What I find is missed by "Disney is a business"

[Aluminum Falcon]

If you are trying to measure it here is a simple question. Is this company doing X to make more money or to provide me with a better product/service/experience.

If the answer is the later its likely they are over delivering to the consumer.
.

again, that isn’t quantifiable, that’s a judgment call each individual gets to make, and there is no real way to quantify it. It boils down to, you’re holding a business accountable to your personal feelings about their product. That’s well and good, but no business is going to cater to an individual. I believe the saying is, money talks, and ******** walks

 

[Jonfw2]

again, that isn’t quantifiable, that’s a judgment call each individual gets to make, and there is no real way to quantify it. It boils down to, you’re holding a business accountable to your personal feelings about their product. That’s well and good, but no business is going to cater to an individual. I believe the saying is, money talks, and ******** walks

The ultimate way Disney makes money long term is a holistic approach in which every product area succeeds because of the others. Parks are reliant on Pixar films are reliant on D+ is reliant on parks are reliant on.,,,

 

[Aluminum Falcon]

If you are trying to measure it here is a simple question. Is this company doing X to make more money or to provide me with a better product/service/experience.

If the answer is the later its likely they are over delivering to the consumer.
.

again, that isn’t quantifiable, that’s a judgment call each individual gets to make, and there is no real way to quantify it. It boils down to, you’re holding a business accountable to your personal feelings about their product. That’s well and good, but no business is going to cater to an individual. I believe the saying is, money talks, and ******** walks

I wouldn't compare Apple to WDW. Apple keeps raising prices but gives their happy owners what they want. WDW keeps raising prices but takes away what their customers are happy with in order to make even more money.

If you ask hardcore Apple phone owners, they won't say they're being nickle and dimed or ripped off as hardcore WDW fans often feel. They will say they wish their Apple 13 weren't so expensive and had features that android phones have had for years, but they're still proud owners of their new iPhone. The closest that Apple has come to cheaping out is that Apple stopped including phone charger plug with each phone.

One of the reasons people continue to fly Southwest is because they bundle in no change fees, 2 checked bags per person, and drinks/snacks. What WDW has done, if it was an airline, is to keep the same high prices but now ask customers to pay for previously free features. The least that WDW could've done to take away FP+ would be to give value/moderate onsite guests 1/2 free LLs upon Genie+ purchase (deluxe guests get 2 LLs and Genie+ included per day) and a bundle of 12 free LLs (3 usable each quarter) per AP. That would've wiped out most of the complaints here and reinforced the value proposition of the high prices charged by onsite resorts.

the point I was making with apple, was that they haven’t done all that much to make improvements/ new features, but people still eat them up at a high price.
Your airline comparison doesn’t make a lot of sense to me either, you’re missing the point that Disney has been adding at a fast clip to their parks, hotels, restaurants for over a decade, and have now started to add to their pricing bc of all the value they have added. So it’s more like, if southwest designed all seats to be like first class, and then starting charging you for bags, and snacks. People keep drawing a straight line between price increases, but it’s more complicated than that.

 

[Starport Seven-Five]

People have a little savings from quarantine- less spending, combined with multiple stimulus checks, combined with higher unemployment benefits.

All that will run out and they’ll go back to work.

Unemployment benefits ran out in a lot of areas without a notable increase in people returning to work.

There have been many articles written on the sources of the labor shortage and it's multi-faceted: Retirees deciding the "social" job isn't worth risking Covid, "one more year" employees finally pulling the trigger on retirement, families where one of the parents stayed home with the kids through the shutdowns, enhanced unemployment benefits, people who used the time off to increase qualifications, etc.

The big thing that is hurting low level service jobs is there are openings in factories and elsewhere that pay better.

I agree with you, it’s an awful round robin if it plays out otherwise. Put it this way, people demand higher wages to work, businesses increase wages, and increase price of their products to compensate for wage increase, cost of living goes up, people demand more money, bc of the cost of living price, companies raise wages….. do you see where I’m going haha. Inflation never stops going up in that scenario, So you make more, but can afford either the same, or less in this scenario. Aka no bueno

The wages at many of these jobs make up a small portion of the bottom line. The increase in cost amount to almost nothing:
https://www.cnbc.com/2021/06/08/chipotle-hikes-prices-to-cover-the-cost-of-raising-wages.html
A rising tide lifts all boats. The wealth gap between rich/poor has grown significantly over the last couple decades and moving wages up for the lowest levels will hopefully reverse that trend.

