Unemployment – have Indian casinos helped solve the problem?

by Clara NiiSka

Expansion of casino gambling in Minnesota is being considered seriously by the State legislature, again.  The House Committee on Governmental Operations & Veterans Affairs is holding hearings on nine gambling-expansion bills currently before it.  The hearings are being held on Friday, February 22, in the Basement Hearing Room.

The current crop of bills propose a range of state-sponsored gambling enterprises.  The bills presently being heard by the House committee are summarized in the box, “Gambling bills before the Legislature,” which accompanies this article.

Obviously, bill sponsors hope that the proposed casinos, video lottery terminals, sports pools and other Minnesota gambling enterprises will increase government revenues without raising taxes.  Some see potential state income from gambling as a sort of ‘windfall,’ making it possible for the State to fund projects and programs for which taxpayers are likely to resist a direct levy.  Others see it as a ‘bailout,’ resolving the state’s projected budget shortfalls without cutting state services or raising taxes.  One knowledgeable source sharply criticized such state fundraising strategies as “eroding” the social contract between taxpayers and state upon which democracy is founded: absolving both the state and citizenry of the mutual responsibilities inherent in tax-funded state programs.

In addition to the envisioned multi-million dollar revenues from state-sponsored gambling, a wide range of “pros” and “cons” have been voiced by gambling advocates and opponents.  The issues are not simple.  The Friday, February 22nd legislative gambling hearings will be held after this newspaper goes to press; hopefully the House Committee will consider the issues carefully and Press/ON will have a detailed report on at least some facets of the complex issues around state-run gambling enterprises next week.

“Jobs, jobs, jobs” – especially increased employment prospects in impoverished rural areas – is among the often-voiced arguments advocating Indian-run gambling enterprises.  Do casinos actually increase employment, or do they merely move jobs from one sector of the economy to another, shifting jobs from one group to another rather than creating real economic growth?

Unemployment insurance claim rates can shed some light on the question of whether or not casinos improve the overall economy.  A chart detailing unemployment claims during the years 1989 – 2000, statewide and in the counties where most Indians reside, accompanies this article.

It would be expected that Indians would be the first to benefit from economic improvement fueled by tribally-owned gambling enterprises.  Yet, both the number of Indians applying for unemployment insurance and the percentages of Indians among the total applicants for unemployment insurance have climbed since high-stakes gambling became widespread on Indian reservations.

In the year 1990, there were 1,628 Indians who made an initial claim for unemployment insurance.  After ten years of casino operations (and millions of dollars poured into job-training, economic development and similar programs), 2,067 Indians applied.  The increase in the rate of Indian unemployment claimants compared to that of the general workforce – the percent of Indian applicants – is more striking: in 1990, Indians were 1.49% of the statewide total.  By the year 2000, Indians were 2.85% of the total.

Statistics detailing applications for unemployment insurance are only one economic indicator – and no statistical set is capable of telling the ‘whole story.’  In order to apply for unemployment insurance, one must have had a job and lost it – and some of the increase in Indian people’s applications for unemployment insurance probably reflects the fact that the number of jobs to lose has increased on reservations since the late 1980s.  On the other hand, the percentage of Indian unemployment insurance applicants increased sharply between 1992 and 1994 (from 1.45% to 1.94%), and then made another substantial increase between 1998 and 1999 (from 2.03% to 2.23%).

Have government-operated gambling operations been the ‘New Buffalo’ that proponents claimed they would be as Indian casinos were being advocated and established in Minnesota?  An Indian unemployment claim rate at least 165% of what it was before the casinos began operation is one indication that the gambling may not be such a lucrative venture for government after all.