Minimum Wage Increases

Dear Mr. Theme Park:

My state was one of the states that began 2016 with a minimum wage increase.  I am concerned that this increase is going to hurt my business.  What can I do to prepare for the upcoming season in terms of possibly reducing staffing – or other measures - without impacting my guests and their experience?

Jim

Dear Jim:

Your concern about minimum wage impact is one shared by many park organizations and small park operators.

For many years, our industry enjoyed a special dispensation from minimum wage.  Quite frankly, I am not sure if we still have this dispensation.  Nevertheless, even if we do, at this point in time in our competitive industry, it really does not make any difference or have a positive impact.  Why?  Because we are in a highly competitive labor market.  Most parks are competing for high school and college students with many local businesses, such as retailers, fast food facilities, and more.  There are many companies and people hiring for positions to be filled by high school and college students, all of which compete with theme parks and other forms of leisure entertainment.  These include:

• Babysitter / Nanny
• Camp Counselor
• Pool Cleaner
• Career-Oriented Internships
• Tutor
• Movie Theater Employee
• Golf Course Caddy
• Mobile Automobile Detailer
• Lifeguard
• Newspaper Delivery Person
• Handyperson
• Dog walker/pet-sitter
• Product Merchandiser
• Sales Associate
• Pharmacy Technician/Associate
• Non-Medical Assistant (caregiver for elderly)
• Housekeeper
• Mover
• Warehouse worker
• Office clerk
• Waiter/waitress and barista
• Cashier
• Restaurant host/hostess

One of the most impactful issues affecting our industry from the employment standpoint is the changing school calendar.  Over the last 25 years, we watched our high schools and colleges across America end their school year later and start it earlier.  This change is having an enormous negative impact on our employment programs.  It not only affects our scheduling of workers, but it also affects days and hours of operation.  We have seen where many parks have had to significantly shorten both number of days and the number of hours they operate because of this change.

In addition to a shorter season, the shrinking labor pool necessitates us to pay more on an hourly basis.  I well remember when we opened Kings Island and, for its first ten years, had a huge talent pool in the greater Cincinnati area from which to hire seasonal employees. We actually hired one employee for every five students we interviewed.  Today, that luxury no longer exists at Kings Island or for any theme park.  The shortage of students forces us to pay higher hourly wages which continues to rise yearly.

For parks that have a small annual turnover, it appears that they have to compensate returning employees at higher levels every season.  Yes, a lot of parks will have an attrition factor that takes place, eliminating some of the higher returning employees as they move on to full-time employment.  But, on an interim basis, the end result is that it costs us more to operate due to increasing necessity to compete with the jobs listed earlier.

Visitors expect theme park employees to be courteous, smiling, informed, and polite.  Seems reasonable, but it also costs money.  These are the qualities all of the above competing employers are looking for when recruiting.  Recently, McDonald’s began paying signing bonuses to employees.  Many parks have employed end-of-the-season bonus plans, but I know of none who have instituted upfront signing bonuses.

Jim, labor is our single largest cost associated with operating a park.  Through the years, operators have utilized many ways to manage labor expenses.  Not all were good and not all were successful.   Some of these attempts included shortening hours of operation, reducing days of operation, and rotating employees in the operation of certain rides and attractions over a defined period of the day, thus using less labor.  The impact of these measures of labor reduction can be a real “turnoff” to guests.  If they came on a Pay One Price plan, they expect to “eat the full buffet.”  Several management regimes ago, Six Flags put several of the above plans into effect with disastrous results, which saw heavy complaints and low guest dissatisfaction.  The end result was that attendance began to suffer.  (They no longer do this).  It was a reaction to increasing labor costs resulting in negative return.

Jim, above all, my suggestion is to not implement any procedures which significantly affect the guests’ visit.  Try managing labor better during times of rain or bad weather, and reducing labor shifts during these times before they are scheduled to start work.  There is no need for them to come if it is a rain-out.  Make sure to manage shift overlaps in a way that minimizes the number of staff reasonable to cover shift changes.

You could also look at your fringe periods of operation to determine if this is when and where you should or could reduce labor expense.

We know there are new ways to also mechanize some jobs in a park.  Ask each department head for their suggestions. The best ideas many times come from the field.  

You may want to talk to your industry counterparts.  Forums at the IAAPA seminars provide great opportunities to share ideas, and learn ways to save money and improve guest experiences.  

Good luck and remember to be vocal to your local government representatives about the negative impact that minimum wage increases have on you and your employees if forced to cut jobs.  Here’s to a good 2016 season!

US Department of Labor