Service economy jobs at odds with cost of living in Orlando area

This is an interesting problem, but it's also not a new one. This is one of the many things covered in Married To The Mouse, which talks a lot about urban planning and economic development.

I can attest to the fact that this is not a new problem. I had to move back home after living in Orlando for a year because I couldn't afford rent and utilities and still pay for food and transportation on the $6.25 I made at Universal IOA in 2001. The 911 terrorist attack was the straw that broke the camel's back, but I recall how relieved I was when I decided to move back. I lived with six other people in a moderately-sized home. Granted we did have a heated pool and a nice yard, but even with that many people, my share was too much. I remember many times that I walked through Walmart with $10 in my pocket wondering how I was going to buy two weeks worth of groceries. It physically made me terrible; gave me a sinking lump feeling in my chest.

A lot of people have been through some hard times. Mine was when I lived in Orlando.

This is why I am all for Disney (and everyone else, really) raising wages. People need to eat, and way too many corporations are relying on their own employees, who work 40 hours a week, to get taxpayer government assistance. The money I pay in taxes shouldn't have to help someone who has a full-time job pay for food.

I'm doing pretty good now, financially.

LostKause said:

This is why I am all for Disney (and everyone else, really) raising wages. People need to eat...

But, in theory, where is that extra money to pay more going to come from?

One of my guesses? Higher prices (for food and such).

It's kind of a vicious circle in that sense.

Just a thought - CEOs and shareholders might need to consider revising their expectations downward a tad...

Where will money for new wages come from?

Higher prices? Possibly.

People with more money spending it at local businesses? Also possibly.

I'm no economist, but you don't have to look very hard to see that many states are out of balance in terms of cost of living to minimum wage. Florida appears to be one of them. The information that I looked up is from the NCSL website. Here in Indiana, we are at the federal minimum of $7.25 while Florida is at $7.93. The cost of living here is substantially less than many states that offer $8.00 or less per hour. It's up to the state legislators to account for costs of living in that state. New York is also out of balance at $8.00 per hour. I visited NYC back in 2010 for 3 days. I couldn't wait to leave. The combination of expense and the rude people made me appreciate my home town.

Yes Gonch, prices will go up for businesses that have a large number of minimum wage employees, which obviously include grocery and box stores as well as amusement parks and many others. There are enough of us who make far more than what we need to survive that it will hardly affect. Let's look at big businesses like oil and utility companies that make astronomical profits that affect the cost of living as much or more so than minimum wage. A minimum wage increase would actually help many people who want the help of the company that I work for that can't afford a premium service. Keeping a roof over their head and putting food on the table is far more important.

Blackie said:

I'm no economist...

Noted.

There are enough of us who make far more than what we need to survive that it will hardly affect.

Two things:

1. I think any across-the-board price hike affects all of us. I know it'd affect me.

2. The main point is that a minimum wage increase is nullified to X degree due to the price increases that would occur. Assuming price increases occur, you're not really helping anyone making minimum wage, you're just hurting everyone making more than minimum wage.

With all of that said, we sort of had this discussion before and, whether it's right or wrong, if you bring minimum skills to the table (or at least the skills that pay minimum wage), I don't think that's a guarantee of a certain level of making ends meet anymore. And I'm not arguing the morality of that fact, just the reality.

slithernoggin said:

People with more money spending it at local businesses? Also possibly.

Except that makes no sense.

Where do those people get that money? From local businesses.

So yes, giving those people more money brings more revenue in, but that's not profit. That extra money given to those people comes from the bottom line - which means less profit unless something else changes.

In order to maintain profit levels, you have to increase prices (pay more for the same things) or cut costs (some of those minimum wage employees lose their jobs so others can be paid more).

Assuming these businesses expect to maintain the status quo (and face it, they will) it's essentially a zero sum game - especially at the minimum wage level.

Not convinced that a raise of the minimum wage creates increased prices. More people with more money to spend generally tends to negate increased prices.

