A bit of good news for the cast of Disney’s domestic theme parks and their guests. The starting hourly wage of the entry level cast member could be rising to $10.00. According to a report in Bloomberg news, the 25% raise would roll out over two years. Last week, Disney made the offer to the Service Trade Council, a group of labor unions that represents almost half of Walt Disney World’s employees.
I see a couple of factors behind this offer. First, there is a nationwide push to raise the minimum wage to $10.10. Disney can show that companies can make this leap on their own by making this move now. Second, Disney has successfully recovered from the down economy and reported record profit last year; $6.6 billion is a lot of Disney dollars. Third, Disney has been investing a ton of money in capital improvements, they have to balance that with some concern for the personnel side of the ledger too.
Of course, there are concessions Disney wants from the unions in return. Switching from Pensions to 401(k) style retirement plans is one. I’m sure there are many others. But hey, that’s what collective bargaining is all about.
There’s one big reason for the offer that Bloomberg doesn’t mention, the Orlando labor market is once again becoming very competitive. In February of 2014 it dipped to 5.5% unemployment rate. That’s nearing the 4% that’s typically considered full-employment (everyone who wants to be working is). Wage inflation is one result of low unemployment, so Disney might be forced to raise wages, even if they weren’t negotiating a new contract with its employees.
Orlando’s labor market is also diversifying. Not only are theme parks, attractions, and hospitality industries expanding, but so are the high tech, health care, and real estate markets. The latter are, on average, higher paying industries than theme park guest facing positions. Disney will have to raise wages to compete for talent with those businesses.
Finally, I’m definitely not painting every cast member with the same brush, but lately I have encountered more cast members who lack that special Disney excellence in customer service they’re so famous for. I’m not the only one, there are similar discussion on nearly every fan forum I’m a member of. To me this comes down to hiring. Can Disney attract enough applicants that they can be choosy which ones to hire (a higher starting wage definitely helps) and are they providing enough training to those cast members.
Forget New Fantasyland, don’t even bother to open Avatar-land, if Disney loses their reputation as the top company for customer service excellence, then they’ve lost everything. Families travel to Disney because they want to be treated like a they’re dropping $1000 even if they’re only spending $100. Cast members are told “The Magic starts with you,” but it really starts with Disney’s ability to hire the right employees. That’s why they should raise starting wages to $10 an hour right now and not even make it a part of the negotiations.
Do you feel Disney is compensating their employees fairly? How is the labor market doing in your neck of the woods?