As you might have heard, unemployment’s been on the rise in Nevada. I figured it might be a good idea to take a look at the big trends behind the numbers. So I consulted the Nevada Gaming Abstract, a great source for data. With the help of my student employee, Tracy Liao, I was able to pull data from each annual report and create a master table, with stats from each year since 1990.
But that was only part of the puzzle I wanted to solve. Knowing that casinos are hiring and firing people isn’t enough: I wanted to get a handle on how productive casino employees have been over the years. So I went to another source of data, the Gaming Revenue Reports, and pulled in statistics on the numbers of slot machines and table games (these aren’t in the Abstracts, just like non-gaming data isn’t in the Revenue Reports).
As a result, I was able to determine how productive casino departments were, not only in the sense of revenue per employee, but also with regard to the number of employees per gamign position.
Here’s the executive summary of what I found:
Total payroll and revenues increased in absolute terms, with the increase in payroll out‐pacing the rise in revenues. In part, this is due to the recession; while total revenues have fallen by about 12 percent since this FY 2007 high, total payroll has only fallen about 6 percent. As a result, the percentage of revenue that payroll entails has risen slightly, mostly due to declining revenues. In general, however, the trend has been for payroll to constitute a smaller piece of casino resort revenues.
This trend is best seen in the casino department, where a variety of labor‐saving devices have made employees progressively more scarce on the floor. The financial results of the trend are evident; on a per capita basis, casinos have, on balance, reduced their labor costs by nearly twenty percent.
The decline in the total number of employees since FY 2006 (17.5%) has not matched the total decline in payroll; as a result, those employees that remain are better paid, both in absolute and relative terms, than they were before the recession.
Basically, across the state, payroll hasn’t risen as fast as revenues. Casino employees, then, are producing more, for every dollar in payroll (which also includes benefits) that they earn.
It’s no surprise that the gaming floors themselves have seen a major transformation. Ever wonder why casinos have invested so much in labor-saving technology? Because labor is expensive. In 1992, labor costs accounted for about one-fifth of all casino revenues. At their low point, 2007, that percentage was down to about 15%. In other words, casinos cut their labor expenses by about 20%, while the total number of positions increased.
Here’s the short form: from 1990 to 2009, revenues increased by about 140%. Payroll increased by 70%. Even while payroll per employee nearly doubled, revenues increased at a rate twice that of total labor costs.
I’m hoping that this report helps people better understand just where we’ve come from and where we are heading. For me, it highlights the need for economic diversification. There’s no way the casino industry is going to return to its previous employment levels, even if business starts booming again tomorrow. I’m also hopeful that other scholars and public policy folks will use the raw data to bolster their own research and analysis.