Beyond the boardwalk, Atlantic City wants to diversify its economy. Julio Cortez/AP

The resort town’s leaders need to not only attract a new workforce—they have to figure out what to do with the one they already have.

One Friday morning at the end of September, a troupe of about 18 city, county, and state officials gathered on the seventh floor of Atlantic City’s stubby modernist city hall for an all-day workshop. The job at hand: Brainstorm ideas for the city’s application for a grant sponsored by Bloomberg Philanthropies. The nonprofit’s 2017 Mayor’s Challenge offers cities the opportunity to win a $5 million grand prize (or, for four runner’s up, a $1 million consolation prize). All Atlantic City has to do to score the jackpot was come up with a brilliant pitch to beat out 554 other Mayor’s Challenge applicants.

This was the 300th such workshop Bloomberg Philanthropies has held in recent months, and the prospect of the prize drew the mayor, his chief of staff, the chief of police, the city planning director, the business administrator, the city grant-writer, five officials from the New Jersey Economic Development Authority, the executive director of the county economic alliance, and an assortment of officials from other institutions who do business in the city. They spent the morning bright-spotting Atlantic City’s charms (considerable) and brainstorming its problems (formidable), before settling on a set of issues around economic diversification.

In particular, the session, facilitated by a youthful consultant from Bennett Midland, circled in on the skills gap of the local workforce, and on the wealth gap afflicting residents of the city’s historically segregated Northside. Both issues reflect the legacy of the casino boom, which powered the city’s economic rise after gambling was legalized in the 1970s.

But the gaming industry slumped dramatically in 2014: According to a newly released estimate of Atlantic County’s ratables, the aggregate value of the city’s real estate has now fallen to $3.1 billion, a shocking decline from $6.5 billion just one year ago. In 2010, before the casino business plunged, it was $20.5 billion.

The sudden evaporation of the tax base meant Atlantic City has been coping with a budget crisis that threatens public services, including cuts to police and fire personnel, at the same time the city’s trying to pivot away from the casino economy and attract new visitors and residents. A 2015 report by Angelou Economics declared Atlantic County in desperate need of economic diversification. But the region is badly positioned to reinvent itself: It’s like trying to sell tickets to a movie in a theater that’s on fire.

So far, that effort has been going about as well as can be expected. When Bloomberg Businessweek recently published its Brain Drain Index of cities that were losing educated white-collar residents, Atlantic City landed at fifth place. The number reflects the nature of the gaming industry workforce: The casinos generated tens of thousands of decent-paying jobs with health and retirement benefits. But many of those jobs were low-skill, and they often went to people who lived—or ultimately settled—in the suburbs, not in the city.

The disconnect between the city’s main industry and many of its residents is so profound that in 2014, when four of twelve casinos closed, the unemployment rate on the (largely African-American) Northside barely moved, even as the city’s overall unemployment spiked to more than 18 percent in January 2015. Residents in that neighborhood were unhurt (relatively) by the loss of casino jobs, if only because so few of them had those jobs to begin with.

This is the challenge facing Atlantic City leaders tasked with conjuring a job-making moonshot: not only attracting a new workforce, but figuring out what to do with the one they already have.

In an interview at the Bloomberg event, Atlantic City Mayor Don Guardian said the 2014 round of casino closures—and the wave of foreclosures they prompted—was a “wakeup call” for the county and South Jersey itself, which for years thought Atlantic City was not its problem but now faces foreclosures and job losses tied to rippling crises in the city. New Jersey’s small towns and suburbs have their own problems, stretching far beyond Atlantic County: a net out-migration of young people, mostly to New York and Pennsylvania, stagnant wages, and a high cost of living. New Jersey leads the nation in recent college graduates still living with their parents.

In response, policymakers have been turning their gaze toward the state’s neglected urban cores, from Newark to Atlantic City, in the hopes of attracting, or retaining, those coveted young, educated residents. Mayor Guardian—a bow-tied Republican who can preach the epistle of multicultural New Urbanism with the best of them—is an affable ambassador for a population of Millennials that remains, as of now, hypothetical. Atlantic City has cheap (relatively) real estate, beaches, 24-hour bars, an astoundingly diverse population, and the bones of a walkable city.

On the other hand, all this could be under water in 20 years.

The big question Atlantic City faces is how to build new economies for hypothetical Millennials without further disenfranchising its actual residents. Despite the city’s demographic mix, only two (at times three) of the workshop attendees were African American, a pattern that plays out across the many agencies that make city decisions. Atlantic City has large numbers of immigrants from Latin America and Southeast Asia. As yet, their presence is unreflected in the board composition of the powerful C.R.D.A., the agency tasked with reinvesting casino tax funds. That’s also, incidentally, the entity controlling city planning functions across the Tourism District, the most valuable real estate in the town.

As unlikely as it sounds, some of the Atlantic City transformation is already underway. Stockton University, whose main campus is offshore in Galloway Township, is building a satellite campus on the beach at Albany Avenue. Classes are scheduled to begin in the fall of 2018. A craft brewery is scheduled to open next year on Baltic Avenue, right next to the craft distillery that opened last year. A yoga studio just opened on the beach block of Tennessee Avenue, amid an ocean of parking lots, one of which is the John King Memorial Bus Parking Lot (you read that right). A beer hall, a chocolatier and coffeehouse are up next, a few doors down. Up the street is the biggest needle exchange in the state, one of the largest such programs in the country. Something, history tells us, is probably going to give.

Will the big ideas bandied about at this workshop speed that transformation? Hard to say: This reporter was shown the door before the group got down to brass-tacks on their Mayor’s Challenge pitch, which was looking like it might involve a mentoring program for the Northside. But Mayor Guardian was typically sunny about the city’s prospects; the city had hit bottom earlier this year, he said, and there were now “cranes in the sky. ”

Now, however, those cranes weren’t just building more casinos. “We’re rebuilding using the best practices of all the other cities around the world,” he said. “Atlantic City is not just a shore town, and it’s not just a casino town. We need the university for continuing education. We need things other than casinos to play and have a good time, and we need things that have nothing to do with tourism at all. And this is the time for it to happen.”

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