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Saturday, October 1, 2022

‘We are still struggling’: Las Vegas economy is a funhouse mirror of the strange US conditions | US economy

In the rotating restaurant at the top of the Strat hotel and casino, guests can once again enjoy $20 cocktails or a $90 shellfish display for two while taking in the expansive views of downtown Las Vegas from its landmark tower. After the Covid shutdown, Vegas is back in business. But not everyone seems happy, or sure how long it will last.

On a recent afternoon, just out of view of the hotel’s 1,000-plus feet (350-metre) spike, a couple of hundred hospitality service workers were gathered in a nearby car park. In baking 90F ( 32C) heat, speakers told the workers that they must fight to get improved contracts and controls for soaring rents. “Sí, se puede” – yes, we can – they shouted outside the headquarters of Nevada’s powerful Culinary Workers Union.

While the housekeepers, chefs and other workers sang and chanted through the meeting, there was no disguising a deep sense of anger about their working conditions and the direction of the economy.

A cursory scan of Nevada’s economic statistics would suggest that life has got better recently for its members. Unemployment hit 30% in Las Vegas in April 2020 when Covid closed the city down – the highest rate in the nation. Now it’s 5%, higher than the national average but still a huge improvement.

Las Vegas has been on a roll recently. Few cities were hit as hard financially by the pandemic. Now the tables are open again, gambling revenues are at new highs, hotel occupancies are climbing, conventioneers are back in town. But the mood is strained. Worker after worker said they were still feeling the effects of cuts made by their employers during the pandemic and were now suffering as inflation drove up prices and wages failed to keep up.

“Everything is going up. Gas, food, rent, everything,” said Gladis Blanco, a housekeeper at the Bellagio. “But not our wages. It’s getting better for businesses but not for us: we are still struggling.”

Woman in sunglasses wearing red holds a sign calling for unity.
Gladis Blanco, a housekeeper at The Bellagio hotel in Las Vegas, attends a Culinary Workers Union meeting in the city. Photograph: Mikayla Whitmore/The Guardian

In many ways, Vegas holds a funhouse mirror to the deeply strange US economy. Nationally, the unemployment rate is 3.6%, close to a 50-year low. Consumers are spending and wages are rising. And yet supply chain problems persist, businesses complain they can’t get staff, workers are angry about how they were treated during the pandemic and after, and tourists are unhappy with shortages and poor service.

Everyone is worried about inflation – rising faster than wages for many – and interest rates. Looming over all this is the threat of a recession – one likely to be felt first in a city reliant on freewheeling spending, which dries up as quickly as spilled water on the hot Las Vegas Strip in leaner times.

“It’s becoming a more delicate situation every day,” said Brian Gordon, principal of Las Vegas-based economic analyst Applied Analysis. “Las Vegas was ground zero for what the pandemic meant: casinos had never shut down before,” he said. “Right at the time when the recovery is taking hold, global economic factors are taking a hold. Global inflation, supply chain challenges, rising interest rates, all of that is putting downwards pressure on spending,” he said. “It’s a very unique time.”

In five short months, Joe Biden’s weird good/bad economy will define the US midterm elections – especially important in swing-state Nevada, which only narrowly backed the president in 2020. But bigger tensions will remain. The pandemic highlighted a schism between America’s workers and their bosses, one that has created a wave of union organising not seen in a generation – and that schism appears to only have widened since the pandemic was unofficially declared “over”.

This lack of trust is broadly felt across the US. Some 42% of Americans told Gallup they were “very dissatisfied” with the size and influence of major corporations in 2022, up from 36% in 2019.

People wearing red t-shirts outside at a rally
Supporters of the Culinary Workers Union participate in a rally in Las Vegas. Photograph: Mikayla Whitmore/The Guardian

At the union rally, workers argued that their employers had taken advantage of the pandemic to lay them off and were now wanting to call them in on short shifts to save money, even as business boomed.

James Loreto, 51, has worked as a food server at the Mandalay Bay hotel for 21 years. He was laid off in March 2020 and now, while he is officially back at work, he is on call for shifts. Some weeks he works two days, sometimes five. “I have to sit by the phone. I can’t do anything,” he said. “All that time, all those years – blood, sweat, tears – and I’m still struggling to make my hours every week,” he told the crowd.