 

[Jonfw2]

Unemployment benefits ran out in a lot of areas without a notable increase in people returning to work.

There have been many articles written on the sources of the labor shortage and it's multi-faceted: Retirees deciding the "social" job isn't worth risking Covid, "one more year" employees finally pulling the trigger on retirement, families where one of the parents stayed home with the kids through the shutdowns, enhanced unemployment benefits, people who used the time off to increase qualifications, etc.

The big thing that is hurting low level service jobs is there are openings in factories and elsewhere that pay better.

The wages at many of these jobs make up a small portion of the bottom line. The increase in cost amount to almost nothing:
https://www.cnbc.com/2021/06/08/chipotle-hikes-prices-to-cover-the-cost-of-raising-wages.html
A rising tide lifts all boats. The wealth gap between rich/poor has grown significantly over the last couple decades and moving wages up for the lowest levels will hopefully reverse that trend.

The wealth gap actually hasn’t grown when you factor in taxes paid and government benefits.

Yes, the Uber wealthy are way ahead of the rest of us. But that’s a fraction of a percent of the population. The rest of the so called rich are not separating from the poor at all.

I totally agree with you though that the reasons for the current phenomenon are multi-faceted. But ultimately, Falcon is correct: artificially increasing wages for the lowest paid won’t change anything. Inflation is already rising. We know this. Who do you think that impacts most?

 

[Aluminum Falcon]

The big thing that is hurting low level service jobs is there are openings in factories and elsewhere that pay better.

The wages at many of these jobs make up a small portion of the bottom line. The increase in cost amount to almost nothing:

A rising tide lifts all boats. The wealth gap between rich/poor has grown significantly over the last couple decades and moving wages up for the lowest levels will hopefully reverse that trend.

That line is just not true, grocery prices have gone up an average of 10%, price at the pump has gone up almost a dollar from a year ago, price of cars, lumber, energy bills,ect…. Now I will admit that shipping delays cause a supply and demand issue which is dragging a lot of pricing up, but to say the increase in cost amount to almost nothing is lunacy.

I also think your rising tide analogy doesn’t fit this narrative, it’s a nice thought, but a businesses job is to make more money then the previous year, if a business raises wages, and sales stay the same, that leaves a business few options, pay more and have less workers, or pay more and raise prices to cover its losses due to higher wages.

Let’s say a company starts paying higher labor by 10%, and they make water heaters, that company then takes that 10% and adds it into the price of their water heaters, now you the consumer who is making 10% more, is also paying 10% more, so you have a net gain on exactly $0.00. Now strip the 10% in higher wages, and from the price of that water heater, and you are back to the same spot.

Another example, a minimum wage worker gets a pay raise to $15 an hour, another worker in another industry who used to make $15 an hour for more skilled labor asks for higher wages bc they can work an entry level job and make just as much money doing it. The skilled laborers company then raises their wages to stay competitive and keep their workers, thus expanding the wage gap that had just been shrunk, the company then starts charging more for its goods to cover the increased wages, and the cycle begins all over again

that rising tide your talking about just raises everything, costs, and wages, and at the end of the day, the wealth gap stays the same

btw, direct quote from the article you attached
“passing along the price of raising pay to consumers.”, that perfectly illustrates my point, wages have to go up to attract workers, and the added cost of labor is being passed onto the consumer, starting a cycle that isn’t good for anyone

 

[CanadaDisney05]

Let’s say a company starts paying higher labor by 10%, and they make water heaters, that company then takes that 10% and adds it into the price of their water heaters, now you the consumer who is making 10% more, is also paying 10% more, so you have a net gain on exactly $0.00. Now strip the 10% in higher wages, and from the price of that water heater, and you are back to the same spot.

I promised myself I wouldn't get dragged into a political, macro economic argument, but I couldn't help myself here because math.

This is mathematically incorrect. I'll use a simplified example to explain.

Product A sells for $10, but costs $7 to build. 10 - 7 = $3 profit. Simple enough.

Let's say the cost to produce product A increases by 10%. $7 x 1.1 = $7.70. 7.70 - 7.00 = 70 cents increase.

