Walt Disney World, Cast Member Union Agree to $18 Pay Deal

This is a solid deal for the WDW unions. Happy to see this.

It’s a good start.

This is great for all the CMs who are struggling to make ends meet. However, wage increases do not occur in a vacuum, and as we've seen over the past few years, increases in earnings are often counteracted by further inflation on common goods and services. The more wages go up, the more prices continue to rise, often outpacing those wage increases.

There have been a ton of studies over the past few years that show increase in wages that have been some of the highest since the 1950's, yet all of those gains have been wiped out by inflation (and then some).

I guess my point is, be careful what you wish for, because while Disney celebrates higher starting wages today, don't be surprised when they're announcing price increases next week.

Do you think they had to do this since Universal just added a few dollars per Hour?

Yeah because we know how in the past Disney has been so concerned about keeping prices affordable and passing the savings from paying its cast members low wages on to the guests.

If you think Disney wasn’t going to jack up prices regardless of what they ended up paying their cast members, you clearly haven’t been paying attention. A butterfly flaps its wings in Africa and Disney uses it as a reason to raise prices.

Disney announces price increases without wage increases. Linking the two would be a little disingenuous… and if your argument against CMs getting a basic standard of living is “Disney tickets will cost more”, then I would suggest trading places and getting one of those coveted staff passes.

Let me be clear. I'm not saying that there is a direct cause and effect when it comes to wage increases and Disney price increases, but it's been shown in the past 3-5 years that the push to increase minimum wages around the country has been a significant cause for inflation, particularly when it comes to essential goods and services.

It's great to celebrate those on the bottom rungs of the economic ladder getting a raise, but what has continued to happen in recent years is a corresponding increase in the cost of living that is outpacing those wage increases. Within a year of the "strive for $15" gaining widespread acceptance, inflation increased upwards of 15-20% on many essential items (and that doesn't even include more hidden sources of COL like "shrinkflation"), negating most gains lower income folks had gotten through minimum wage increases over the past 5 years. In other words, the more we raise base incomes, the faster and more dramatically prices increase. It's a constant battle against inflation that will never end until companies learn how to moderate increases and provide more targeted wage increases based on skill, value, and retention.

I have nothing against CMs (or any other employee seeking to make enough money to live a decent life), but there's something to be said for these recent dramatic shifts in minimum wage and the impact they've had on the overall cost of living, not only in Orlando, but many other areas around the United States. It creates a snowball effect that not only puts lower-waged workers in an even worse situation in the long run, but it also starts to drag middle-income and more blue collar (and even some lower white collar) workers into this unending cycle. Economists warned of these impacts 10 years ago when the "strive for $15" movement arose, and those predictions have come to the fore, exasperated of course by COVID and supply chain disruptions. The point being that wages and costs form a delicate balance that will always seek equilibrium. Small movements in one or the other can be easily managed and controlled, but significant changes to either will have a dramatic impact on the other, and will cause carry on effects across interconnected industries.

"but it's been shown in the past 3-5 years that the push to increase minimum wages around the country has been a significant cause for inflation, particularly when it comes to essential goods and services."

this is simply not true. raising minimum wage has, at best, a marginal effect on inflation.

https://www.epi.org/blog/inflation-minimum-wages-and-profits-protecting-low-wage-workers-from-inflation-means-raising-the-minimum-wage/

I think mostly everybody can agree that increasing the minimum wage is long overdue and a welcome change.

This is truly life changing. Coming from a working family who tried to survive on a household income of $30,000 for years was a real struggle.

However wages have increased exponentially since the pandemic where our household income is over $100,000.

Absolutely inflation has risen, and we no longer qualify for critical government services we once relied on like food stamps, tax refunds, or Medicaid. Which has cut into our budget.

But we also now were able to afford to buy a house and still have a generous monthly income surplus, all mostly due to these market adjustment wage increases.

The impact and increase in quality of life this will have on the working people in Orlando is real and well deserved.

Thanks to Jacob for that link. Rising corporate profits are the primary factor driving inflation in America today. And, of course, the Disney Parks are doing their part to contribute to that. ;^)

Disney can more than afford this raise without further raising prices in Orlando. But it will, not because of the raises, but because history has shown over and over that guests will pay the higher prices.

Disney has so much money they need to lay off 7000 people. I'm sure those 7000 without jobs are happy about the raises.

And here's some support for my counter argument from the Financial Times...

https://www.ft.com/content/0097fbd7-96ae-4a75-876d-8df4d4379651

Also, whether Disney (or any other company for that matter) can "afford" paying workers more without raising prices isn't at issue. It's the simple fact that companies (and their shareholders) expect profits and dividends to continue to grow, and if you are increasing your obligations through higher labor costs, those have to be offset somewhere in the ledger to maintain shareholder expectations. For companies, like those that provide essential goods and services (who often work on far thinner margins than the entertainment industry), raising prices is the easiest (and often only) way to balance the books (aside from increasing efficiency, which often comes at the cost of layoffs - like Disney has already demonstrated).

We can certainly criticize the companies that take this tact, but it's par for the course, and should be a cautionary tale for everyone out there celebrating these massive increases in base pay.