Like many workers at the rally, Loreto said businesses seemed to be doing well “post-Covid”, but workers not so much.

“The casino is packed at the weekend and business is resuming, and yet there are still so many of us struggling to make payments to cover our healthcare,” he said.

Meanwhile business executives “are still selling, buying, expanding and using their money so they can drive around looking nice and sharp while you and I are out here in this heat”, he said.

A graphic showing how the US median wage has steadily declined throughout the pandemic after reaching a high in early 2020.

The culinary union – which represents 60,000 members in Las Vegas and Reno – is pushing for legislation to cap rent rises, which have been as much as 40% in the city. It is a force to be reckoned with, knocking on 650,000 doors in the last election and claiming credit for Biden’s narrow victory in a swing state.

It will be out in force to back progressive candidates again in the upcoming elections, hoping for structural change. Similar battles will play out across America as the election cycle spins faster.

Over at the Las Vegas Chamber of Commerce, there are similar concerns about the economy but very different views on what has gone wrong and what can be done about it.

A man holding a red sign
A supporter of the Culinary Workers Union participates in a rally in Las Vegas. Photograph: Mikayla Whitmore/The Guardian

Its president, Mary Beth Sewald, will never forget how the pandemic closed Vegas down. “I have never seen the like. It was actually a very scary and sad time,” she said. “Everything was shuttered. Locals were walking, riding their bicycles down the Strip. It was surreal,” not a word to be taken lightly from a woman who lives in a city with a fake volcano, a pyramid and wedding chapels filled with Elvis impersonators.

Now that the lights are back on, Vegas is still going through strange times. “The demand has come back but a lot of restaurants, the larger properties, don’t have the employees to be able to handle the amount of demand,” she said.

Tourists agree. Friends Simon Payne and Nick Wadia, over from the UK for a golf and gambling holiday, have been very disappointed with Vegas hospitality. “We’ve not once seen a housemaid. I had no towels,” said Payne. When they had interacted with staff, they had been unhelpful and ill-informed, they said. “They just seem really unhappy in their jobs,” said Wadia.

Nor are they impressed with the prices. “I paid $8 (£6.40) for a coffee that is £2.50 ($3.15) at home. Water was $7.90.” The only thing they found cheap was gas: it’s now more than $5 a gallon in Nevada, a huge rise for American consumers and up from $3.60 a gallon a year ago, but still far cheaper than in the UK.

A man wearing a red shirt stands for a portrait
James Lareto worked as a food server at the Mandalay Bay hotel in Las Vegas for 21 years. He lost his job in March 2020 and is now back at work, though he is on call for shifts. Photograph: Mikayla Whitmore/The Guardian

Sewald described Vegas’s hiring problem as a “headscratcher”. The government stimulus cheques had gone but, she said, people didn’t want to work. Childcare was a big issue and the chamber had been working on helping with that. But something bigger may be happening. Employers speculate that the pandemic has reordered priorities for many, particularly millennials.

“I think there is a certain portion of the population saying work and money is not our priority,” she said. “I speak to our members and they say we can’t find anyone who will come to work and take these jobs.”

She believes there may be worse to come. The lack of staff has been compounded by inflation, which is hitting small businesses hardest.

“It’s kind of a perfect storm,” she said. “When you consider inflation, supply chain, lack of workforce, what else could you have? The cost of doing business has gone up dramatically and immediately; now, with inflation, those costs have gone up even more.”

For Sewald, the answer is less regulation, not more. The chamber successfully lobbied to kill off 85 bills it argues would have increased costs on business in the last legislative session and stands ready to do it again. “A lot of our legislators are well-intentioned but they don’t understand the unintended consequences of legislation.”

The chamber’s position will set it at loggerheads with the Culinary Union come November, another fight between employers and employees both struggling with the same issues but fighting from opposing sides.

Whichever party wins the election in November will inherit an economic landscape as divided as the political one, and an economy that may be turning for the worse.

Lareto fears for the future of his children. “Man, it brings me to tears,” he said. “I have an 18-year-old and a 21-year-old. Their dreams are being destroyed, something needs to be done. I see a lot of empty houses, people being displaced, people sleeping in cars … We have got to do something and we have got to do something now.”

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