Las Vegas world’s fifth worst economy, Atlantic City cuts work force by 20%

vegas-fifth-worst-economyA study of 150 metropolitan areas around the world claims that Las Vegas is the fifth worst in terms of economic performance. The study, conducted by the Brookings Institution and the London School of Economics, paints a seriously bleak picture of a once mighty economy. In the years leading up to the economic recession, Las Vegas ranked as high as 14th on the same list, but plummeted to 128th by 2008/09, and fell further to 146th this year. Only Dublin, Dubai, Barcelona and Thessaloniki ranked lower.

Between 1993 and 2007, Las Vegas added jobs at an annual rate of 4.9%, thanks to booms in the construction, real estate and gaming sectors. But since then, the jobless rate has hit 14.1% and the prospects for improving this figure are bleak, especially with the city ranking in the bottom third in terms of workers holding college degrees. More dependent on tourism and consumption than virtually any other city in America, Vegas can’t hope to recover until the rest of the nation feels safe enough to indulge in a little discretionary spending, and the rest of the nation simply isn’t there yet.

Las Vegas’ salvation may come from targeting tourists from outside America’s borders, in countries such as China, India and Latin America. Vegas’ gaming properties already view baccarat as the lone bright spot on their gaming revenue pie charts, but Vegas will have to figure out a way to encourage visits from middle class Asian consumers, not just billionaire whales with money to burn.

The story is much the same in America’s other great gaming jurisdiction. Due to the lingering effects of the recession, as well as increased competition from neighboring states’ gaming establishments, Atlantic City’s 2010 gross gaming revenue is expected to fall below that of the $3.75b it tallied in 1995. As a result, AC casinos have trimmed 20% of their workforce in the last five years, according to the New Jersey Casino Control Commission.

The peak year for total casino employment in AC was 1997, when 51,560 workers made their bones keeping the casinos going. Over the next ten years, annual job cuts averaged between 2-4%, but that number ramped up to 8-9% in 2007 with the arrival of Pennsylvania casinos and the economic downturn.

However, there are those who say the picture isn’t as bad as those numbers paint, pointing to the casinos’ expanded use of outside contractors to handle jobs in the bars and retail shops on their premises. In other words, these workers may no longer be listed on a casino payroll, but that doesn’t mean they’re not working in casino-related fields. It’s a nice theory, but the lines at the unemployment offices and U-Haul outlets suggest the bleeding is all too real, and likely to continue for the foreseeable future.