Atlantic City – Since the dawn of the gaming age here, casinos have cut back on the number of employees when summer gave way to fall and winter.
With declines in gaming revenues in both 2007 and 2008 from a confluence of factors – competition from Pennsylvania and New York, a partial smoking ban, high gas prices over the summer, and a downward spiraling economy – you’d expect a sizable decline in the number of jobs as a result.
Fact is, the job loss in the past two years has been minimal citywide. The payroll dropped by 164 between September 2007 and September 2008. The industry lost 4,170 workers between September 2006 and the same month in 2007, but about half of that decline owed to the closing of the Sands in October 2006.
Casino employment has declined steadily for much of the past decade after peaking at 49,673 in 1997. The industry suffered a larger drop after the terrorist attacks on the World Trade Center and Pentagon on Sept. 11, 2001, and enjoyed a slight uptick in 2003 with the opening of Borgata.
„You would think the addition of 5,000 employees at Borgata would have a major impact. But the increase was gone a year later,“ said Chet Sherman, an analyst for the state Department of Labor.
Technology, regulatory relief and consolidation get the credit for the reductions.
„We got relief from a variety of required positions, so they were eliminated,“ said Mark Juliano, CEO of Trump Entertainment Resorts.
Fewer employees are needed in areas where technology has automated the process. Cashless slots and ticketing reduced the need for coin cashiers on the casino floor and coin counters in the back of the house.
„Coinless slot machines don’t require the kind of staffing you need to fill and empty machines and count cash,“ Sherman said.
Consolidation has reduced the number of companies.
„The merger of Harrah’s and Caesar’s enabled shared services out of one location instead of four,“ Juliano said. „That’s the case for us, too.“
Between September 2007 and September 2008, Trump Entertainment Resort’s three properties lost 166 employees total. During the same time, the number of workers at Harrah’s four casinos fell just 164, a number which included the addition of more than 650 jobs at Harrah’s Atlantic City, thanks to the opening of a new tower and various amenities.
„It’s a painful decision to adjust,“ Carlos Tolosa, eastern regional president for Harrah’s Entertainment, said. „But we’ll never compromise in service.“
Still, economics in the future and continued sharp declines in gaming revenues may accelerate layoffs in the future.
„We hope we don’t cut jobs. But we can never promise,“ Larry Mullin, president of Borgata, said.
Said Juliano, „If business is so bad, we’ll decide to close part of the casino, hotels or restaurants. But we have no plans to do so now.“
The situation is worse elsewhere.
Thousands of casino employees from California to Connecticut are being issued pink slips.
Foxwoods, the Indian-run gaming hall in Connecticut, recently released 700 employees, the CEO among them. The unemployment rate in Las Vegas continues to climb, hitting 7.1 percent in August, just short of the all-time highest rate of 7.2 percent set in July 1993.
„And casinos are not alone in an effort to trim costs whenever possible. These are tough times, not for the timid,“ said Joseph Weinert, an analyst for Spectrum Gaming in Linwood.
The state faces a rising unemployment rate, now at its highest point in 23 years. New Jersey has lost some 20,000 jobs this year; 3,900 in September alone. The unemployment rate is lower than a year ago. Economists predict it will worsen through 2009 and 2010.
„The largest loss is in financial activities, with cutbacks in insurance, banks and securities. Manufacturing is lower. Construction is also down 800 in September,“ Sherman said.
The only growth areas are in education and health services.
Labor costs are rising faster than inflation, Richard Perniciaro, Dean of Administration, Planning and Research at Atlantic Cape Community College, said.
„There’s a point where even as a strategy to shed costs, where does labor declines influence service. There’s only so much you can cut. When do revenues get to that point?“ he said.
That line may have been reached this past year, he said.
„If you cut services, you’ll alienate those customers in the upper end,“ he said.
Just look to the Tropicana for the impact of mass layoffs, he said. The casino under its new owner cut more than 1,000 jobs in 2007, leading to massive complaints about service, and eventually, the ousting of the company by the Casino Control Commission.
„No one wants that reputation,“ Perniciaro said.
More likely, casinos will refrain from filling positions rather than go with large layoffs, he said. However, the industry could play the layoff card as United Auto Workers tries to negotiate contracts to represent dealers, and also when the contract expires with Local 54 next year, he said.
But job cuts are inevitable, said Weinert.
„The casinos have an obligation to stay profitable and produce an acceptable return. To the extent they can operate with fewer people, they will,“ he said.