News Disney offers to pay union members at least $15 by 2021

[CaptainAmerica]

It’s not as though they say “well, at $11 we were gonna order 18 self service kiosks out of 20 at pecos...but since it’s $15, we’re getting 22...”

That number was ALWAYS gonna be 22...it’s not done on half measures. It’s maximum automation with minimum staffing where feasible.

Terrible example.

Yes, self service kiosks at Pecos Bill's have proven to be a worthwhile investment because they replace enough labor hours to justify their cost. So that PARTICULAR automation project was going to be done no matter what happens to wages. But not every automation project drives the same level of efficiency. Every quick service restaurant has its own flow rates and prep times and loads of other variables that drive how much labor a machine is capable of replacing. Maybe guests move slower or require more custom orders at Flame Tree BBQ so you can't have as high a ratio of kiosks to workers. At Pecos Bill's, you might be able to eliminate two workers for every three machines you install, but at Flame Tree it might only be one. Maybe that wasn't worth the investment before but it will be now (again, all hypothetical). Automating resort check-in will have its own set of calculations, as will automating ride operation and every other job you can think of.

Disney has a very long list of automation projects lined up in terms of their expected return. They're making their way down that list in order. That's not new. But there's a line on that list at some point that says "these projects below this line aren't worth it." Labor inflation shifts that line to include more projects that will be approved.

Also, people are calling this a minor increase. What's the starting rate today? $10? $12? If so, we're talking about a 25% to 50% increase in labor costs. That's enormous.

 

[Sirwalterraleigh]

There are exceptions, but I typically have much more pleasant interactions with the CPs than the full timers.

I don’t think they were commenting on the attitudes of college program...it’s the lack of maturity, communication skllls, life experience that limits their ability to provide the proper service/interactions...generally speaking

 

[Sirwalterraleigh]

Terrible example.

Yes, self service kiosks at Pecos Bill's have proven to be a worthwhile investment because they replace enough labor hours to justify their cost. So that PARTICULAR automation project was going to be done no matter what happens to wages. But not every automation project drives the same level of efficiency. Every quick service restaurant has its own flow rates and prep times and loads of other variables that drive how much labor a machine is capable of replacing. Maybe guests move slower or require more custom orders at Flame Tree BBQ so you can't have as high a ratio of kiosks to workers. At Pecos Bill's, you might be able to eliminate two workers for every three machines you install, but at Flame Tree it might only be one. Maybe that wasn't worth the investment before but it will be now (again, all hypothetical). Automating resort check-in will have its own set of calculations, as will automating ride operation and every other job you can think of.

Disney has a very long list of automation projects lined up in terms of their expected return. They're making their way down that list in order. That's not new. But there's a line on that list at some point that says "these projects below this line aren't worth it." Labor inflation shifts that line to include more projects that will be approved.

Also, people are calling this a minor increase. What's the starting rate today? $10? $12? If so, we're talking about a 25% to 50% increase in labor costs. That's enormous.

It’s only “enormous” if the current prices are formulated based on their hourly labor outlays...and the that is not the case. WDW prices - especially since the beginning of collapse of espn - is about providing profit for stock

Only a fraction of your ticket cost covers labor...so why do you care, honestly?

This is yet another “academic” based discussion that honestly the real, 3 dimensional people don’t care about. If UCF eventually does a “masters in Disney finance”, then we can get some charts to show if you charge $350 for a $150 room, then you aren’t raising it to $450 a night to covers a $2 an hour raise to a housekeeper that cleans 18 rooms a day.

 

[Nubs70]

Consider this though.. someone spends a lot of money on a degree/degrees, they enter a position and bust their bums, they then work through the promotion ladder and still bust their bums, they miss their children’s events, they get phone calls/emails/texts while out with their family or on vacation.. they consistently work over 40 hours per week, at the office, at home, and wherever they may be. They do not get to leave work at work.

But someone in an hourly wage low skilled job, who does get to leave their work at the workplace -they should be able to work only 40 hours per week and be paid enough to be comfortable with their finances.

"Comfort with finances" is something that can never be guaranteed.

