Pink slips an ominous sign for local economy

Layoffs announced Tuesday at the Mohegan Sun casino could signal more trouble for an already-battered local economy.

"This is a difficult hit for the region," said Tony Sheridan, president and chief executive officer of the Chamber of Commerce of Eastern Connecticut, after the casino eliminated 475 positions, amounting to 355 actual job losses. "It has a devastating effect on the individuals, but we all pay a price because of the psychological effect on the community."

Steven P. Lanza, an economist at the University of Connecticut in Storrs, said layoffs of such magnitude tend to have a multiplier effect as people's paychecks are reduced and many are forced to relocate.

"Though it varies by industries, you would expect that the full effect of this would be to take with it another 400 jobs," Lanza said in a phone interview. "Particularly in this industry, it is not out of the realm of possibility."

Lanza added that mass layoffs have other spillover effects as well, including downward pressure on wages as more workers compete for fewer positions. Real estate sales and prices could take a hit in the process, he added.

"It's also a signal from the casinos ... that they don't see the economy turning around soon - that it makes more sense to eliminate positions than to keep them in hopes the economy improves," Lanza said. "Of course, it also makes the economy worse, so it's a self-fulfilling prophecy."

John Markowicz, executive director of the local business development group Southeastern Connecticut Enterprise Region, said he was surprised by the announcement, figuring the economy had finally leveled off and was destined to slowly edge its way up.

"It certainly belies the theory that the casinos are recession-proof," he said.

During the last recession at the turn of the millennium, the region faced virtually none of the economic outfalls experienced in the rest of the country, thanks largely to the growth of the local Mohegan Sun and Foxwoods Resort Casino. But this recession has been different, with thousands of positions at the gaming meccas having been eliminated either through attrition or layoffs.

Sheridan pointed out this was the first mass layoff at the Mohegan Sun. Previously, he said, the casino has frozen salaries and allowed attrition to take its course as the Mohegans tried to compensate for slower gaming activity because of the recession.

"Mohegan Sun has been a very considerate employer," Sheridan said. "It was a last resort, because they wouldn't have done it otherwise."

He said the region has seen some signs of economic recovery, thanks to construction at the U.S. Naval Submarine Base, jobs returning to the Electric Boat shipyard and the stabilization of Pfizer Inc. after the sale of its former worldwide research-and-development headquarters in New London to Electric Boat.

Sheridan said this region is still "hugely dependent" on jobs in the tourism industry and has been hurt by the state's decision during a budget imbroglio to eliminate promotion of Connecticut travel opportunities.

"The fact that we're the only state in the nation that has no advertisements for the travel-and-tourism business is just flooring," Sheridan said. "This has got to be an eye-opener."

John Beauregard, executive director of the Eastern Connecticut Workforce Investment Board in Franklin, said he will be working with the state Department of Labor to provide help for laid-off workers. But federal money his organization received this year for workforce retraining already has been exhausted, he said, with a list of 700 still awaiting help.

Beauregard said he likely would apply for emergency aid to help the Mohegan Sun workers, as well as others on the waiting list. He added that dislocated casino workers looking for new careers have successes similar to those in other fields, though gaming employees are more inclined to go into the healthcare field.

Laid-off casino workers eligible for unemployment benefits need to apply to the Department of Labor and will receive payments under a complicated formula. Currently, the minimum payment is $15 a week, and the maximum $537, which will increase to $555 on Oct. 3, a department spokesman said.

"No job is safe at a time like this," said Lanza, the UConn economist. "Even diversified economies lose jobs across sectors. There's no place to hide."

l.howard@theday.com

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