Robert McDevitt heads Local 54 of UNITE-HERE, Atlantic City’s largest casino union.
This is a crucial time for the union because it is negotiating a new contract with 10 of the city’s 11 casinos for its 14,000 members, including bartenders, cocktail servers, cooks, housekeepers and other service workers. (Borgata’s contract does not expire until 2012.) McDevitt discusses the challenges of the contract talks and the possibility of a strike.
Q: The union has signaled its willingness to compromise by proposing to take some cuts. However, the casinos are pushing for even more concessions, including having Local 54 members pay for their health care and pension benefits for the first time ever. What do you believe will be the ultimate outcome?
A: Well, we didn’t propose actually taking wage cuts. We proposed changes in the contract, which address financial issues for the company that don’t affect paychecks or benefits. Members of Local 54 understand probably more than anyone else how difficult this economy is because many of the members on the contract committee — and we have 500 members — have been here for 25 or 30 years, so they’ve seen the good and they have been here all through the decline.
So I think they understand more keenly than anyone, even casino management, just how bad things have gone, because very little of the management that’s here today was here during the salad days or during the days when things were going up. So we are looking through the contract with our committee to find places to save the industry money without affecting the direct income of the workers.
Q: The economy remains weak and competition from casinos in surrounding states is putting even more pressure on Atlantic City. How much should the union members be willing to sacrifice to save their jobs?
A: The difference between the casino industry in Atlantic City and other hospitality centers on the East Coast is that the operators here in Atlantic City have been given a license for gaming. In 1976, when that was voted on by the citizens of New Jersey, that came with the absolute agreement that the jobs created in this industry would be good middle-class jobs with benefits.
So it’s not just merely a situation where this is just like any other hospitality employer. This is a social compact that took place since 1976. Even though we’ve had ups and downs, I think that social compact has been upheld through the first 30 years. I think the real question is whether or not the hospitality industry in Atlantic City can successfully build their business back up to a profitable level by putting its workers into poverty, because that is essentially what their proposals are that are on the table.
You’re talking about thousands and thousands of dollars taken from workers who only average $12 an hour across the city. The only thing that makes these jobs middle-class jobs is that they have a good health plan and a good pension. Without that, you might as well work at McDonald’s, because the wages really aren’t that much different in many cases.
Q: How far should the casinos be willing to go to preserve jobs and help their workers make a good living?
A: Well, see, this is the rub, because in Atlantic City you have two things happening at the same time. On one hand, you’ve got this situation where the city is in decline, but no one is quite sure how much further in decline we are going to get to. No one is sure where that floor is. So without having that benefit of being a clairvoyant, we don’t know if we are bargaining at the bottom of the industry or whether there are still further declines to come.
I believe that we are bargaining near the bottom. I think that the industry has lost what it is going to lose to the competition in Pennsylvania and elsewhere. If you believe that, then you know that when you are bargaining a contract on the industry side you must have a belief that you are going to be here two, four, five years down the road.
What I’m seeing in the pattern of bargaining is that we have some companies who, because of their level of investment and because of their commitment to the city, are bargaining with the idea that they are going to be here. And then you have other companies who are here for the short term, who really don’t see themselves being in this market. They see themselves selling assets and profiting from that and turning it over to another operator. So that has been very complicating in this process.
Q: How much do Local 54 members typically earn now?
A: Currently, the average wage for Local 54 members is $12 an hour. Not exactly a king’s ransom in terms of wages. I don’t think anyone is going to argue that $12 an hour is an excessive wage. So when we get comparisons, these sort of people who don’t really know the landscape make comparisons between us and, say, the auto industry or other types of unions. We are a service workers union. We’re not big-money people.
Q: Local 54 has been staging mass demonstrations at Resorts Casino Hotel during the contract negotiations. Why is Resorts being singled out, and are the demonstrations likely to spread to other casinos?
A: Resorts has basically set the pace. They are like a rabbit at the dog track. They came out swinging, cutting people’s wages, like a housekeeper’s, from $14.17 an hour down to $9.50 an hour. These workers are truly under water. They are losing their homes and being evicted from their apartments because they cannot afford them, and it’s an untenable situation.
The rest of the industry has sort of taken their cue off of Resorts. If you dig into their proposals, at least their initial proposals, they were structured very similar to Resorts’, although it was hidden a little more in the proposal. So, are we going to take economic action against other properties? Well, that is up to the other properties.
Q: The union staged strikes against the casinos in 1986, 1999 and 2004 when contract talks broke down. What is the likelihood of a strike this time around? What would be the impact?
A: Rather than deal with a picket line or angry workers, the average customer is just going to stay home or go to one of the Pennsylvania casinos or go to Delaware or Maryland or wherever and not have to deal with the potential labor dispute. So we understand that.
As I said recently, any casino operator who doesn’t understand the way the workers are thinking — if they believe the workers didn’t strike because they were in fear — believe so at their own peril. If the industry doesn’t begin to understand where the workers are at, there will come a time when we will take economic action on some of these employers. We are not going to do it because we are happy to do it. We are not going to do it because we are macho or tough.
