Union Pay Cuts in Atlantic City

AC casino union willing to take 50-cent cut
By WAYNE PARRY

Casino service workers in Atlantic City are offering financial concessions in order to help the nation's second-largest gambling market survive. But the proposed givebacks are far below what the casinos say they need to stay afloat.

In contract talks that resumed this week, Local 54 of the Unite-HERE union reluctantly offered to cut overall compensation for some 14,000 housekeepers, food and beverage servers and luggage handlers by 50 cents an hour. The cuts would not be made to base salary or benefits, but involve items like giving up a paid holiday for an employee's birthday, delaying pension eligibility for 90 days and other items.

But they fall far short of the $3 hourly pay cuts the industry is seeking, and both sides remain far apart. Contracts for 10 of Atlantic City's 11 casinos expired on Sept. 15. The Borgata Hotel Casino & Spa's deal has one more year left.

The union workers average $12 an hour.

"This union has never put a concessionary proposal on the table -- they should acknowledge that," said Bob McDevitt, Local 54's president. "The workers in this union will only take the insult from this industry for so long. If the casinos believe the workers are weak, they do it at their own peril."

The union is in talks this week with Trump Entertainment Resorts, which owns two casinos here, and Caesars Entertainment, which owns four. The Trump proposal would cut worker pay by $2,000 in the first year, $3,000 in the second year, and $6,000 in the third year, McDevitt said.

"That's $11,000 that management would be rifling through the pockets of their employees and taking out," McDevitt said.

Bob Griffin, CEO of Trump Entertainment Resorts, said the casinos' request for wage cuts averaging $3 an hour is essential to the survival of the casino industry in New Jersey. Atlantic City casinos are in the midst of a 4 1/2-year revenue slump that has lopped $1.5 billion worth of revenue and thousands of jobs from the city.

Under the terms of the just-expired contract, which both sides are still honoring while talks continue, the casinos would have to pay $1.70 more an hour toward the union's pension fund and health insurance.

"We are in a position where we need a concessionary contract because we can't pay that type of wages and benefits and still survive," he said. "There's no way we can pick up $1.70 per hour per employee. We just don't have the money."

The casinos want union workers to contribute for the first time to their health care and pension benefits.

"What we are asking the union to do is just what all the other employees have had to do," Griffin said. "We've frozen salaries, instituted pay cuts for our salaried workers, and suspended our 401(k) years ago. Everybody's been sacrificing."

But the union notes it has sacrificed pay raises in order to preserve health insurance and retirement benefits, which it considers crucial to maintaining the kind of good middle-class living that New Jersey promised casino workers when gambling began here in 1978. Union members' pay has increased by only 55 cents an hour over the last seven years, largely because the union insisted on protecting health and retirement benefits.

Both sides say they want to reach a new contract and avert a repeat of the 2004 casino strike, which lasted 34 days. That work stoppage took place when Atlantic City was still doing well, with revenues nearing what would be their all-time high of over $5 billion a year before casinos started popping up in Pennsylvania.

The union and the casinos say they realize how much more a strike this year would damage an already fragile resort.

"We all realize the industry is in a precarious position and that a strike would hurt not just the industry but the entire community," McDevitt said. "But they need to be like the Borgata and improve their product to compete with new competitors and not try to get profits by destroying their workers."

Griffin said the talks, while difficult, have not been confrontational, and he credited McDevitt with keeping the tone professional.

"I expect we'll get a contract worked out, but because the situation is so tough, it's taking much longer to do it than it normally would," he said.