Disney recently announced an increase in the minimum wages of its employees at the Disneyland Resort in California and Disney World Florida. The move is expected to make other companies in the region increase the minimum wages of their workers.
The wage increase
At the Disneyland Resort, workers had been agitating months for a pay raise. The new employment contract will raise the minimum wage from the existing $13.25 per hour to $15 per hour. In addition, the company will also pay up on a US$1,000 bonus it had promised last year. About 2,700 workers will benefit from the new contract.
“I’m proud that all of us cast members stuck together and stayed strong to win the money we deserve for the value we create,” The Los Angeles Times quotes a concierge who has a 30-year employment history at the Disney resort. The employees will also have access to a new “Disney Aspire” program launched by the company that will financially assist workers if they wish to pursue higher education.
Another Disney property that will increase its wages will be Disney World in Florida. The company will raise the minimum wage from the existing $10 per hour to $15 per hour. This will also allow Disney to hire more part-time workers in the future. About 70,000 employees work at Disney World, making it the biggest single-site employer in the U.S. And just like Disneyland, employees at Disney World will also receive US$1,000 as a bonus.
“Our 50 percent wage increase will have a real, meaningful impact on our cast and their families and is part of our commitment to the thousands of cast members who make magic for our guests each and every day… Increasing wages for cast members represents a significant investment in central Florida and will provide a powerful boost to the local economy,” Wral quotes George Kalogridis, president of Walt Disney World Resort.
Impact in the region
The current minimum wage for California is $11 per hour while for Florida it is $8.25 per hour. By increasing the minimum wage of its employees to $15 per hour, Disney will now be raising their salaries by 50 percent and more. According to the Bureau of Labor Statistics, Florida has the second highest percentage of people earning below the minimum wage.
By setting the minimum wage at $15 per hour, Disney will have a huge impact on other workplaces in California and Florida. Businesses will likely consider matching Disney’s $15 per hour minimum wage in order to retain its high-quality workers. Otherwise, they might have to grapple with a high employee turnover.
“If I’m working for $8.25 at wherever, and I’m using similar-type skills, then I’m going across the street to Disney World looking for a job that guarantees me higher pay and raises,’’ the Tampa Bay Times quotes economist Sylvia Allegretto from the University of California Berkeley.
The other side of the coin
However, some economists warn that even though a minimum wage hike looks good in theory, it might have consequences for consumers. When a business pays its employees $15 per hour rather than the previous wage of $10 per hour, it is incurring 50 percent more labor cost. If the business bears this extra labor cost, its nets profits may be reduced.
And the business may decide to pass this extra cost on to customers by charging higher prices for its products. In addition, higher product prices mean that consumers will have to pay more for the same product. As such, while a burger may cost $5 when the minimum wage was $10, it might now cost $8 when the minimum wage is raised to $15.
So, while Disney’s move to increase the minimum wage of its workers might get some initial praise, the final economic consequences may not be to everyone’s liking.