A U.S. bankruptcy judge's decision last week to allow the
Trump Taj Mahal Casino in Atlantic City to jettison a traditional
defined-benefit pension and company-sponsored health insurance could spell the
end of historically solid benefits for low-paid casino workers.
Unite Here Local 54, the union targeted by Trump
Entertainment Inc., Taj Mahal's parent company, said every worker in Atlantic
City is under siege by billionaire investor Carl Icahn, who controls Trump
Entertainment through the roughly $290 million of debt he holds.
The consequences for the casino workforce in Atlantic
City could be huge.
"No other property owner is going to want to pay
several dollars more an hour than Icahn is paying at the Taj," said Ben
Begleiter, spokesman for Local 54, estimating the hourly cost of benefits.
Unite Here represents about 1,100 Taj Mahal workers.
Icahn's Tropicana Casino & Resort, which he bought
out of bankruptcy in 2009 for $200 million, withdrew from the Unite Here
pension in 2012, a preview of what was coming for the Taj Mahal.
Most Atlantic City casino employees represented by Local
54 are working under contracts that expired last month but received six-month
extensions.
Taj Mahal and Tropicana - the two casinos controlled by
Icahn - were the only two that refused the extensions, according to union
officials.
Trump Entertainment told U.S. Bankruptcy Judge Kevin
Gross that the company needed $14.6 million in annual savings from its contract
with Local 54 to have any chance of emerging from bankruptcy.
Gross ruled Friday, but on Monday released his detailed
opinion, which showed he was convinced that the union was more focused on
protesting the bankruptcy maneuver than on negotiating a new agreement.
The bankruptcy plan also hinges on local property tax
savings and significant benefits from the state - both of which face stiff
political opposition.
Kevin Ortzman, a Caesars Entertainment Corp. executive in
Atlantic City who is also president of the Casinos Association of New Jersey,
could not be reached for comment Monday about the impact of the bankruptcy-court
decision on the cost structure of other Atlantic City casinos. Ortzman runs
Caesars and Bally's.
Health benefits and pensions are a major cost to casinos
in Atlantic City, where there has historically been a level playing field in
terms of labor costs because of a large union presence, Begleiter said. Many of
the casinos have workers represented by three or more unions.
Excluding the four Atlantic City casinos that closed this
year - the Atlantic Club, Showboat, Revel, and Trump Plaza - the industry spent
at least $72 million on health benefits and pension contributions in 2013,
according to financial filings with the New Jersey Division of Gaming
Enforcement.
The cost for five casinos with comparable data ranged
from 2.4 percent of net revenue at Harrah's to 8.1 percent of net revenue at
Resorts.
The $72 million does not include an undisclosed amount
spent by Borgata on health insurance. Borgata is by far the resort's biggest
casino in terms of employment and revenue, with 6,018 employees in August and
$696 million in revenue last year. Borgata said it spent $7.3 million on union
pension plans.
The financial filing by Taj Mahal covering 2013 does not
say what the casino spent on health insurance for unionized employees, but it
says the casino contributed $4.18 million to union pension plans. In a
bankruptcy document, the company said it contributed more than that - $4.61
million - to the Unite Here pension alone in 2013.
Begleiter pointed out that his union does not account for
all health-care and pension costs. However, in the case of pension costs, Unite
Here's badly underfunded pension accounted for at least three-quarters of the
pension costs reported by the casinos.
Bob Bruno, a union expert at the School of Labor and
Employment Relations at the University of Illinois at Urbana-Champaign, offered
a positive note.
He said Friday's bankruptcy ruling on the Taj Mahal union
contract does not mean that pension and benefits will automatically disappear
for Atlantic City's casino workers.
"It doesn't absolve the employer in each different
setting to establish what their economic ability to pay really is," Bruno
said.
Source: Philly.com
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