July 9, 2016
By Steven Wishnia
Atlantic City, NJ – The strike by some 1,000 workers at the Trump Taj Mahal hotel and casino here has entered its second week, and no deal is in sight.
The workers, members of UNITE Here Local 54, walked out July 1, trying to win back benefits and pay taken away during the casino’s lengthy bankruptcy proceedings and its takeover by billionaire investor Carl Icahn. Local 54 reached tentative agreements with four other Atlantic City casinos just before the July 1 deadline.
“This is about workers fighting to hold on to middle-class jobs from a billionaire investor hell-bent on destroying them,” Local 54 said in a statement to LaborPress July 7. The union criticized Icahn’s “intransigence.” No negotiation talks are scheduled, a spokesperson said July 8.
A federal bankruptcy judge ruled in 2014 that Icahn could eliminate casino workers’ health benefits and pensions. The result, Local 54 says, is that “half of workers at the Trump Taj Mahal are forced to rely on subsidized health insurance,” and one-third have no health insurance at all. Housekeepers, servers, and other casino workersaverage less than $12 an hour, it adds, and the wages of many have gone up only 80 cents an hour since original owner Donald Trump filed for bankruptcy in 2004. Icahn also increased the number of rooms housekeepers have to clean from 14 per day to 16.
Local 54 President Bob McDevitt told USA Today that the company’s last offer included only a minimal health-insurance plan. It would have lowered the housekeepers’ cleaning quota back to 14 rooms, but would not have restored pensions, severance pay, or paid meal breaks.
Icahn Enterprises said in a statement sent to several media outlets that it had put $86 million into the casino when no one else was willing to invest. It said the union seemed “hell-bent on trying to close this property and killing the jobs and livelihood of the other Taj employees.”
Icahn, Local 54 says, has threatened to close the Trump Taj Mahal on Dec. 12, unless the state gives him “$175 million in tax breaks.”
The union says Icahn has taken far more out of the casino than he has put in. “As the sole creditor between 2010 and 2014, Icahn extracted $350 million from the property, driving it into bankruptcy and then swooping in to take control,” McDevitt said in a June 6 statement. “He used the bankruptcy proceeding to strip Taj Mahal workers of health benefits and retirement security.”
Trump opened three casinos in Atlantic City in the 1980s, but by the mid-1990s, they were all in bankruptcy proceedings. According to a Wall Street Journal report published in January, he made $160 million in profit from them between 1990 and 1996. His casino company filed for bankruptcy in 2004.
“He always rigged it so he got paid no matter how his companies performed,” presumptive Democratic presidential nominee Hillary Clinton said in a speech in Atlantic City July 6. Now that the Taj Mahal workers are on strike, she told the crowd, “we should all support them in getting a fair deal.”She briefly visited a Local 54 picket line on Pacific Avenue.
Icahn, who made his fortune as a “corporate raider” in the 1980s, borrowing money to buy stock in “undervalued” companies and then laying off workers and selling off their assets, bought up the Trump Taj Mahal’s debt at a discount. In June 2015, he traded $292 million of it for full ownership. He has endorsed Trump for President. Clinton suggested that Trump might name him Secretary of the Treasury.
Trump and Icahn, says Local 54, “subscribe to the same slash-and-burn tactics—using bankruptcy to eliminate good jobs for workers and treating Atlantic City as their own personal cash cow instead of investing in the workers and local economy.”
The city’s troubled casinos may be beginning a recovery. Four closed in 2014, but the eight survivors reported a collective profit of $106.5 million in the first three months of this year, $25 million better than in the first quarter of 2015, according to figures released by the state Division of Gaming Enforcement in May. The Trump Taj Mahal reported first-quarter losses of $4.6 million, but said a “non-cash reorganization gain” had brought it up to a $269 million profit.
Local 54 says Icahn’s business model is “stripping workers of their benefits and stripping assets.” When he took over the now-defunct TWA airline, it says, he ended two pension plans covering 36,500 workers. When he took over the Illinois food-packaging company Vizkase in 2006-7, he ended health care for retirees in the U.S. and Canada. And when he took over scrap-metal recycler PSC Metals in 2013, he cut off health insurance for its 1,000 workers.