Around 18,000 MGM Resorts International employees were laid off at the company’s casinos last week as the Las Vegas-based gaming giant struggles with capacity reductions and weak demand stemming from the Covid-19 pandemic.
The job cuts, which took effect August 31 and encompass roughly 25 percent of the company’s U.S. workforce, had been forewarned as early as May in accordance with federal regulations.
Still, coming as they have three months into the casino industry’s nationwide return to business, they provide another clear indication that the recovery will be slow and painful, particularly for operators like MGM with major exposure to Las Vegas.
The casino mecca continues to suffer from drastic declines in air travel, the continued closure of showrooms, nightclubs, bars and many restaurants and the disappearance of the convention trade. Total visitation to the city was down 61 percent in July, the latest official numbers available. Hotel occupancy has fallen by nearly half and is down to around 35 percent midweek.
While it’s not known how many of the layoffs occurred in Las Vegas, MGM’s stature as the city’s largest employer and the largest private-sector employer in Nevada, qualifies the losses as a “significant economic event,” according to Jeremy Aguero, principal of Las Vegas-based economic research firm Applied Analysis.
“The magnitude of that impact will be a function (of) how many people are laid off and for how long,” he said.
“We must always be mindful that the primary motivation for nation-leading population migration into the Las Vegas metropolitan area has been the availability of quality jobs,” Aguero said. “If the Covid-19 crisis is prolonged, many workers may have no other choice but to seek out employment opportunities in other markets.”
MGM said the fired employees will continue to receive health benefits through September 30 and could be eligible through the end of November for assistance from an MGM Employee Emergency Grant Fund, which has distributed around $12 million since the pandemic hit in March.
The company said also that those let go will remain on a list for regaining their jobs and seniority once business returns to something approaching pre-pandemic normalcy.
Observers, however, don’t expect that to happen any time soon.
“Based on current trends from the state, I do not see (business levels) changing in the near future,” said Brendan Bussmann, director of government affairs for Global Market Advisors, an industry consultancy.