The Unions Play Their Hand
As strong labor organizations that have long represented auto workers, truck and transport workers and other blue-collar occupations migrate toward the service economy, the terms “casino” and “union” are becoming increasingly, inextricably intertwined.
The United Auto Workers, among other unions, are in search of members to replace the many factory jobs they have lost to overseas operations, the poor performance of domestic automakers and a deepening worldwide recession. In casinos, they have permanently attached their aspirations to a high-profile group of service employees with a wide variety of job descriptions, from housekeepers to highly trained slot technicians.
“It’s about revenues,” said Pete Kirsanow, a Cleveland attorney and a former member of the National Labor Relations Board. “They are a business like any other. Unions are in the business of getting more union members so they can get more revenues, more leverage and better able to secure better contracts. The way you grow is getting more members and more dues.”
While casino companies reel from years of over-leveraged expansion, labor is making headway in jurisdictions from California to Connecticut.
“Clearly, the various efforts are having an effect, at among other places, Indian casinos,” said Kirsanow. “Ever since the [NLRB] ruled in 2004 that if the casinos were operated as commercial enterprises they could be unionized, there were a quarter of a million more employees who are potential union members.”
Labor’s success within the gaming industry had been increasing even before the current massive recession hit and before the Democrats took control of Congress and a new labor-friendly administration occupied the White House.
The mainstreaming of gambling came about just as much because of corporate mergers as it did because of themed megaresorts, or “family-friendly” schemes or successful TV ads about what “stays in Vegas”. The evolution of privately owned casinos into publicly traded companies, with an emphasis on quarterly earnings and growth, meant a more corporate atmosphere for everyone from dishwashers to pit bosses to marketing chiefs. If it came down from the main office that belt-tightening was in order, workers with decades on the job would be let go. There has been a decided trend toward hiring more part-time workers with no benefits. None of this has gone unnoticed by labor organizers, who had had mixed reactions from casino workers in the past.
Growing competition is playing a role as well. Nevada’s California is Atlantic City’s Delaware and Pennsylvania. Unionization in one market will likely spread quickly to adjacent ones. And with an overall U.S. population experiencing mass layoffs and becoming more focused on basics like job security, health care and retirement benefits, it’s hard not to correlate the national economy and current political environment with a bolder labor movement.
“With the [Employee Free Choice Act] pending, unions are just salivating at the prospect of this fairly large group of employees to unionize,” Kirsanow said. “Even with the defeat of the card-check measure, there is a fair possibility that some version of the act will make it extremely easy to organize, and unions would fairly aggressively assert those rights.”
Sketchy past, uncertain future“Unions have obviously been on a 50-year slide, and casinos, at least the casino floor, had not traditionally been fertile ground for them,” said Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.
He and other industry watchers say part of the reason it is so difficult to get a read on the labor picture within gaming is because each big push onto casino floors seems larger than the previous one, and are often in new markets. Even in established jurisdictions the ground shifts. Atlantic City, now the target of a consortium of unions, has since 1982 largely avoided attempts to organize.
Eadington says Nevada’s labor history has been bifurcated, with Vegas on one hand and the rest of the state on the other. “Northern Nevada was just inherently more conservative. But in the gaming industry Bill Harrah was very anti-union. His approach was, ‘I will provide a working environment and working rules that would make it virtually impossible for unions to do better.’ That was very unusual in its day. … Thirty years ago in Las Vegas there was a lot of cynicism with labor. In the ’70s unions were seen as somewhat corrupt, and there was a general sense that dealers did not want [representation], because of their tips - that unions would interfere in that. This was before the IRS wrote new rules on tips; but even after that, dealers tended to be, by reputation anyway, not joiners as much.”
But maids? Maids are joiners. So are cocktail waitresses and dishwashers and fry cooks and bell hops. As members of Culinary Workers Union Local 226, an affiliate of the Hotel Employees and Restaurant Employees International, their ranks wreaked havoc on several casino-hotels from the mid-1980s through the mid-1990s. In 1984, Las Vegas was the scene of a citywide strike in which most hotels settled after two months of picketing. For the holdouts the strike continued beyond a full year, to the detriment of the union, which lost a half-dozen or so properties as a result. In a March 1996 article in The New Yorker one organizer was quoted as saying, “Most workers assumed that it was the beginning of the end of the Culinary Union in Las Vegas.”
Significant strikes occurred after union contracts were renegotiated again in 1989. Binion’s Horseshoe suffered a 10-month walkout. And on Sept. 21, 1991, the longest successful hotel strike in U.S. history began at the New Frontier on the Las Vegas Strip, when hundreds of workers represented by four locals stopped work. It did not end until October 1997 when billionaire Phil Ruffin stepped in to buy the property. The workers finally returned in February 1998 after Ruffin took possession.
Despite these actions, “The union issue had really been a secondary issue for quite some time,” even for the large publicly owned companies that operate in multiple jurisdictions, Eadington said. He said there was still a belief that if you’re working in the gaming industry “You can come in at a given skill level, and it puts you at a higher pay level, which again is a deterrent for unionization.”
Well beyond Nevada, though, that mindset seems more and more a thing of the past, as organized labor seeks out new ways to become a more significant force in the industry.
The success of the United Auto Workers at organizing dealers at four Atlantic City casinos was unprecedented (although as of this writing the UAW had not reached contracts with any of them). The UAW’s move into Indian Country at Connecticut’s Foxwoods Resort Casino, the biggest tribal casino of them all, was also seen as historic.
The UAW’s Atlantic City Dealers Union has launched a multimillion-dollar multimedia advertising campaign targeting Bally’s and Caesars Atlantic City, claiming the casinos have not been bargaining in good faith for the past two years. The union says the effort is to inform the public that dealers have had their hours slashed, retirement benefits cut and seniority stripped while management stalls progress at the bargaining table or simply refuses to negotiate.
