salary is keeping them afloat.

"I know times are tough everywhere," says Mr. Wadsworth, who has applied for jobs all over the area, including at the airport and City Center. "I guess we just aren't used to this in Vegas."

Write to Tamara Audi at tammy.audi@wsj.com