To offset this cost, the manufacturer is forced raise price by 70 cents. $10.00 + 0.70 = 10.70.

The price increase represented as percentage is only 7%.
10.70 / 10.00 = 1.07.
1.07 - 1.00 = 0.07

So, in order to offset a 10% cost increase in this example, the manufacturer is only required to raise prices by 7% in order to earn the same gross profit. A 10% price increase will match their previous profit margin (30%), but will also actually increase their gross profit, not keep it the same.

 

[Jonfw2]

I promised myself I wouldn't get dragged into a political, macro economic argument, but I couldn't help myself here because math.

This is mathematically incorrect. I'll use a simplified example to explain.

Product A sells for $10, but costs $7 to build. 10 - 7 = $3 profit. Simple enough.

Let's say the cost to produce product A increases by 10%. $7 x 1.1 = $7.70. 7.70 - 7.00 = 70 cents increase.

To offset this cost, the manufacturer is forced raise price by 70 cents. $10.00 + 0.70 = 10.70.

The price increase represented as percentage is only 7%.
10.70 / 10.00 = 1.07.
1.07 - 1.00 = 0.07

So, in order to offset a 10% cost increase in this example, the manufacturer is only required to raise prices by 7% in order to earn the same gross profit. A 10% price increase will match their previous profit margin (30%), but will also actually increase their gross profit, not keep it the same.

Of course, the math is more complicated than both of your examples. But the point stands: when costs increase, prices go up.

 

[CanadaDisney05]

Of course, the math is more complicated than both of your examples. But the point stands: when costs increase, prices go up.

Correct. When costs increase, prices increase. But the premise that prices must go up proportionately to keep the business owner (or shareholders) whole is false.

 

[Jonfw2]

Correct. When costs increase, prices increase. But the premise that prices must go up proportionately to keep the business owner (or shareholders) whole is false.

They do go up proportionally. The proportion is just different than he indicated.

 

[CanadaDisney05]

They do go up proportionally. The proportion is just different than he indicated.

You are correct. Poor choice of words on my part. I meant that the premise that wage increase must lead to a 1:1 proportion price increase is incorrect. Which means, that the effect on the low wage worker of a pay hike will have a positive benefit (not a net zero benefit), IF the business community accepts earning the same profit, rather than using the wage increase as an opportunity to increase profit.

I'm not here to argue whether th expectation on the business community should be to keep profits at the status quo or what ramifications that could have. I'm just pointing out the flaw in the argument that is continuously used to trick people, rather than to pursuade people.

 

[Jonfw2]

You are correct. Poor choice of words on my part. I meant that the premise that wage increase must lead to a 1:1 proportion price increase is incorrect. Which means, that the effect on the low wage worker of a pay hike will have a positive benefit (not a net zero benefit), IF the business community accepts earning the same profit, rather than using the wage increase as an opportunity to increase profit.

I'm not here to argue whether th expectation on the business community should be to keep profits at the status quo or what ramifications that could have. I'm just pointing out the flaw in the argument that is continuously used to trick people, rather than to pursuade people.

Oh, I promise I’m not arguing. I’ve worked in finance for 25 years and I just love an intellectual economics discussion that goes beyond “rich people bad” which is where this was before you and Falcon started commenting.

 

[Aluminum Falcon]

I promised myself I wouldn't get dragged into a political, macro economic argument, but I couldn't help myself here because math.

This is mathematically incorrect. I'll use a simplified example to explain.

Product A sells for $10, but costs $7 to build. 10 - 7 = $3 profit. Simple enough.

Let's say the cost to produce product A increases by 10%. $7 x 1.1 = $7.70. 7.70 - 7.00 = 70 cents increase.

To offset this cost, the manufacturer is forced raise price by 70 cents. $10.00 + 0.70 = 10.70.

The price increase represented as percentage is only 7%.
10.70 / 10.00 = 1.07.
1.07 - 1.00 = 0.07

So, in order to offset a 10% cost increase in this example, the manufacturer is only required to raise prices by 7% in order to earn the same gross profit. A 10% price increase will match their previous profit margin (30%), but will also actually increase their gross profit, not keep it the same.

