Icahn and union face off over benefits

Billionaire Carl Icahn is facing intense pressure to reinstate health benefits and employee pensions at the Taj Mahal casino in Atlantic City. On Tuesday August 25, Local 54 of the UNITE HERE union told Icahn he had ‘one last chance’ to restore benefits and avoid a strike. The union also held a ‘preparation event’ to gather materials and train workers for the potential strike.

The benefits were cut by Trump Entertainment Industries in October 2014 after bankruptcy judge Kevin Gross gave the company permission to impose concessions. Trump Entertainment said the concessions were necessary to avoid closing the casino and claimed that without them it could be shut down within a month. The Taj Mahal’s woes are part of a greater problem facing Atlantic City; casino revenues have fallen from $5 billion in 2006 to $2.8 billion in 2013 as business is lost to nearby states.

UNITE HERE immediately came out in opposition to the ruling.

“The decision today will certainly enrage the workers who have relied on and fought for their health care for three decades,” said UNITE HERE Local 54 President Bob McDevitt. “We intend to continue to fight this both in the courts and in the streets.”

In the year since the cuts, ownership of the Taj Mahal has been slowly transferring to Icahn, who McDevitt claims has a “long history of eliminating, reducing or freezing worker benefits which sometimes saddles government agencies with the burden of cleaning up the mess.” Icahn is coming into ownership of the Taj Mahal through Trump Entertainment’s bankruptcy proceedings.

In an open letter published in March 2015, he called UNITE HERE a “dysfunctional system that enriches those in power to the detriment of its own members.” He went on to blame the union for the difficulties faced by casinos in Atlantic City and claimed that UNITE HERE leadership refused to negotiate with the Taj Mahal. Icahn has also said that the cut benefits were ‘unaffordable’, and that he will close the Taj Mahal if the appeals court orders benefits reinstated.

However, the casinos aren’t the only ones facing problems in Atlantic City. In 2008, Local 54 had nearly 16,000 members; that number dropped to 10,700 in 2014 (a decrease of nearly one third). The Taj Mahal employs around 1,000 of these members. The chapter was last involved in a strike in 2004, when roughly 10,000 workers walked out of area casinos. McDevitt led that strike, an experience that will surely be valuable if Local 54 hits the Taj Mahal with a strike. He’s unfazed by the membership drop, saying “Our numbers have gone down, but so have the number of casinos.”

Shrinking membership numbers aren’t the only thing plaguing Local 54. The recent economic downturn has left Atlantic City with rising unemployment rates and dropping casino revenue, two factors that the Taj Mahal management can use to their advantage. Strikes lose much of their power in times of rampant unemployment; when employees walk out, the company can simply hire more. The loss of casino revenue means that local government is more likely to support the casino. Atlantic City runs on the gambling business and although local officials have supported labor organizations in the past, economic reality may turn their hand.

Luckily for UNITE HERE Local 54, they aren’t facing this challenge alone. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest union federation in the United States, has called on its allies to boycott all Atlantic City casinos owned by Icahn. The resolution read as follows:

“Be it further resolved, that the New Jersey State AFL-CIO and Central Labor Councils call on all its member organizations to support the workers at the Taj Mahal by not scheduling conventions, retreats or meetings at either the Taj Mahal or the Carl Icahn-owned Tropicana Casino in Atlantic City.”

Support from the AFL-CIO is not surprising, but the reasoning behind it runs far deeper than inter-union solidarity. Historically, health insurance and pensions have been an area of great success for Atlantic City casino unions. If Trump Entertainment and Icahn successfully cut these benefits it would be a stunning blow to labor organization in the Atlantic City gambling industry. Other companies could point to this precedent in their own negotiations with the union, a domino effect feared by UNITE HERE Local 54 and their allies. Local unions have enough trouble extracting concessions from casinos as it stands, and this additional level of power could bring trouble to their negotiations for years to come.

Local 54 and its allies clearly don’t intend to go down without a fight. 70 people (including McDevitt) were arrested at a demonstration in June that brought protesters from around the country.

“I would take a thousand arrests if it would mean we win.” McDevitt said afterward.

Charles Wowkanech, president of the New Jersey AFL-CIO, addressed the crowd at the event.

“We’ve got a billionaire who’s sitting over in New York who took away our health care away, who took our pensions away and took our lunch break away. And you know what? When we’re done, we’re going to send him away.”

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1 Comment

  1. In every country, when some court declare that some company bancrupted, the problem’s came, the workers union, they will demand this and that. We can’t blame them, they need the money for life. My point is, for years, most of big company contribute to its nation (the govt) with high tax (or high campaign cost donation). But when the court declare that the company were bancrupt, the govt turn their back on. They gave no solution. They left the problems to the company.
    They act that the company’s workers are not the Citizens of their country. Aren’t they?

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