The only way to measure "Comfort with finances" (CwF) is an asset to liability ratio greater than 1.

If one considers income an asset and spending a liability, then:

Considerable effort is being made to legislate/pressure $15/he.

$15/hr has been shown by academics as a wage rate that constitutes a livable wage.

No one addresses the liability side of the personal balance sheet

If you want to legislate wage rates to ensure adequate CwF, government must legislate what you can spend.

 

[Nubs70]

Automation initiatives are approved or denied based on their forecasted net present value, i.e. the discounted value of future savings minus the current investment in the automation technology. When wages go up, you're increasing the potential savings associated with cutting labor hours, increasing the amount of automation investment you're willing to make.

Can we get a Sticky?

 

[CaptainAmerica]

It’s only “enormous” if the current prices are formulated based on their hourly labor outlays...and the that is not the case. WDW prices - especially since the beginning of collapse of espn - is about providing profit for stock

Only a fraction of your ticket cost covers labor...so why do you care, honestly?

This is yet another “academic” based discussion that honestly the real, 3 dimensional people don’t care about. If UCF eventually does a “masters in Disney finance”, then we can get some charts to show if you charge $350 for a $150 room, then you aren’t raising it to $450 a night to covers a $2 an hour raise to a housekeeper that cleans 18 rooms a day.

I haven't said a single word about prices. I care because people are going to lose their jobs.

 

[asianway]

On one hand it seems like a compromise...but I wouldn’t renegotiate overtime...that’s an agenda ask.

A union contract cannot supercede federal labor law. Apparently the union contract has some stipulation that all work done on day 6 in a row is paid at time and a half, even if 40 hours have not been achieved. And double time on day 7.

It stinks, but it is not eliminating overtime, lets just be clear on what they are losing. It would affect people working a lot of short days. I have no knowledge of how many that touches.

 

[CaptainAmerica]

Can we get a Sticky?

This might help people.

Yes, projects Mickey, Minnie, Donald, Goofy, and Pluto are going forward no matter what. Those are the "Pecos Bill's kiosks" of the world. Projects Oswald and Clarabelle probably aren't going to happen no matter what because their eliminations aren't worth enough to justify the cost of investment. But there are always marginal projects, in this example represented by Daisy, Pete, and Mortimer. These are projects that would not be approved in Scenario A but would be approved in Scenario B.

 

[Nubs70]

This might help people.

Yes, projects Mickey, Minnie, Donald, Goofy, and Pluto are going forward no matter what. Those are the "Pecos Bill's kiosks" of the world. Projects Oswald and Clarabelle probably aren't going to happen no matter what because their eliminations aren't worth enough to justify the cost of investment. But there are always marginal projects, in this example represented by Daisy, Pete, and Mortimer. These are projects that would not be approved in Scenario A but would be approved in Scenario B.

What is the source for 10% discount rate?

 

[CaptainAmerica]

What is the source for 10% discount rate?

I just made it up. Companies set those rates internally, but at a minimum it's usually the company's weighted average cost of capital, which I believe is something like 8% for Disney. I rounded up to keep it simple. Obviously Disney's real model would be much more complicated and accommodate things like depreciation, income taxes, payroll taxes, benefits, etc. In the context of project approval, it's referred to as the hurdle rate. The point at which a project's net present value equals zero is the point at which the project's return is equal to the hurdle rate.

 

[Nubs70]

I just made it up. Companies set those rates internally, but at a minimum it's usually the company's weighted average cost of capital, which I believe is something like 8% for Disney. I rounded up to keep it simple. Obviously Disney's real model would be much more complicated and accommodate things like depreciation, income taxes, payroll taxes, benefits, etc. In the context of project approval, it's referred to as the hurdle rate. The point at which a project's net present value equals zero is the point at which the project's return is equal to the hurdle rate.

Thanks, WACC makes sense.

 

[Sirwalterraleigh]

I just made it up. Companies set those rates internally, but at a minimum it's usually the company's weighted average cost of capital, which I believe is something like 8% for Disney. I rounded up to keep it simple. Obviously Disney's real model would be much more complicated and accommodate things like depreciation, income taxes, payroll taxes, benefits, etc. In the context of project approval, it's referred to as the hurdle rate. The point at which a project's net present value equals zero is the point at which the project's return is equal to the hurdle rate.