Your math is flawed, when a company raises prices, they add by dividing by the inverse, so it would be more like raising by taking that $10, and dividing it by a .9 . 10/.9= $11.11, that is a true 10% mark up, and one of the first things I learned in business, so the consumer actually pays more than 10% on a 10% markup.
The reason companies do this, is bc they run on margin, not price
the site below explains it pretty well

https://www.themathdoctors.org/percent-change-markup-and-margin/

 

[CanadaDisney05]

Your math is flawed, when a company raises prices, they add by dividing by the inverse, so it would be more like raising by taking that $10, and dividing it by a .9 . 10/.9= $11.11, that is a true 10% mark up, and one of the first things I learned in business, so the consumer actually pays more than 10% on a 10% markup.
The reason companies do this, is to account for price raises on, overhead, raw material, and so on, usually a price increase in one area causes a domino affect, and companies have to react to that.

That is exactly my point. A percentage increase is not the same as a gross dollar increase. If total costs go up by $1,000,000, IF the business is willing to accept the same profit (dollars, not percentage), revenue needs to increase by $1,000,000. The percentage is being calculated on different bases.

In my simple example, a 7% price increase offsets the 10% cost increase. The business justifying a 10% price increase to offset a 10% cost increase is just fooling the customer base into increased profits. Again, I'm not arguing that the business should not be trying to increase profit. I'm just pointing out the flawed logic.

 

[Aluminum Falcon]

That is exactly my point. A percentage increase is not the same as a gross dollar increase. If total costs go up by $1,000,000, IF the business is willing to accept the same profit (dollars, not percentage), revenue needs to increase by $1,000,000. The percentage is being calculated on different bases.

In my simple example, a 7% price increase offsets the 10% cost increase. The business justifying a 10% price increase to offset a 10% cost increase is just fooling the customer base into increased profits. Again, I'm not arguing that the business should not be trying to increase profit. I'm just pointing out the flawed logic.

business runs on margin, the moment they start taking less margin, their product starts to dip in value, and over time the business goes defunct. They run on margin because they have to account for increases on material, overhead, raises, taxes, and inflation to name a few. You make it sound like business is greedy just for the sake of it, and I think you said it there, your equation is to simple

 

[CanadaDisney05]

business runs on margin, the moment they start taking less margin, their product starts to dip in value, and over time the business goes defunct. They run on margin because they have to account for increases on material, overhead, raises, taxes, and inflation to name a few. You make it sound like business is greedy just for the sake of it, and I think you said it there, your equation is to simple

A) I explicitly said:

I'm not arguing that the business should not be trying to increase profit. I'm just pointing out the flawed logic.

I never said the business was "greedy".

B) i never said that wages increased by 10% in my example. I said costs increased by 10%. That factors in things like overhead, etc....

I'll repeat myself. I am not suggesting that businesses should be operating in a way that doesn't provide the largest profit possible. That is a much larger discussion, and I don't pretend to be a macro economist who studies in depth these types of models. I am just pointing out that the flawed logic which is continously repeated that a 10% cost increase requires a 10% price increase in order to keep the business whole.

 

[Aluminum Falcon]

A) I explicitly said:



I never said the business was "greedy".

B) i never said that wages increased by 10% in my example. I said costs increased by 10%. That factors in things like overhead, etc....

I'll repeat myself. I am not suggesting that businesses should be operating in a way that doesn't provide the largest profit possible. That is a much larger discussion, and I don't pretend to be a macro economist who studies in depth these types of models. I am just pointing out that the flawed logic which is continously repeated that a 10% cost increase requires a 10% price increase in order to keep the business whole.

Got cha, I thought you were referring to an earlier post of mine, I do understand where you’re coming from, we just don’t see eye to eye on it haha

 

[Starport Seven-Five]

The wealth gap actually hasn’t grown when you factor in taxes paid and government benefits.

Do you have a source for that? Would like to read more.

I totally agree with you though that the reasons for the current phenomenon are multi-faceted. But ultimately, Falcon is correct: artificially increasing wages for the lowest paid won’t change anything. Inflation is already rising. We know this. Who do you think that impacts most?

Inflation will impact those not getting raises the most. If low income wages go up 10% and prices raise 5%, it's still a net gain.

