Economists: Automation will continue to impact service industry in Las Vegas

A Caesars Palace employee disinfects a self serve kiosk in the lobby after guests check into their room, Thursday Aug. 13, 2020.

As technology advances and the automation of jobs continues to spread, the effects will likely be more pronounced in Las Vegas, a city with a robust service-industry presence, local economists say.

John Restrepo, a Las Vegas economist and principal at RCG Economics, said the potential loss of hundreds or thousands of service industry jobs to automation would be crippling to the Las Vegas workforce.

“I don’t know if we’re focused enough on this issue,” said Restrepo, who touched on the automation of jobs during an August 31 economic outlook presentation hosted by the Henderson Chamber of Commerce. “I don’t see anything that’s being produced by groups as far as economic development strategies or discussions in public settings like this that are raising the red flag or talking about the potential impact of automation.”

In 2019, MGM Resorts International announced plans to add automated beverage systems—essentially, machines that mix and produce drinks—at some of its properties on the Strip. The concept spurred worry about bartender and server jobs going away for good.

Mike PeQueen, a partner at Hightower Securities, an investment firm with offices in Las Vegas, said awareness of how automation could affect the Las Vegas workforce had been on the rise before the pandemic, but that issues related to COVID-19 have dominated the collective local consciousness.

“Our attention has been diverted lately by more emergent things like COVID and water,” PeQueen said. “This is an existential problem for the service industry. I would say that I’d love to see policymakers further along the road of dealing with automation.”

PeQueen and Restrepo agreed that any time a recession—brought on by a pandemic or not—occurs, it’s often a catalyst for change in a given industry.

In February 2020, before the pandemic, the resort industry in Nevada employed nearly 350,000 people, according to the Nevada Resort Association. By April 2020, that number had dropped to about 205,000. The association reported that the number grew to about 300,000 by December.

“Anytime a company can do more with less, particularly if they don’t have HR issues to deal with, they’ll do it,” Restrepo said. “Look at how many McDonald’s restaurants now have kiosks that customers order from. This is all coming.”

Restrepo points to numbers from the World Economic Forum, a forward-looking think tank in Switzerland. According to the forum, the global percentage of labor done by machines—as opposed to man hours—is expected to rise to 52% by 2025. In 2018, humans accounted for 71% of all labor hours, the group estimates.

In addition to the so-called robot bartenders in Las Vegas, other indications of increased automation have popped up recently. When casinos reopened following the pandemic shutdown in June 2020, some pushed mobile check-in options. At some properties, it became possible to check into a hotel, receive a room and enter a reserved room without ever interacting with a person.

Driverless vehicles are also widely expected to start sharing roadways in the U.S., which would hurt taxi and ride-share drivers. Nuro, a company that produces driverless vehicles for grocery and prescription deliveries, announced plans last month to spend $40 million for a manufacturing facility in Las Vegas.

“Low-wage routine jobs are the first that get replaced by automation,” Restrepo said. “Then there’s mid-skill level jobs that are going to likely go away due to advances in artificial intelligence.”

Clark County Commissioner Tick Segerblom, whose district includes the Strip, said he’s working with the local Culinary Union, which represents about 60,000 workers in the Las Vegas area, to find solutions such as more high-tech training.

“Technology will never replace a smile and Las Vegas’ friendly service, but we can’t ignore technology,” Segerblom said. “There will always be a need for the human touch.”


This story appeared in Las Vegas Weekly.