Memorial Day ushers in the unofficial start of summer at the Jersey Shore. Fire up the BBQ. Get ready for beach concerts, beach bars and efforts to continue to increase nongaming revenue.
In preparation for the new season, the Tropicana Casino and Resort recently unveiled its $50 million facelift at a ribbon-cutting last week, just in time to lure new customers and welcome back old ones. The casino has erected giant LED panels for a new light show. A new granite pathway and coffered ceilings augment a renovation of 434 hotel rooms. New televisions are sprinkled among the table games. With AtlantiCare as a partner, the Trop opened a state-of-the-art fitness facility at the property. One executive boasted that the leg-press machine alone cost $9,000.
Such investments in Atlantic City's business properties are welcome, and increasingly important in a saturated casino industry. The opulence of these facilities, however, contrasts sharply with the Memorial Day 2015 realties of casino workers and former workers. In Atlantic County, as elsewhere in America, working families are feeling squeezed. Beef prices for those barbequed hamburgers are at an all-time high. The prices of chicken and pork are up too due to drought and a virus in the hog industry, as are the prices white bread, iceberg lettuce, American cheese, potato chips and ice cream, the other key commodities measured by Fortune magazine's BBQ Index.
It is almost like a tale of two cities: the Haves and the Have-Nots. Our local economy is still struggling with the closing of four casinos last year and the loss of 8,000 casino jobs. The ripple effects have been felt by businesses, communities and families throughout the area. Unemployment checks are now running out. Those who still have jobs are often working fewer hours, bringing home less after-tip income, and paying more for their benefits packages. And, at the same time that Tropicana Entertainment was shopping for gym equipment and installing the light show, its key investor, Carl Icahn, was cutting payments for health care and pensions for workers at Trump Taj Mahal. This is still being fought in court.
That money for just one piece of gym equipment is about equal to a family's annual cost of health care under the Affordable Care Act (Obamacare). Here is how that accounting works, using a standard online health insurance marketplace calculator. We used one from the Kaiser Family Foundation to look up the cost of a silver plan for a family of four from Atlantic City, all nonsmokers, with adults and two children. Using a family income of $34,000 per year (the approximate median), the cost of the silver plan is $808 a month, or $9,692 annually, without available tax credits. With available tax credits, the price decreases to $196 a month, or $2,349 annually. Further, there are out-of-pocket costs, like going to the doctor or medications. Under a silver plan in 2015, the cap for this family would be $10,400 per year. Working families are forced to bear such costs as more employers strip away health-care benefits.
In the late 19th century, in the so-called "sweated industries," the pay was so low that workers could not survive without help from other family members in better-paid industries, from private charities or from public poor relief. These low-wage employers were called "parasitic" because they reaped profits by paying workers less than what it took to survive. In essence, profits were indirectly subsidized by government and others who helped provide for their workers. This concept of parasitic industries led social reformers at the time to mount living wage campaigns, leading to passage of minimum wage laws. The idea was that businesses should not shirk from paying the appropriate cost of maintaining the labor force.
Today, employers are once again shifting costs. And not just onto employees who have to pay for health care. The $18.8 million cost of the current renovation project was subsidized by the Casino Reinvestment Development Authority, since it will be credited against Trop's CRDA tax obligations. If these new attractions make the property more popular, great. But profits alone cannot sustain our local economy. Our local economy cannot afford to subsidize the billionaires who buy and sell casinos while trying to squeeze out as much profit as possible in the interim. Investing in employees by providing good jobs with living wages and access to benefits is the key to any economic rebound.