Again, incremental increase in wages can be easily absorbed and compensated for without having to answer to shareholders, but these 10-20% increases will cause ripple effects that not only hurt the people who think they're better off with a bigger paycheck, but entangle the next rung of the economic ladder because their now-stagnant wage (because only those below them actually got a raise) is further devalued by inflation and increased prices for essentials. These huge base wage increases are ultimately pinching the middle class into extinction.

Russell, your initial claim was essentially “This is going to make Disney have to raise prices” and now you’ve morphed it into some thesis on base wage increases wiping out the middle class.

Regardless of the accuracy or inaccuracy of your second argument, it is totally irrelevant because, when it comes to WDW and DLR, Disney hasn’t shown the slightest bit of concern in keeping prices affordable for the middle class for at least 20 years now.

We’ve all seen and heard how Disney has found innumerable ways to cut corners on everything from cast member salaries and benefits, to ride maintenance, to food quality and quantity and beyond; and has there ever been even a SINGLE instance where Disney has said “We’re doing these things so we can pass the savings onto you, our values guests”? Unless I really missed something, I can’t think of any. Instead it’s been price increase on top of price increase, surcharge upon surcharge, to the point where Disney has priced many people out of the market, and made it a stretch for others, without any help from major increases in CM wages.

If Disney had been using the money they saved on lower CM salaries to keep parks prices relatively affordable, I wouldn’t have said that it’s a “good” thing per se, but I would least be able to acknowledge that there was a benefit for guests in their strategy. But we both know that’s not the case and Disney has long been sticking it to guests at one end and CMs at the other.

An increase to $18 means that Disney is going to repeatedly raise park prices and fees in the coming years at a rate greater than inflation. No increase in CM wages would have also meant that in the coming years Disney is going to raise park prices and fees at a rate greater than inflation. Any lesson on macroeconomics is totally facetious in the microeconomics world of Disney parks where there has been almost zero relationship between CM salaries and guest prices for decades now.

Yes, they will raise prices regardless, but instead of 5%, maybe it's 5.5% or 6% (not noticeable in the grand scheme), and just like a salary, it compounds. But I will agree this has less to do with inflation than the government printing trillions of dollars and giving to people who don't need it to spend on vacations and commodities they otherwise wouldn't have purchased.

As someone that has lived in Orlando for a long time I will back Russell up and say that wage-push inflation is definitely a thing. When Disney raised their pay I think it was from like $10 to $15 in one year, all of the apartment complexes around Disney raised their rents in unison like the week after it was announced. This is not an easy problem to solve and I know Orange County has tried to make developers in areas around tourist hotspots be mixed income/more dense recently, however there is an array of dilemmas. Orlando very much has the issue of being a desirable area for higher paid work from home people, rich retired people moving from other states, airbnb, and on top of that most of the jobs are low pay tourism jobs so you have the stereotypical problems of the people that actually work there being priced out. Add in a big dose of another stereotypical problem where those that have a lot of influence want policies that don't help those at the bottom, and those at the bottom are working 60+ hours a week doing service jobs so they don't know whats going on and don't vote, so policies that don't help them don't make it through. A perfect example of this was the 1% sales tax increase to fund a massive improvement in public transit (which would have doubled the Lynx bus fleet, reduced headways by half, and expanded sunrail). Because Orange County has so many tourists, half of the funding for improving the public transit for the residents would have been paid for by tourists so it would be a huge bang for your buck type tax, and also the tax wouldn't apply to household essentials like most grocery items. But it got eviscerated by the conservative propaganda machine and here we are with a rapidly expanding region, tons of traffic that just keeps getting worse every year, and no way to get around without having to buy a car and insurance/maintenance etc.

Wage-push inflation obviously does not mean Disney and their union should not fight for the best deal they can get because i'm just trying to point out the problem is more complicated than people realize.

In regards to the prices, as the resident MBA, I can assure you the prices have nothing to do with wages, those are two entirely different things. There are retailers and restaurants who may raise prices if wages go up (like Walmart for example tries to make everything as cheap as possible, and a raise in wages will make them raise their prices), but when it comes to pricing for entertainment venues they are going to pay people as little as they can to keep the place properly staffed and they are going to charge as much as they can to maximize profits. The industry of pricing (and it is a science that you can study in school) has gotten way more complex over the years as now everybody is trying to tailor their prices to each individual customer to get each person to pay the maximum amount possible. You can call that corporate greed or whatever else you want to call it but ultimately that's the way the world works today.

As stated on EPI’s own website, one-fifth of their funding comes from unions, so they are going to deliver statistics that support increased Union wages.

Torrance has it correct. Prices at Disney and Universal will rise regardless of wage increases, but this will cause them to rise more, whether it is to keep pace with current profits or just used as an excuse to squeeze an extra 1/2 percent out of park attendees.

Nobody is questioning the weight of the (much too high) top salaries, and the stockholders greed ?
(Apart from general costs of services they buy in)
I read a lot here about 'macroeconomic effects'. Picking one detail only in the total balance bill leads nowhere.
Greetings