A controversial study finds that Indian casinos are good for low-wage workers but unlikely to produce more high-wage earners.
A study of tribal casinos shows a checkered pattern of benefits and drawbacks for those on the reservation. William Evans and Wooyoung Kim found that when casinos open, local wages and employment rates improve, but drop-out rates increase and rates of college enrollment tend to decline.
Evans, an economist at Notre Dame University, presented their paper “The Impact of Local Labor Market Conditions on the Demand for Education” in May at the Harvard Kennedy School.
Examining long-form responses to the 1990 and 2000 census, Evans and Kim looked at data from 265 Native American tribes. Of that group, 142 tribes “had opened a Las Vegas-style casino by the end of 1998,” when the Indian Gaming Regulatory Act passed, permitting gambling on tribal lands in most states. “The vast majority of Indian reservations and their casinos,” the scholars write, “are in rural areas.”
Evans and Kim described the sudden boom in Indian casinos as “an economic shock” that transformed the labor market on many reservations, and they analyzed consequential changes in employment, in wages — and in the demand for education.
Looking at 25-40 year olds, 1990 and 2000, the scholars found no significant change in employment rates on reservations without casinos. But on Indian lands with casinos, among people in this same age group, they found a 2.3% percentage increase in employment generally, a 6% increase in full-time workers, and “a 3.3 percent increase in real wages.”
Evans and Kim noted that more job openings and higher pay for low-skilled work “may increase the opportunity cost of attending schools, thereby enticing young adults out of school and into the labor market.” And comparing the educational status of young people on reservations with and without casinos, they found just this result.
Between 1990 and 2000, young adult Indians living on reservations with casinos “had large declines in high school graduation rates,” the scholars found. “For male Indians, high school graduation rate drops by 9.6 percentage points for 20-24 age group and by 4.0 percentage points for 25-29 age group.” The effect was even larger among young Native American women. For women 20-24, high school graduation declined by 11.5% with establishment of a casino, 9.3% for the group age 25-29. The scholars conclude, “This is clear evidence that favorable labor market conditions lead Indians to drop out of high school.”
Research about the impact of casinos on Indian people and communities is politically charged, and many people in Indian Country take issue with the these findings. Ernie Stevens, Oneida tribe, chairman of the National Indian Gaming Association, reports that most tribal casinos require employees to earn their GED’s within six months of employment and support ongoing training and education for employees. Some casinos require employees to earn associate degrees, according to Stevens.
Kate Spilde of San Diego State University, a former research associate for the Harvard University’s Kennedy School of Government, has also worked as a researcher for the National Indian Gaming Association. Her study for the Center for California Native Nations, based on the same census data Evans and Kim used, reached a different conclusion. Spilde found an increase in people receiving high school degrees among gaming versus non-gaming tribes. She says that it is important not to view reservations and Indian communities as islands; and her analysis includes what she describes as “spillover effects” outside of the immediate community.
Evans and Kim acknowledge that their measures of schooling leave out those tribal members who may have left the reservation for higher education elsewhere. “Some of the younger people not on the reservation at the time of the census may be attending college,” they write, and “possibly some of the older people used the benefits of a higher education to exit reservation life.” Even so, Evans and Kim assert “there is a large and pronounced negative impact of casinos on the educational attainment of those who stayed on reservations.”
The scholars compared their findings with a recent study of the employment and educational effects of boom/bust cycles in coal mining regions of Kentucky and Pennsylvania.
Dan Black and his co-authors found that during the coal boom of the 1970s, earnings of high school dropouts increased relative to incomes of high school graduates; under these conditions, more students in coal-producing counties left school to take advantage of a plentiful job market. When the coal boom subsided in the 1980s, and relative earnings of dropouts declined, high school enrollment increased in coal mining communities. Black et al. conclude that “a longterm 10% increase in the earnings of low-skilled workers could decrease high school enrollment rates by as much as 5–7%—a finding with implications for policies aimed at improving low-skilled workers’ employment and earnings, such as wage subsidies and minimum wage increases.”
Similarly, Evans and Kim’s analysis showed that most of the gains in wages and employment rates on reservations with casinos “were among low-wage workers.”
As a tourist industry, casinos primarily generate jobs for cooks, maids, and other low-wage service employees. A 2005 study by Connecticut’s work force development office on the impact of newly built casinos on wages in the southern part of the state found “From 1990 to 2002, southeastern Connecticut lost 10,000 manufacturing jobs with an annual average wage of $67,000, and gained 20,000 casino jobs with an annual average wage of $33,000…not the kind of employment Gov. Patrick had in mind when he vowed to create 100,000 jobs.”
The Evans/Kim study likewise should have policy implications for tribes and other governing authorities that might be considering whether, in a post-manufacturiing economy, it makes sense to shift from smoke-stack chasing to mattress chasing.
Indian nations netted $16.3 billion from casinos in 2003. The Navajo nation, after twice voting down casino gambling, got into the gaming business too in 2008.
If “Casinos are inevitable,” as John W. Carroll Jr., of Detroit’s Regional Economic Partnership contends, and Indian tribes, for now, possess a competitive advantage in establishing them, tribal governments have a serious problem: as things stand, “better” seems to be keeping young Indians from their “best.”