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Tuesday, 22nd May 2007

Walt Disney World’s Hidden Costs: The Impact of Disney’s Wage Structure on the Greater Orlando Area

Walt Disney World’s Hidden Costs: The Impact of Disney’s Wage Structure on the Greater Orlando Area (PDF; 155 KB)
Source: Research Institute on Social and Economic Policy, Florida International University

This report examines the impact of changes in the pay practices of Walt Disney World in the years from 1998 to 2006. One major change was the institution of a two-tier wage system that lowered the pay increases of new entrants to its labor force hired after December 12, 1998 compared to those hired on or before that date. This progressive lowering of wages has created a major "hit" to the greater Orlando economy:

  • By 2006, the Walt Disney annual payroll was $19.39 million lower than it otherwise would have been; Pay levels were 12.2% lower for the more recently-hired workers;
  • As a consequence, Orange and Osceola counties lost $23.4 million in goods and services production in 2006;
  • 178 jobs were also lost to Orange and Osceola counties due to this wage reduction.
  • The 178 jobs lost meant an additional loss in payroll of $5.24 million in 2006.
  • These losses will continue to grow in future years, as "old timers" retire or leave the company and new hires receive the lower pay increases.
  • The impact of Disney's payroll cut on the larger Central Florida region as a whole must be considerably greater than that on Orange and Osceola counties alone, perhaps twice as great or more.

In the same time period, Disney's lowest entry level wage deteriorated compared to its competitors (Universal Studios and Sea World). In 1998 its entry level hourly wage was 5- 8% higher than its competitors; by 2006 it was between 3-4% lower.

This deterioration in the wages of Walt Disney World workers has negative consequences for the entire economy in the Orlando area. If Disney continues with its two-tier pay structure and lower starting wages than its competitors, the damage to the greater Orlando economy will continue to grow.



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