The union is now teaming with the Service Employees International Union, the AFL-CIO and the Transport Workers Union in three other states (Nevada, Indiana and Connecticut) to ratchet up pressure for agreements. The new multi-headed entity is known as the Gaming Workers Council.
Joe Ashton, a UAW regional director for New Jersey and parts of Pennsylvania and New York, issued a statement that said: “I’ve lived in this area all my life, and I’ve seen the gaming industry grow up and become an important part of our community. A lot of jobs have been created, and many of them are good union jobs with good contracts negotiated with management by casino workers. There’s no reason that dealers and slot technicians should be left out.”
Financial analysts who cover the industry say that the growth and power of unions is part of a bigger picture that is still taking shape, even as the economic landscape alters for workers and owners alike. In the meantime, they say, there is no clear means of quantifying, financially, what that power and growth might mean to profitability or share prices.
Part of that has to do with how capital-intensive and technology-driven casinos and gaming companies have become. Table games - with or without newly unionized dealers - are becoming increasingly marginalized. And if labor does succeed in a given jurisdiction it could accelerate that marginalization.
âBig bargaining issues'“There are really some interesting microeconomic dynamics at play here,” Eadington noted.
In particular, geography plays a bigger role than one might think in this day and age when American culture is said to be so homogenized. Perceptions about gambling vary from state to state. So, too, is organized labor’s chances of making an impact, in good times and in bad.
“It makes sense to me because clearly when manufacturing unions started to decline, with those many jobs moving overseas, the logical move would be to go to other parts of the economy that were not affected by that kind of displacement,” said Sophia Koropeckyj, managing director for Moody’s Economy.com, in West Chester, Pa.
In “right-to-work” states with established gaming, such as Mississippi, unions pose no immediate threat to owners. Not so in Atlantic City, where the employees and the vast majority of the customer base are from the historically union-friendly Northeast. Atlantic City of course is also a large market unto itself so organizers can dig in for the long haul.
“And we’re in an environment with [the Obama] administration that is much more sympathetic to [union] interests as well,” said Koropeckyj. “So even though there have been setbacks to the card-check legislation, it does make sense.”
Of course, it would indeed make things more difficult for casinos, she pointed out. “What can happen then is a closing down, like when Wal-Mart butchers unionized, and they closed down the butcher department and started selling prepackaged meats. Casinos would have to devise how to get a handle on using more machines,” possibly replacing workers.
“The weak financial condition of the gaming industry remains pretty dramatic,” Eadington added, “to the point where it would, if anything, weaken [the unions’] position to organize.”
Nonetheless, there is a tide of unionization sweeping through the industry. In Las Vegas, the Transport Workers Union has been in talks with Wynn Las Vegas and Caesars Palace - for almost two years. The fight, involving more than 7,000 workers who voted to be represented, may play a role in deciding what form the Employee Free Choice Act will take if a bill can get passed. An early provision of the legislation sought government arbitration to set contract terms after 120 days of the formation of a new union if an agreement has not been reached.
“In a terrible economy, as people lose their jobs left and right, a lot of people lose and more would want to be part of unions,” said Steve Geller, an attorney who heads up the gaming law practice at Greenspoon Marder, based in Fort Lauderdale, Fla. “On the other hand, the average casino company stock is down 70 or 80 percent, so that makes companies less willing to do anything that has to do with paying any more. A strike would put them out of business. These are big bargaining issues.”
Daniel O’Meara, a senior fellow at the University of Pennsylvania’s Wharton School and an employment law attorney with Montgomery, McCracken, Walker & Rhoads in Philadelphia, is no fan of EFCA, despite a respect for labor unions forged during his upbringing in a western Pennsylvania steel town.
“I think each gaming facility that opens [in Pennsylvania and other new jurisdictions] is going to have a very specific union avoidance plan, as they open,” he said. “I think EFCA will not go through. The headline [would be], ‘Legislators take away secret ballot vote,’ and that means it won’t go through. Until we come out of the economic crisis, we’re in a time when no substantial change will go through. I just don’t think the Democrats will want to spend their finite political capital.”
Meanwhile, the UAW scored perhaps the biggest casino organized labor win to date in February, when workers voted for representation at Foxwoods, the largest employer in Connecticut and the biggest casino in the world.
Despite the breakthrough, unions have to contend with the central issue of tribal gaming, just as government officials and other service providers must - how to deal with jurisdiction on lands that are considered sovereign under federal law and therefore independent of state law and public policy, despite the fact that casino-style gaming on much of those lands operates on the basis of contractual agreements with states that involve benefits and concessions on both sides.
“The [National Labor Relations Board] really does have jurisdiction,” said Geller, who was a Florida state senator for 20 years and served as president of the National Council of Legislators from Gaming States. A Democrat, he was the Senate minority leader and advised Florida’s Republican governor, Charlie Crist, on state-tribal compact issues until last year when term limits forced his retirement.
“Federal labor laws do apply on Indian reservations,” he said. “That’s the hottest issue in Indian country - in general, the Indians continue to maintain that that is not settled law.”
But whatever the backdrop - tribal lands, board rooms, union halls, in the restaurant kitchens or on the sidewalks among picketers - experts say get ready for more of the same.
Recessions are “generally considered historically good times for union activity,” said Kirsanow. “One thing employees feel that unions can provide is job security.”
Which cannot be understated in the current downturn.
On the other side, as Geller said, “Every company makes the argument that in this economy we’re on the brink, that we can’t afford negotiating the contract or granting the wage increases.”
That, too, he says, is a legitimate argument.