Buying Power of American Indians Grows With Little Impact on Overall Economy
By Zayda Rivera
November 14, 2008
Keywords: American Indian, Native American, casinos, tribe, buying power
The buying power of American Indians is a small percentage of the overall population's--0.6 percent in 2007. Even though their growth in buying power from 1990 to 2007 was 190 percent, according to a Selig Center report--which exceeds the estimated growth rate for U.S. buying power as a whole over the same period--it still doesn't make a major dent in the big picture of the U.S. economy.
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"We see a market that has been growing at an above-average rate yet is still a very, very small market nationally," says Jeffrey Humphrey, director of the Selig Center of the Terry College of Business at the University of Georgia. "So that market is concentrated in certain states and therefore very important in those states."
In fact, a large portion of that 0.6 percent is concentrated back home--Indian land. And its major source of revenue is in slot machines, poker games, fancy hotel suites, sexy lounges, celebrities and an instant return on the American dollar into the soil of the native people--at casinos.
"[Casinos] definitely contribute to the growth and buying power [of American Indians] and has helped to raise per-capita income," Humphrey says.
Because of the rise in casinos and therefore higher per-capita incomes, American Indians are seeing a great opportunity to leave home to pursue higher education and then return to work for their own people, thus further enriching the fabric of their communities.
"Increasingly, over the last 10 years, there is an opportunity for people to go away to school, get advanced degrees and then come back to the reservation, come back to their community and contribute productively to their own well-being and to that of the community," says Michael Burton, director of the Affiliated Tribes of Northwest Indians (ATNI) Financial Services Corp. and the interim director of the ATNI's Economic Development Corp. "The casinos have only been around for 10 years or so, maybe 15 in some places. At Coeur d'Alene in northern Idaho, they've actually developed a critical mass of young tribal members with business backgrounds and with business training--so the management team at that casino is largely Coeur d'Alene members."
In addition to providing more job opportunities for tribal members, there is also a greater opportunity to make investments.
"Setting aside the fact that [casinos] are expensive projects worth tens of millions of dollars, they have to come up with the capital to do it, so they have to create an investment pool," Burton says. "Casinos make obscene amounts of money, and on a short-term [basis], they may be saving some of the revenues because they are going to invest it in whatever is next. It might be senior housing or employee housing. It might be expanding the water and sewer facilities because casino growth [creates] additional demands."
So although casinos have helped to breathe the life back into Indian land and the economy within those communities, many tribes are looking at it as a source of future security away from casino dependence.
Burton says before casinos got popular, the economic activities were very limited for tribes.
"There wasn't a way to make money if you're out there on the plains of South Dakota, if you're in eastern Oregon and eastern Washington. There just wasn't a lot of high-density economic activity," Burton says. "But when you add a casino and the ability to generate cash and make additional investments--Yakama makes juice now--they have a sawmill, a tobacco company and they own the Continental Basketball Association. [Likewise], Kwenol has a sawmill and an extensive fishing fleet. So the resources that have been availed by virtue of the casino cash flows have opened a bunch of doors to the tribes and doors that were not available, primarily due to their remote locations. [Now] the tribes are investing in their futures and looking for diverse opportunities and looking to diversify their income away from casinos. They're on a very serious growth trajectory."
However, like many corporations across the nation, some casinos have fallen victim to the depleting economy. The Mashantucket Pequots of Connecticut's Foxwoods Resort Casino and MGM Grand at Foxwoods recently cut back on their work force by approximately 700 people. Their decision was in direct response to the declining revenue as people gamble less.
"As is happening to so many organizations, the economic issues facing our nation and regional consumer economy have negatively impacted our revenue growth," Tribal Council Chairman Michael Thomas said in a written statement. "Although it has taken a few months, the recession's impact can now be clearly seen in our industry."
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