The 254 employees laid off by MGM International Resorts were from a variety of properties and worked in diverse positions, but they had one thing in common — none belonged to a union.
The Culinary Union, which represents some 60,000 workers — mostly on the Las Vegas Strip — isn’t thanking its lucky stars and shrugging off the fate of the laid off workers.
In an April 9 letter obtained by the Current, D. Taylor, president of the Culinary’s parent union, UNITE HERE, reminds MGM CEO and Chairman Jim Murren that “Gaming expansion in most other states was predicated on the promise of stable tax revenue and good permanent jobs…”
“We support changes that protect the long-term health of the company, including the continuation of family-sustaining wages and benefits and adequate reinvestment in the properties,” Taylor wrote to Murren. “However, we will not stand by silently if the benefits of casinos and casino jobs are imperiled by the financial engineering of hedge funds and other Wall Street firms trying to extract value by cutting service levels, slashing wages and benefits, and reducing capital reinvestment.”
Taylor is referring to demands made by activist investors such as Carl Icahn, who bought enough shares in Caesars Entertainment to secure three seats on the company’s board, and Starboard Value, which is building a position in MGM Resorts.
Murren even put one activist investor on MGM’s board.
At roughly $15 billion, MGM has the highest debt in the industry.
The company also has authorized $3 billion in stock buybacks over the last two years. Stock buybacks have increased steadily throughout the corporate world in recent years, driven in some instances by influential “activist” shareholders seeking returns. In a report on U.S. corporate buyback activity this week reported by Bloomberg, Moody’s noted that corporate debt can can hinder a firm’s ability to repurchase stocks, even as investors are demanding they do so.
On Monday, MGM announced total first quarter revenue of $3.177 billion, up 13% year-to-year and higher than analysts’ expectations. But the company’s earnings fell short, experts say.
The job cuts are part of the company’s “MGM 2020 Plan.”
MGM 2020 is “aimed at leveraging a more centralized organization to maximize profitability and lay the groundwork for the Company’s digital transformation to drive revenue growth,” Murren said in a statement accompanying the earnings release. “We are creating a streamlined, nimble organization that empowers leaders to make faster decisions. We are excited about our targeted growth opportunities in Japan, sports betting and interactive initiatives,” Murren said.
While union employees were held harmless in this round of cuts, and are likely to escape altogether from MGM’s elimination of 1,000 positions, the Culinary faces job automation as the most immediate threat to its members. In preparation, the union won concessions in 2018 designed to lessen the blow, and provide the Culinary entree to new job classifications.
“Our automation and technology language includes capturing new jobs as union jobs, workers being trained for free to do new jobs, if current union jobs are changed due to technology and automation,” says Culinary spokesperson Bethany Khan.
Employment in the U.S. is “at will,” meaning employers can fire workers at any time and for any reason, regardless of seniority. In Montana, the only exception, just cause must be given for terminating even a probationary employee.
Union workers can be fired, too, but contracts spell out the terms and other protections, such as recall procedures.
“Contracts have seniority and layoff provisions,” says Professor Ruben Garcia of UNLV. “Once you have that you have protection from arbitrary discharge. If you’re non union, layoffs don’t have to follow any seniority. It’s the same as at-will employment — being fired for any or no reason.”
In 2018, 14 percent of working Nevadans belonged to a union. That’s up from just under 13 percent in 2017, according to the Bureau of Labor Statistics. Union membership peaked in Nevada in 1996 at 20.4 percent and ebbed in 2016 at 12.1 percent.
Nationwide, one in 10.5 workers belongs to a union. Nevada’s rate of union membership is consistently above the U.S. average, according to the BLS.
And in a “Right to Work” state, too
But labor advocates say the share of union workers would be higher if not for Nevada’s so-called “Right to Work” law, which allows workers to enjoy the benefits of union contracts without paying dues.
Nevada is among 27 states that have “Right to Work” laws. The National Labor Relations Act (NLRA), passed in 1935, included union security agreements that allow contracts requiring all members to pay dues, but the Taft-Hartley Act of 1947 allowed states to prohibit union security agreements and pass “Right to Work” (RTW) laws.
Supporters say RTW enhances personal freedom and employer flexibility.
Opponents say the laws allow “free riders” to take advantage of hard-fought victories paid for by their colleagues.
The Congressional Research Service (CRS) says unionization rates in RTW states are less than half the rate in union security states — 6.9 in RTW states and 16.2 in union security states.
“It is ambiguous what portion of this difference is attributable to RTW laws, what portion is due to diverse preferences among states’ populations regarding unionization, and what portion is due to other factors,” the CRS website says.
The “free-rider hypothesis,” according to the CRS, suggests that when dues are optional, more workers decline to pay them, leading to an ultimately untenable scenario where the remaining members are called on to pay unsustainably high dues, resulting in the ultimate failure of the union.
“…right to work for less”
Nevada is the only Democratically controlled state with a “Right to Work” law on the books. But lawmakers evidently feel no compulsion to take advantage of their majority status.
“Why it’s not on the (legislative) agenda this time I don’t know,” says Garcia of UNLV. “One thing might be the fact the unions have been pretty strong in an anti-union environment.”
The Culinary Union collects dues from 90 percent of its bargaining unit, despite Nevada’s RTW law, but the Service Employees International Union 1107, which represents public and private sector employees, collects dues from only 57 percent of its bargaining unit members.
“Right to work should really be called right to work for less,” state Sen. Yvanna Cancela said via email. “It’s a destructive policy that has been used across the country to weaken unions.”
But don’t look for a repeal effort any time soon.
“I’m interested in a long term strategy to repeal Nevada’s right-to-work statutes,” Cancela said. “This session though, the immediate focus is on repealing policies passed in 2015 that diminished prevailing wage and worker protections.”
The lack of bargaining rights for state employees could be a second reason Nevada Democrats have yet to pursue a repeal of the RTW law.
“You need state bargaining rights,” said Garcia. “That’s on the agenda.”
In his State of the State address, Governor Sisolak announced he’d support allowing state workers to collectively bargain.
The governor did not respond to a request for comment for this story.
A repeal of the RTW law in Nevada would have no current benefit for public sector employees.
In 2018, the U.S. Supreme Court ruled in Janus v. AFSCME that public employees may enjoy the benefits of a union contract without paying for it, rendering America a Right to Work nation, at least for the public sector.
Presidential hopeful Bernie Sanders, who has the first campaign to be unionized, has called for a ban on Right to Work laws at the state level.
“We need elected officials and candidates at every level to get serious about speaking out for the trade union movement. This should not be an afterthought,” Sanders said. “If we’re talking about growing wages, providing healthcare to all people, having a progressive tax system, the trade union movement must be in the middle of all of those discussions,” Sanders.
Senator Kamala Harris, also a Democratic presidential hopeful, echoed Sanders while in Las Vegas on April 27.
“I’d use my executive authority to make sure barriers are not in place to do the advocacy [unions] need to do,” Harris said.
In Nevada, where a handful of companies own the bulk of hotels, laid off workers are especially hard-pressed to find work.
MGM Resorts International owns eleven properties in Las Vegas, all of which are unlikely candidates for the newly unemployed.
Those who do find work will likely be paid lower wages than counterparts in states with union security agreements, according to the CRS. But the research suggests RTW laws “have little influence on these differences.”
Nevada’s Right to Work law was first passed in the general election of 1952, by a margin of 1,034 votes out of 75,000 ballots cast, according to the Legislative Counsel Bureau.
Three repeal efforts in the 1950s failed.