And (and this is purely anecdotal) no one I've talked to over the many years I've been alive was willing to forgo their annual salary increase in order to allow their company to provide lower prices.

It does seem to me that people who protest a raise in the minimum wage aren't willing to make the sacrifice they ask of those at the lowest end of the salary range.

slithernoggin said:

Not convinced that a raise of the minimum wage creates increased prices.

You're ignoring where that money comes from.

When the cost of doing business rises (paying employees more in this case) prices tend to rise too.

More people with more money to spend generally tends to negate increased prices.

I see it exactly the opposite: Increased prices tend to negate the benefits of more people with more money.

If you give people more money and then in the same motion reduce their buying power, you really haven't done anything beyond patting yourself on the back for giving people more money. You certainly haven't improved their quality of life...plus you've also reduced the buying power of everyone making more than minimum wage without giving them more money.

No one really benefits and those who were close to the edge now fall over the poverty cliff and everyone else takes one step closer.

Much like Blackie, I'm no economist. I'm open to some explaining how you artifically lift the bottom without the kickback that seems likely to naturally occur.

And (and this is purely anecdotal) no one I've talked to over the many years I've been alive was willing to forgo their annual salary increase in order to allow their company to provide lower prices.

I'd say you're pretty spot on with that one.

When the cost of business rises, by paying employees more money, each business benefits by having customers with more money to spend.

You say increased prices negates the benefit of more people with more money. I say more people with more money to spend does not result in increased prices. Why would any business raise its prices when it is making more money?

Lord Gonchar said:

1. I think any across-the-board price hike affects all of us. I know it'd affect me.

2. The main point is that a minimum wage increase is nullified to X degree due to the price increases that would occur. Assuming price increases occur, you're not really helping anyone making minimum wage, you're just hurting everyone making more than minimum wage.

Exactly. Prices for many things would rise, by how much depends on the percentage of the working population that makes minimum wage. Everyone would pay just a fraction more so that everyone could make ends meet. It would help low income families tremendously, but only by slightly hurting higher incomes. There is a balance that must be found in order for everyone to at least be able to have the essentials. The cost of living can vary greatly according to the city and state. It's obviously gonna more difficult for people making $10.00 per hour in NYC than it would in BFE.

With all of that said, we sort of had this discussion before and, whether it's right or wrong, if you bring minimum skills to the table (or at least the skills that pay minimum wage), I don't think that's a guarantee of a certain level of making ends meet anymore.

Sorry I missed the discussion. I have a little more free time at the moment.

There are a lot of overqualified, underemployed people struggling right now. Moderate or Maximum skills doesn't always translate into equal earning potential.

And I'm not arguing the morality of that fact, just the reality.

It's a damn shame how much truth is in that statement.

Inflation never stops, yet the federal minimum wage hasn't gone up in almost 5 years. So much for their annual salary increase.

Granted the cost of living has increased and minimum wages have not kept up, but really these hikes are temporary fixes. We'll argue about it over and over and eventually some politician will get his/her way and we'll see a raise that will hold us over for a while. I've never understood why minimum wages aren't tied into cost of living and factored on an annual basis.

slithernoggin said:

When the cost of business rises, by paying employees more money, each business benefits by having customers with more money to spend.

You say increased prices negates the benefit of more people with more money. I say more people with more money to spend does not result in increased prices. Why would any business raise its prices when it is making more money?

I'm not sure that Wal Mart is gonna get a matching return on the loss on payroll. You're only shifting wealth from one to the other. Almost all non essentials would take a very minor hit. They might sell more food and clothing, but sell less electronics, toys, etc.

slithernoggin said:

Why would any business raise its prices when it is making more money?

Because. They. Are. Paying. More. Money. To. Do. Business.

If I give you two dollars and you use it to buy something from me, I didn't magically make more money. I lost product.

You keep ignoring that all the 'extra' money the business gets is coming from the business in the first place.

Fun said:

I've never understood why minimum wages aren't tied into cost of living and factored on an annual basis.

