The Happiest Place on Earth… Or Maybe Not
Over the Fourth of July weekend, a few of my friends and I had the opportunity to visit the happiest place on earth, Disneyland, for a couple of days. During that time, I had the opportunity to have a “real” discussion with one of the Cast Members. This was not Mickey Mouse, Minnie Mouse or Cinderella. “Cast Member” is how Disney refers to all employees that make the park run smoothly. Disney has always been known for its high-quality experience and a smooth-running park; however, that was not our experience this trip. The streets weren’t as clean, the food wasn’t as hot and the lines for service were longer. I don’t for a minute believe that Disney has reduced its quality standards. They are just unable to hire enough Cast Members.
This is a problem we seem to be experiencing on a national level and not just at Disney. Our unemployment rate remains stubbornly above 5% and our job openings are remaining stubbornly unfilled. Some of our clients who own one or more restaurants are now allowed to have 100% capacity for dining, but due to staffing shortages, can only provide service to 50% of its tables. It is no longer the pandemic that is holding our economy back from expansion; it instead seems to be the policies that were put in place to support it through the pandemic.
I did a quick Google search to determine the average annual salary for a Walt Disney Cast Member is $28,327 per year. That comes out to approximately $14 an hour. Unemployment benefits provide up to $450 per week and the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides an additional $600 per week until September. That $1,050 per week of unemployment benefits equates to $26.25 an hour based on a 40-hour work week. Annualized, unemployed individuals are making up to $54,600 a year as compared to the average annual salary of Disney Cast Members at $28,327.
According to the Becker Friedman Institute for Economics at the University of Chicago, “the stimulus package made the economic consequences of the pandemic more unequal. The stimulus package redistributed heavily toward low-income households, while middle-income households gained little from the stimulus package but will face a higher future tax burden.”1 The production of unemployed workers leaves the economy, which reduces the gross domestic product (GDP) and moves the country away from the efficient allocation of its resources. When unemployment is high, states will often look to replenish their coffers by increasing their taxation on businesses. Along with higher taxes on businesses, it is also more expensive for businesses to retain or hire workers given the amounts received under unemployment.
The Disney Cast Member that I was talking to loves his job and is grateful to be working, however, he realizes that he would be making more today if he just stayed on unemployment and not voluntarily gone back to work. The CARES Act that was put into place to support eligible individuals through difficult economic times may now be hindering the economic recovery. Nearly half of all states have ended the extra unemployment benefits early. At Potentia Wealth, we are expecting a decrease in unemployment for the fourth quarter of this year leading to continued economic expansion into 2022. For this reason, it may not be until later this fall before we can fully open our businesses and economy, and perhaps Disney will once again be the happiest place on earth.