We are going to make a decision that the companies that are set in putting us in poverty — and therefore we have nothing to lose — that’s the point where we will take economic action. As it stands right now, we are still bargaining. I believe we made some movement on some of the tables and hopefully that will play out over the next few weeks. But you don’t leave people with nothing to lose.
Q: There is speculation that the economic slump could force the closing of the Atlantic City Hilton Casino Resort unless it is finally able to find a new buyer. Is there anything special that Local 54 is doing to help the Hilton through its financial crisis?
A: We agreed that if the property was sold, then we would get back to the table and we would bargain with them. We have an extension agreement with Hilton. It’s the only property currently that we have a contract extension on, because they need the stability as part of the negotiations to know that we weren’t going to pull a strike in the middle of them sealing a deal.
Not that we had any plans at the time of having a strike, but you can’t predict what other people are going to think. We think that the contract extension and the labor peace that it brings is the best thing that we could do for that property, and we genuinely hope that the Hilton will be sold.
Q: Have you heard the names of any potential Hilton buyers?
A: I respect the company’s request not to tell me who they are dealing with, although I do know there are two entities, private equity hedge fund type companies, and I believe it is very close. What I was told, the biggest sticking point was the back taxes. People say, “How does the Hilton operate?” Well, if you don’t pay your mortgage and you don’t pay your taxes, that leaves a lot of money left over to keep the operation going. I’m not sure what their tax lien is, but it’s got to be over $10 million. So I think that is one of the things, because that would have to be paid upon purchase.
Q: While older, smaller casinos such as the Hilton continue to struggle, Atlantic City is encouraged by the grand opening next May of the $2.4 billion Revel megaresort. But Local 54 and Revel have had a strained relationship. Why?
A: We’ve had problems with Revel from the beginning. Revel wants to come into Atlantic City and play by a different set of rules. Fortunately, there is Borgata to compare it to. It’s not ancient history. Borgata opened up in 2003. They came in and they played by the rules that everyone else had played by. They had card check with Local 54, which allowed people to organize a union for themselves without the interference from the employer.
They put a tremendous amount of capital into the facility of the Borgata. They’ve been great for Atlantic City. They were, in many ways, a game changer — an unexpected source of competition for a lot of the operators who are no longer here, who have since retired, who didn’t expect Borgata to have the type of impact that they did. When you compare that to Revel, you have a project that has been scaled back two times.
The first time was when they decided not to build the two 1,900-room towers that were supposed to be built simultaneously. The second time is when they took 10 floors off the existing tower, which is why I predict they will have 1,700 rooms and not 1,900. They don’t seem to say 1,900 anymore. So in my opinion, when you take 10 floors off a building ... I don’t see how they can have 1,900 rooms. So you basically have a 1,700-room casino the size of Showboat.
Q: Why has Local 54 filed a lawsuit to try to block $261 million in state breaks for Revel?
A: There was what I believe was a real game of three-card Monte played with the state when they said Atlantic City was going to fail if Revel wasn’t completed. That was when this whole fight came to pass, when Revel wanted a quarter-billion dollars in tax breaks in order to get their property finished. We went around and talked to politicians around the state — assemblymen and senators — and it all went on deaf ears because they were all convinced that if Revel wasn’t opened the city would fail. Our question was, if Revel opens and then goes bankrupt what does that mean for the city?
My response to this tax break was, if we accept the fact that Revel needs this to get completed, we are going to waive their sales taxes. Why don’t we waive the taxes for all casinos for conventions and business meetings to get us more competitive, because that is what is going to keep the properties open for mid-week business. Everyone is busy on the weekends. Resorts is busy; Hilton’s busy. All the bottom players are busy on the weekend.
It’s really Monday through Thursday where the problem is in the offseason. If the state waived that sales tax, we would be able to be much more competitive with other regional convention sites like Pittsburgh, Baltimore, Philadelphia, Boston. Where would you rather be in February, Pittsburgh or Atlantic City? That is really the bottom line. If you have a financial incentive for everybody, then everyone is playing on the same playing field. When you give government largesse to only one project, I think it is fundamentally unfair.
Q: Local 54 represents about 14,000 casino workers now, down from a high of 16,500. Wholesale layoffs in the past five years have reduced the size of the casino work force. What is Local 54’s long-term plan for building up its membership?
A: If we really want to become a premier resort, I think we have all the elements to do it. We’ve got the infrastructure, we’ve got the capital investment.
You have the best restaurants in the country in all of these casinos — top-name restaurants, top-name entertainment. You don’t need a $15 cab ride to get from one end of the town to another. You could basically walk most of the town. Really, the key to that is the governor’s plan (for a state-run Tourism District). I think it is very important. We will get those hotel rooms filled and we will gain our membership back. That is one way we see growth, by bringing the city back.
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