I don't think minimum wage should be tied to the cost of living because the cost of living isn't the same as the value of minimum skills. I think the cost of living has outpaced the value of minimum skills. The bar has been raised.

Still arguing reality, not morality.

Well, if I work for Walmart and only buy from Walmart, then yes.

I'm fairly certain that most people take their paycheck and "spread the wealth".

If, after giving you one dollar, I give you two dollars, and I give all my other employees another dollar, and you all go out and spend your two dollars at all the businesses in town ... huh ...those businesses all take in more money. And since all those businesses are making more money, they can afford to pay their employees more money, that those employees can spend at my business.

It would, of course, be nice if real life were as neat and tidy as our examples here. Real life is not. That said, based on what I've read over the years, giving a lot of people at the bottom of the wage scale more money benefits everyone.

But all the businesses have to pay more to do business.

Raising the mandatory minimum wage is raising the cost to do business.

The money doesn't magically appear from nowhere.

If I give you $2 and Joe Businessowner gives his employee $2 then you go to Joe's and buy something and his employee comes to me andf buys something - we didn't make more money - we lost product. It doesn't matter how many businesses and how many employees you add to the equation.

I'm going to weigh in on this and I hope I don't confuse myself, because a lot of conflicting thoughts run through my head on this subject.

First of all, I read that article on line about a day or two before it hit here, and I was shocked. When we were at WDW in February it never occurred to me that those happy, peppy people who waited on us everywhere might actually be homeless. However, I did stop to wonder how the 60,000 people who work there can possibly survive on the notoriously low wages that Disney pays them. I reckoned it must be awfully cheap to live there, and didn't give it a second thought.

Now. Let's add in the thousands of folks who work at Sea World, then Universal, then the countless number of hotels, restaurants, gift shops, gas stations, convenience stores, water parks, and minor attractions that have sprung up in the area since WDW was invented. That's a lot of people trying to live in a big city who don't make a lot of money. As noted several times above, those that flock to Orlando seeking employment will likely find themselves in the service industry and shouldn't expect much for their time and trouble, right?

Orlando was a city before tourism came, but not a very big one. It's growth into a town that has a beautiful city center, huge freeways, major league sports and the like is, I venture to say, due solely to the fact that Walt Disney World came to town one day. Sure, other big, non-amusement related companies have located in Orlando since then, it's likely relatively cheap to build there, but like every other city those employment opportunities are limited.

I guess my point is there's a terrible imbalance that grew, maybe, out of necessity. Or a natural economic process. And what is there to do about it?

So Disney is proposing to raise the wage to ten bucks an hour and contribute matching 401k funds up to a point. Are we fearful for them it's going to break their bank? No, they're gonna be just fine and they'll make their cuts as well. No more pension fund is also in the offing, (an old fashioned concept anyway, right?) and my guess is they'll do what they can to cut hours as well. They may also win in the end as there will surely be no end of people applying to work at the resort knowing they're the highest paycheck for service employees in the county. For now.

And, as noted above, when costs increase that's something that's passed on to the customer. And those of us who visit Disney value the experience so that we may roll our eyes and heave heavy sighs, (because it does affect us) but will we go ahead and pay it? Yes. And that's what they know.

I worked for a large corporation as a worker bee my entire life and I've seen my share of corporate greed. I tend to come down on the side of the employee, their value, and their needs every time. Say what you like about people's choices in where they work and how they should only expect so much on account of it, and I get that. But there's shame that falls on someone, somewhere when a loyal, hardworking employee still sits below the poverty line and is reduced to living like a vagabond.

As a last thought I'd like to add: Hey, Travis! Can I come to your pool? Oh, wait, never mind. You don't have one anymore...

The difference for me is that Disney is choosing to pay their employees more. They're making an active approach that changes their business structure and part of that includes paying a little more. (and as you mentioned most likely includes downsides as well). But the bottom line is Disney decided to do so, they were not forced to value their employees at some arbitrary level.

And for the most part, deep down inside, I agree with you. But like I said, I'm arguing the reality of the situation here - not the morality.