That line is just not true, grocery prices have gone up an average of 10%,

Source? YOY according to this is 4.6% from the BLS:
https://www.bls.gov/news.release/cpi.nr0.htm

price at the pump has gone up almost a dollar from a year ago,

Prices last year were hit by a drop in demand due to the pandemic. We're up $0.50 from 2 years ago and below the high prices of 2011-2014.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epmr_pte_nus_dpg&f=m

price of cars, lumber,

Temporary shortages driving spike in prices.

energy bills,ect…. Now I will admit that shipping delays cause a supply and demand issue which is dragging a lot of pricing up, but to say the increase in cost amount to almost nothing is lunacy.

My quote was regarding the labor costs amounting to almost nothing. For example:
1. A study was done on McDonald's and found that a 10% increase in their labor cost translated to a 1.4% increase in the cost of food. https://www.marketwatch.com/story/w...s-restaurants-and-their-employees-11611862080
2. Chipotle found similar when they had to raise prices 4% to cover raising wages to an average of $15/hour. https://www.wzzm13.com/article/news...yees/507-18678e92-f393-4b26-ae2c-71bd98dd17ca

If you're going out to a restaurant, is a 4% increase in cost even noticeable? That's $0.40 on a $10 meal.

I also think your rising tide analogy doesn’t fit this narrative, it’s a nice thought, but a businesses job is to make more money then the previous year, if a business raises wages, and sales stay the same, that leaves a business few options, pay more and have less workers, or pay more and raise prices to cover its losses due to higher wages.

A business' job is to stay afloat. This idea of delivering year over year increases in profit to satisfy investors is a relatively new phenomenon and is not sustainable long term. You eventually squeeze wages so low that the consumer class ceases to exist.

Let’s say a company starts paying higher labor by 10%, and they make water heaters, that company then takes that 10% and adds it into the price of their water heaters, now you the consumer who is making 10% more, is also paying 10% more, so you have a net gain on exactly $0.00. Now strip the 10% in higher wages, and from the price of that water heater, and you are back to the same spot.

As mentioned above, it's not a 1:1 relationship. The price of a product is labor + materials + capital + tooling. Some products are labor intensive while others have very little impact. Most mass produced products will see very small cost increases from the increase in labor costs.

Another example, a minimum wage worker gets a pay raise to $15 an hour, another worker in another industry who used to make $15 an hour for more skilled labor asks for higher wages bc they can work an entry level job and make just as much money doing it. The skilled laborers company then raises their wages to stay competitive and keep their workers, thus expanding the wage gap that had just been shrunk, the company then starts charging more for its goods to cover the increased wages, and the cycle begins all over again

that rising tide your talking about just raises everything, costs, and wages, and at the end of the day, the wealth gap stays the same

“passing along the price of raising pay to consumers.”, that perfectly illustrates my point, wages have to go up to attract workers, and the added cost of labor is being passed onto the consumer, starting a cycle that isn’t good for anyone

I understand this but your assumption is that higher prices are sustainable. Corporations have constantly pressured wages down to grow profits and part of raising wages will be a reversal of that trend. They'll try to pass it along to the consumer as much as they can but at the end of the day, the market will only bear so much.

If you want an example of this you can explain how manufacturing output in this country has increased dramatically while worker wages have remained the same and cost of goods have steadily increased. When the gap grows and companies post record profits we consider it normal but the idea of that gap shrinking shouldn't break our brains. A healthy consumer class needs to exist for the economy to work and the continual shifting of wealth to a smaller and smaller group is not sustainable.

 

[Jonfw2]

Do you have a source for that? Would like to read more.

https://www.aei.org/op-eds/incredible-shrinking-income-inequality/

 

[OKW Lover]

Any company with a business model that relies on huge numbers of low wage workers should be having a moment of reckoning right now. Disney among them

Not understanding why this is so right now as opposed to pre-covid.

Amazon hired 500,000 employees last year.

And is seeking more. Disney is also seeking more employees.

Amazon has a labor shortage so bad they are offering college tuition as a benefit to lure people.

Disney has offered this benefit for years

The ultimate way Disney makes money long term is a holistic approach in which every product area succeeds because of the others. Parks are reliant on Pixar films are reliant on D+ is reliant on parks are reliant on.,,,

Don't forget that Disney is more than parks and movies. There is also the fairly unrelated ABC, ESPN (and other alphabet businesses) that can be approximately 1/3rd of the overall corporate revenues/costs, depending on the year.