This is the problem with model constructs and generalitities when you are applying it to a specific example.

I’d like to see your takes on wdw’s Finance and pricing models...if you were to work for them.

 

[21stamps]

I am finding so much humor in this.

 

[CaptainAmerica]

This is the problem with model constructs and generalitities when you are applying it to a specific example.

Models and generalities apply to every specific example if they're done properly.

I’d like to see your takes on wdw’s Finance and pricing models...if you were to work for them.

This isn't a WDW model or a Parks and Resorts model or a Walt Disney Company model or a media and entertainment industry model. This is a universal model that literally every single publicly traded for-profit corporation uses.

 

[Nubs70]

This is the problem with model constructs and generalitities when you are applying it to a specific example.

I’d like to see your takes on wdw’s Finance and pricing models...if you were to work for them.

While the example shown is derived from assumptions, the methodology is the same. The fact is when projects are justified, NPV is used as a go/no go evaluation.

MM+ went through the same process with actual WDW Finance and Pricing Models. How did that work out? There is no need to violate an NDA to answer your questions. Anecdotal observation should be sufficient.

 

[21stamps]

Agreed, I'm one of those people that busted my buns many years ago. My pay off was an early retirement (51) I'm here now on my terms to have fun. But not all who are in a bad way suffer from self inflicted wounds. Many things can happen in life that are out of your control like a financial draining illness.

I understand that, there are people in a bad place, and it’s sad. This is why I used “perfect world”... emotions can’t overrun logic though.
People have to look at the big picture. The more money that a company must spend on payroll, especially for unskilled positions, the less people who will have a job.
It doesn’t just impact the lowest level, it raises everyone above them as well.

 

[Sirwalterraleigh]

I haven't said a single word about prices. I care because people are going to lose their jobs.

You should only care if it’s about prices. They don’t need your chapter 3 labor theories.

It’s their “world”...figuratively and almost literally.

The problem with “losing jobs” in central Florida is that it’s very unique. WDW has about 63,000 or so employees on the average...but they have really ovextendended the labor pool already need to shrink it to grow and create more things for profit.

But that’s just the raw numbers, it’s not that they’d employee 75,000, but $15 makes it too expensive. It’s that they can’t find 75,000 anyway. That’s the problem. It has been since DAK.

That’s why all “Fifth gate” talk is irrelevant. And that’s why their employee numbers have not risen as they build...they already identified the need to shed employees when they were actually making more money off them when they had 55,000. The writing on the wall. Automation was guaranteed because of that, not the labor costs (which are substantial)

I get that you are of old school mentality, as am I...and people shouldn’t really expect to make $45,000 to check strollers out at MK. I’m a rust belter who lives in the monetary insanity of the megalopolis.

But that’s not the reality...you can’t really get the raw numbers as is...and if you want to pull from others because you do need more employees...$15 is realistically the opening maneuvers.

And why can they do that? Because of the price escalation...they can make more, pay more, and we’ll continue to spend more.

It’s hard for this discussion not to cover the whole Spectrum....price, market, labor costs, stock market ramifications...but the thing that is a problem is labor availability.

The reason why they take everyone in the college program and jam them into tenement housing isn’t JUST because they’re cheap. It’s the numbers.

 

[Sirwalterraleigh]

Models and generalities apply to every specific example if they're done properly.


This isn't a WDW model or a Parks and Resorts model or a Walt Disney Company model or a media and entertainment industry model. This is a universal model that literally every single publicly traded for-profit corporation uses.

Every dow 30, second largest media company on earth, who gets 35% and rising of PROFIT (not revenue) from 3 amusement park compounds in a 7.5 billion person world?

 

[xdan0920]

I am finding so much humor in this.

Folks, she doesn't average 1000 posts a month for nothing. Dynamite drop in here.

 

[21stamps]

Folks, she doesn't average 1000 posts a month for nothing. Dynamite drop in here.

You add to the humor too, bud. .