Casino closings cited as damaging N.J.'s economy

The collapse of New Jersey's hospitality industry, driven by the closure this year of four casinos in Atlantic City, is one reason the state's economy is not faring as well as the nation's, an economist said Tuesday at a business forum.

"It's really a tale of two economies - the national economy vs. the state economy," said Joel Naroff of Naroff Economic Advisors Inc. in Bucks County. "If I had to give the state economy a grade, maybe I'd give it a 60 out of 100. It's not doing too well. I'd give the national economy a grade of 80."

Naroff was part of a panel, sponsored by Rutgers-Camden at the Crowne Plaza Hotel in Cherry Hill, that examined manufacturing, tourism, health care, and the economy.

National economic growth figures will be released Thursday by the federal Bureau of Economic Analysis for summer and the third quarter. Naroff said he expected around 3 percent growth.

"When you put the last six months together, it's solid, strong growth," he said. "What's happened is that the weakest links in the economy had been holding back, at least nationally. Housing targets have largely turned around. Prices are good. Starts are up. Sales are up."

One thing missing, he said, has been wage increases for the average worker.

"Worker compensation, especially when you adjust for inflation, has largely been flat over the last five years," Naroff said.

He said he expected it to change dramatically in the next year as a worker shortage sets in and businesses have to boost wages to retain workers.

New Jersey's unemployment rate is a half-percentage point above the national rate of 5.9 percent. Only Alaska lags further in job growth, Naroff said.

"It's barely creating jobs," Naroff said, citing problems in Atlantic City. "We need to revitalize an industry that was really critical to the state's growth."

A fifth casino in the Shore resort is threatening to close in November. About 8,000 casino jobs have been lost so far.

Another panelist, John Palmieri, executive director of the Casino Reinvestment Development Authority, the state agency that uses gambling proceeds for redevelopment projects in Atlantic City, didn't shy away from the resort's problems. Atlantic City's economy has been wholly dependent on gambling revenue for more than three decades.

"If you're going to build a resilient economy, you have to make it a more diverse economy," Palmieri said. "We've been focusing on broadening the economy with nongaming amenities, such as new retail destination tenants - such as Bass Pro and Margaritaville - and how to rebuild a convention center industry within the city's limits."

He noted some bright spots. Health-care provider AtlantiCare is interested in expanding, he said, while Richard Stockton College is negotiating to purchase one of the closed casino hotels.

"We know we're not out of the woods," Palmieri said. "But we're making progress."

Russell G. Grizzle, president and chief executive officer of Mannington Mills Inc. - a 99-year-old, privately owned flooring manufacturer in Salem - said his industry provided a ground level snapshot of the housing industry.

Residential sales, which Grizzle's company depends on in New Jersey, were 40 percent of what they were in 2007, before the housing and economic downturns, he said.

"The residential business is getting better, but the valley and the trough were so deep that it's been a tough struggle coming back," he said. Homeowners are deferring upgrading their homes for "other things," he said.