Howard Gold takes a look at two, one-horse towns–Detroit and Las Vegas. Both fell down in the financial meltdown and can’t get up. Not yet, at least.
Home prices have fallen over 58% in Las Vegas from the peak in 2006, more than any other major city. More than 70% of homeowners are underwater. Unemployment was 13.3% in March and last year the state reported a population decline for the first time in 90 years.
As Gold points out, Las Vegas Sands and Wynn Resorts are making their numbers half a world away in Macau. Macau’s gaming revenue is now four times that of the Las Vegas Strip, reaching $23 billion last year.
Ironically, the “new Detroit” title Gold uses, was a favorite phrase of the Culinary Workers Union Local 226. It was always the belief that D. Taylor’s maids, bartenders and cocktail waitresses could not be moved offshore. So pile on the work rules and demands because gamblers aren’t going anywhere else, the union brass figured.
The Union picketed the Frontier for six and half years before Margaret Elardi finally sold the place to out-of-towner Phil Ruffin, who remarkably was granted a gaming license in 15 minutes when he said he would approve the Culinary contract. The rest of the corporate Strip hotel owners buckled and the Las Vegas Sands is the only major Strip property to remain non-union.
Surly employees and geriatric cocktail waitresses are the equivalent of Monday Morning Cars, vehicles made on days when absences are high and too few workers show up sober.
Legacy costs and poor quality products took GM to the abyss. It’s no different for Las Vegas.
The Las Vegas area population peaked at around two million. Detroit’s population peaked in 1950 at just short of 1.9 million. The Motor City last year was just over 700,000.
There are many more cars on the road today than there were in 1950. People in Detroit just aren’t making them.
The number of gamblers will continue to grow. But they will take their wagers elsewhere.