Disneyland workers live below poverty line, Disney reported $4.423 billion in Net Income

A job at Disneyland is a ticket to poverty for the average worker. Most of the workers at Walt Disney Co.’s (NYSE: DIS) flagship theme park in Anaheim, California, cannot pay the bills with their paychecks.

Salaries for cast members at the “happiest place on Earth” are so low that many of them struggle with homelessness, eviction, and food insecurity, Working for the Mouse; a Survey of Disneyland Resort Employees by the Economic Roundtable and the Urban & Environment Institute for Occidental College found. Most cast members, as Disneyland employees are called, face a desperate struggle for survival.

The Poverty of Disneyland Cast members exposed

“Disney has become a nightmare to work for. The long hours; lack of livable wages, and zero respect, has got to stop.”

– an anonymous individual identified as a fulltime Disneyland cast member in Working for the Mouse.

Some horrendous statistics that expose the poverty of Disneyland cast members include:

• The average hourly wage at Disneyland in 2017 was $13.36.

 

• 31% of Disneyland cast members were making between $10 and $10.99 an hour in 2017.

• 29% of Disneyland cast members were earning between $11.00 and $11.99 an hour in 2017.

 

• The poverty level in the state of California is $11.82 an hour according to the survey.

 

• Only 15% of Disneyland cast members were making more than $15 an hour.

 

• 85% of Disneyland employees earned less than $15 an hour.

 

• 54% of Disneyland cast members that had been working there for more than 15 years were making less than $15 an hour.

 

• The U.S. Census Bureau placed the official poverty threshold for a family of four in the United States at $25,238 a year in 2017.

• If Working for the Mouse’s conclusions are correct 85% of Disneyland’s cast lives just above that threshold.

 

• By my calculations, a Disneyland worker making $13.36 an hour is earning $25,651.20 a year; or $413.20 over the poverty threshold, if his or her spouse does not work.

 

• If the survey’s conclusions are accurate around 60% of Disneyland cast members might be making less than the poverty level.

 

• The average hourly wage at Disneyland dropped by 15% between 2000 and 2017. Falling from $15.80 to $13.36 an hour. Note: these figures are apparently adjusted for inflation so they do not reflect the actual cash Disney employees were taking home back at the turn of the 20^th

 

• Around 68% of Disneyland workers admitted to having trouble paying for food. In other words being food insecure.

 

• More than three quarters; 76%, of Disneyland employees with children under 18 admitted to being “food insecure.”

 

• Around 73% of Disneyland employees admitted they did not make enough money to pay their bills.

• Around 11% of Disneyland employees admitted to being homeless within the last two years.

 

• Around 13% of Disneyland cast members with young children admitted to being homeless.

 

• Around 44% of the highest paid Disneyland cast members those who made more than $15 an hour admitted being unable to make ends meet.

 

• 67% of the Disneyland cast members that had been on the job had been for more than 15 years admitted to being unable to pay their monthly bills.

 

This report based on a survey of 5,000 Disneyland cast members reveals that the “happiest place on Earth” has become a nightmare for those who work there. It should also raise serious ethical and practical concerns for Disney investors.

The Walt Disney Company is making a lot of money

These conclusions are particularly troubling because the Walt Disney Company is making a lot of money. Data provided by Stockrow shows that Disney is a money-making machine for everybody but Disneyland cast members.

Highlights of Disney’s earnings report December 30, 2017, include:

• Quarterly revenues of $15.351 billion, down an increase of 3.84% over 3^rd Quarter 2017.

 

• A quarterly gross profit of $6.614 billion for 4^th Quarter 2017.

• A quarterly net income of $4.423 billion for 4^th Quarter 2017.

 

• A quarterly operating income of $3.778 billion.

 

• A quarterly operating cash flow of $2.237 billion.

 

• A quarterly free cash flow of $1.256 billion.

 

• Cash and short-term investments of $4.667 billion for 4^th Quarter 2017.

 

• Assets of $97.734 billion on December 31, 2017.

Disney is obviously a profitable and cash-rich company that should be able to pay the cast members a lot more. The contrast between those financials and Working for the Mouse lead to some bothersome questions.

Is Disney evil and greedy or is Disneyland losing money?

There are true equally troubling conclusions one can reach from a comparison of these statistics. These conclusions are:

1. Disney is an evil, greedy, corporation that treats its employees like dirt.

 

2. Disneyland simply is not generating enough revenue to pay for a decent wage for its workers.

If conclusion number one is true, responsible people should sell their Disney stock. No sane or ethical person should own stock in a company that deliberately drives its employees into poverty.

You should also sell your stock if conclusion number two is true; because it indicates Disney is a poorly managed company that is keeping a money-losing sinkhole open for sentimental reasons. A disturbing thought that Disney zombies will hate is that Disneyland is losing money, and the only way Disney can afford to keep it open is to pay the workers nothing.

Should Disneyland be closed?

From an ethical and business standpoint the best course of action for the Walt Disney Co. might be to close Disneyland and sell the land to a real estate developer.

This might be better for the people of Orange County, California, who might see higher government revenues from property taxes and lower bills for the county’s social services programs and law enforcement. I imagine there are quite a few Anaheim residents who would love to see the traffic jams; parking problems and noisy crowds, created by the Magic Kingdom go away would support closing Disneyland.

Unfortunately, closing Disneyland would be a public relations nightmare for the Walt Disney Co. Even if it made sense, Bob Iger would never suggest such a move because he knows he would be vilified and perhaps lynched by rabid Disney fans. One way Disney would be able to get away with shuttering Disneyland would be to sell off all the theme parks.

Is Labor Unrest coming to Disneyland?

Iger might have no choice to make a decision about Disneyland’s future because of labor unrest. The poverty of Disneyland employees and the discontent uncovered by Working for the Mouse indicates that some sort of employee revolt or strike at Disneyland is likely.

The bad publicity generated by news footage of pickets or rioting workers at Disneyland would be far worse than the gripes about “shutting down the Magic Kingdom or bulldozing Tomorrow Land to make way for a new Ralph’s store.” After all, Disneyland sits on 85 acres of prime Orange County real estate right off the Five Freeway (Interstate 5) and a busy commuter-rail line. It might now be worth more to real estate developers than the Walt Disney Company.

Is it ethical for Disney to keep thousands of workers in poverty while depriving Orange County of needed tax revenues just to preserve an aging tourist attraction for nostalgic Baby Boomers? Rational minds would probably say no, unfortunately, reason will have little to do with arguments over Disneyland’s future.

How Should Disney Investors Respond

There are two certainties here that every Disney investor must keep in mind. Those certainties are:

• Disney is operating its’ theme parks in an ethically questionable manner that will cause serious public relations problems in the near future.

• At least some of Disney’s theme park operations might no longer be sustainable or profitable and need to be reviewed.

 

Every Disney investor needs to take a close look at Working for the Mouse in order to see the serious problems that lie ahead for this company. One has to wonder if Bob Iger will be able to deal with them.