Last spring, the Covid-19 pandemic slammed the door shut on businesses across the U.S., and kept them closed for many months.
Perhaps no industry was harder hit than hospitality, including entertainment and gaming, from Las Vegas to Atlantic City and most every place in between. Dealers? Gone. Wait staff? Gone. Housekeepers? Gone. Bartenders, chefs, desk clerks, pit bosses? All were left out of work for extensive periods of time.
Nevada, with its tourism-based economy, took the brunt of it. Over the past tumultuous year, employers did all they could for as long as they could to lessen the financial impact on workers, according to Virginia Valentine, president of the Nevada Resort Association. Employers extended health benefits, paid wages and established employee assistance funds.
But the pandemic shut down the Silver State for 78 days. When casinos reopened last June, jobs didn’t rush back, because properties were operating at reduced capacities, ranging from 25 percent to 50 percent. According to U.S. Bureau of Labor statistics for the Las Vegas-Henderson-Paradise area, the number of jobs in leisure and hospitality in March 2021—a year after the pandemic hit—came to 201,100, 30.8 percent fewer than the year before.
With a more diversified economy, Northern Nevada is less reliant on tourism for its solvency. As a result, the economy there has rebounded more quickly. Reno and Lake Tahoe also serve more regional drive-in customers and have a strong base of local patrons.
But Southern Nevada’s economy is driven by trade shows, meetings, conventions and special events, and also depends more on air travel and international visitors. “All of these segments are taking more time to recover,” said Valentine.
The Atlantic City Story
Atlantic City has seen similar struggles. At the end of 2020, the work force at the Borgata Hotel Casino & Spa totaled 3,600, as compared to more than 5,550 at the end of 2019. In February 2021, the tourism industry as a whole in the resort employed 5,200 fewer employees than the prior February. And that’s more than six months after casinos reopened in July.
Covid restrictions, including a long-term ban on indoor dining, kept the employee rolls down. But figures for this March showed about 21,300 jobs in Atlantic City, including 15,250 full-time positions, a slight increase over February figures.
And with summer fast approaching, employment should approximate pre-pandemic levels. But employment is returning more slowly than expected, even with job availability, said Jane Bokunewicz, coordinator of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at New Jersey’s Stockton University.
“The types and distribution of jobs throughout a property may change,” she said. “The need for fundamental jobs like housekeeping and food service will remain a constant, but there will likely be some shift in how other personnel are deployed. Investment in both gaming and non-gaming amenities will also create new employment opportunities.
“It’s impossible to say when employment will reach pre-pandemic levels, but it almost certainly will.”
’UI Discouragement’ or Something Else?
So, why aren’t more workers returning to the fold? The answer is “complicated,” said Oliver Cooke, Stockton associate professor of economics. Factors include a continuing fear of Covid, childcare constraints, J-1 visa problems for some foreign workers and to an extent, the bonus unemployment insurance (UI) that is still available to many.
“There’s been heated national debate over the unemployment insurance issue for several weeks now,” Cooke said. “Is the ‘UI discouragement effect’ possible? Sure. But, I tend to think it’s overstated.” To fill unfilled jobs, higher wages can’t hurt, he added. “But if the other issues play a role, higher pay won’t matter.”
Cooke described April hiring as robust nationwide in leisure and hospitality. Another positive sign is that first-quarter wage growth returned to levels last seen in the fourth quarter of 2019. “Neither of these two items suggests that UI is a major culprit,” he said. “The reality is that the economy ground to a halt and has come back rather strongly. So there’s real competition for labor right now.”
First-quarter results year-on-year show the Atlantic City labor market remained down, while Cape May County to the south was up, he added. “If unemployment insurance was a real issue, we’d expect to see similar trends in both metro areas—but we don’t.”
The industry itself could also be hesitant over whether the expected summer demand proves itself through early June. More data might clarify the situation, Cooke said.
Back in Nevada, according to Valentine, “Every day, resorts are adding back more employees and helping to drive down the area’s unemployment rate, which is a positive sign for our economic recovery. The resorts, as with other businesses, continue to focus on reaching out to furloughed and laid-off employees in the hope of bringing them back.
“We’ve heard that there are a variety of reasons for people not coming back to the jobs they once held in any industry. As some people decide not to return, resorts are actively recruiting for those open positions through job fairs and hiring events.”
‘Sweetening the Pot’
David Schwartz, associate vice provost for faculty affairs at the University of Nevada Las Vegas, said, “I imagine that if there’s a labor shortage, they’ll have to raise wages or otherwise sweeten the pot for applicants.”
It happened recently at the Gun Lake Casino in Michigan, which raised the minimum wage to $14 effective June 1—an increase of 30 percent at a property that hopes to hire an additional 200 employees. Tribal Chairman Bob Peters said the decision was made because “the past year has presented all of our team members with unique circumstances and an ever-changing environment.”
For resort areas like Las Vegas and Atlantic City, a lack of trade shows, conventions, special events and headliner entertainment has also suppressed employment, Schwartz noted. “That would make sense. Those are labor-intensive functions, and having them return will help with resuming full employment.”
The problem is that conventions and trade shows require lengthy planning and a long lead time from booking to event, and there isn’t much that can change those dynamics.
In Las Vegas, in particular, the industry also needs those international travelers who “tend to stay longer and spend more than a domestic leisure visitor or a business traveler,” Valentine said. “International travel will depend on the vaccination rate in other countries and the return of international flights, which may take some time.”
Still another factor is a decrease in the number of employees due to technological advances. The phenomenon grew out of concerns about sanitization and other risks caused by Covid-19. The pandemic has “expedited the adoption of touchless or contactless technology as guests have become more comfortable using them,” Valentine said.
Other technologies include mobile check-in and digital room keys, virtual menus with QR codes, virtual waitlists where patrons get text updates, ticketless and remote event registration and virtual concierge services—all innovations that mean fewer live bodies. “But hospitality employees will always be a critical component of the guest experience,” Valentine said. “No one else can deliver world-class customer service like we do.”
For employers hiring, it’s a numbers game, added Bokunewicz. The number of food and beverage employees is determined by the number of dinners served. The number of table games opened is determined by the number of players wishing to play. And the number of hotel rooms serviced is determined by the number of overnight guests.
“As business volumes return to pre-pandemic levels, we’ll have a better idea of what, if any, lasting changes operators are making to their staffing levels,” Bokunewicz said.
In Nevada, the legislature has recently pass and the governor has signed “right-to-return” legislation, a law that would require employers to give priority to former workers who want their old jobs back, rather than hiring new staff members, possibly at lower rates.
Valentine called the idea counterproductive and said it would place “an arduous burden on employers through needless, time-consuming requirements that will significantly slow down rehiring.
“Nevada’s largest industry and economic engine continues to navigate the challenges created by the pandemic,” she said. “Now is not the time to create more obstacles to getting Nevadans back to work.”
Amid all the confusion, adaptation and readjustment, there are encouraging signs, she added. “We’re seeing the pent-up demand for the entertainment and attractions Nevada offers and bookings for the second half of the year look good, so it depends on business levels.
“But predictions are difficult. It’s been a devastating year, but encouraging signs that point to better days ahead.”
Meanwhile, an Atlantic City shop manager, Alex Rivera, told the Press of Atlantic City, “Everyone likes collecting unemployment. People don’t want to have regular jobs anymore. During the quarantine, people started being creative, following their other talents and pursuing their dreams.”