Knock-on Effects or the Foreseen and the Unforeseen

Step 1: SARS-CoV-2 originates in China.

Step 2: The virus spreads from China to Europe.

Step 3: The virus spreads from Europe to the U. S. and from China to the U. S.

Step 4: Panicky mayors and governors impose lockdowns on their jurisdictions in the hope of slowing the spread of the virus.

Step 5: The volume of business being done by many businesses decreases sharply, partly due to the lockdowns and partly due to people changing their behavior.

Step 6: Disney Co. lays off the 28,000 of its 233,000 employees who work in its two domestic theme parks.

Step 7: U. S. Sen. Elizabeth Warren complains about it. From Bloomberg:

Sen. Elizabeth Warren (D-Mass.) called for answers on Wednesday on Disney laying off 28,000 workers while reportedly restoring the salaries of its senior executives during the coronavirus pandemic.

Disney said last month that it plans to lay off the employees due to the lack of attendance at its parks around the world. Warren, however, noted in a letter to Disney Executive Chairman Bob Iger and CEO Bob Chapek that the company said it would restore the paychecks of executives to pre-COVID-19 levels in August.

“I would like to know whether Disney’s financial practices have impacted the company’s decision to lay off workers and whether your company plans to extend health care or other critical benefits and protections to laid off employees,” the senator wrote.

She added that the company has invested in compensation packages, dividend payments and stock buybacks in recent years for executives and stockholders, “all of which weakened Disney’s financial cushion and ability to retain and pay its front-line workers amid the pandemic.”

Warren asked for information by Oct. 27 on which types of employees will be laid off, how decisions were made on the layoffs, if Disney will provide health care coverage for laid-off employees and the total compensation Disney gave its top executives in 2019 and 2020, among other information.

I think that’s only the tip of the iceberg. Phase II of the economic downturn is now well under way and every business that depends on in-person contact with the public is suffering. A new “stimulus” package will not do much to change the course of events.

18 comments… add one
  • PD Shaw Link

    A quick google does not locate Warren having any interest in Disney firing workers and requiring them to train their H-1B replacements. The attorney that brought four lawsuits on behalf of the workers stopped, because she determined she cannot win: “Unfortunately, we lost because it’s legal.” The law is the law, its not like there are people who makes laws, at least ones that care.

    (I think its evidence that Warren doesn’t care about the workers, she cares about executive pay, its a grievance issue for people one step down the social-economic ladder)

  • steve Link

    She is really complaining about the executives maintaining their pay, and one assumes their jobs, while laying off a lot of people. As noted above, that is totally legal and what we should probably expect from most large corporation management in the US. Dont know about Warren but I think it tells us what management thinks about each other vs their workers.


  • walt moffett Link

    and we enter yet another round of Grand Standing, bloviating, Roth waxing Jennings, unemployment numbers rising, more defaults, groans and creaks from the safety net, but, counting coup is what matters.

  • PD Shaw Link

    @steve, Democratic Senators that called for an investigation into Disney’s abuse of the H-1B visas:

    Richard Durbin (D-Ill.)
    Richard Blumenthal (D-Conn.)
    Sherrod Brown (D-Ohio)
    Claire McCaskill (D-Mo.)
    Bernard Sanders (I-Vt.)

    Warren is not pro-worker, she’s anti-finance and anti-executive compensation.

  • PD Shaw Link

    We were at WDW in February; it was so freaking crowded and its so bizarre to think back to a time where people were lined up for hours in enclosed spaces. I can’t imagine how that place can remotely stay in business. I keep seeing suggestions from AMC that they can’t make it through the year, etc. etc.

    In any event, I learned this WDW trip that the new Star Wars ride is longer than the previous record holder at WDW — It’s a Small World. Which amused me because Dave has mentioned that he got stuck on it once.

  • bob sykes Link

    There are still problems in supply chains, and our local Kroger and Walmart are missing whole categories of stuff. Some empty shelves. Some products appear only occasionally. Our local small town has lost three chain restaurants, and some of the others are closed for remodeling, even a Wendy’s.

    All the schools are on some sort of hybrid system, but parents are complaining that the online part is a disaster. Students at all grade levels and in college are losing a year of education.

    Our economy is still 5 to 10% below its pre-covid level. That’s a major recession. On the bright side it is a recovery from a 30% drop in the second quarter.

    China seems to have recovered, and its economy is actually growing.

  • There are still problems in supply chains, and our local Kroger and Walmart are missing whole categories of stuff. Some empty shelves.

    The same is true of our stores. A colleague of mine who is an expert in warehouse and supply chain management says that there is a massive shift in supply chains in progress which will continue regardless of who is elected president.

  • PD Shaw Link
  • In our particular case it wasn’t a supply chain problem as such. The model we wanted was in stock but it took us three weeks to get it delivered—it was installed on Monday. The retailer was backed up, presumably for reasons described in the linked article.

    After living for most of a month with just a few cubic feet of refrigerator space it seems pretty strange to have a full-sized refrigerator again. I might add that we experienced a problem that I think all consumers in the U. S. do. All of the products suck. High end or economy end doesn’t really make any difference. Products have features we don’t care about, have features we do not want, and are poorly designed and constructed.

    That’s something I noticed when I returned from Germany after working there for a while and that was forty years ago. The U. S. is a mass market economy. It isn’t just true about appliances but about everything: clothing, food, everything. Many truly quality products simply are not available. I can walk into a store in the UK or Germany and see fabrics that are higher quality than anything on sale in the U. S.—I’d need to order directly from overseas.

  • Andy Link

    As long as the incentives remain the same for big corporations, then they will continue to operate as normal regardless of what Warren or anyone else says.

    Like many on the left, I think she comes at this problem from the wrong direction. Changing incentives will be more effective long-term than trying to punitively micromanage executive compensation.

    We have the same issues at our groceries (also a Kroger brand), but Costco seems to be doing just fine with stocking.

    I agree with Dave that a lot of stuff out there is crap. We’ve been looking for a simple, basic coffee-maker for our RV and all the reviews of the basic drip models indicate that a non-trivial number of them die after a year. And that’s been our experience as well.

  • TastyBits Link


    Get the basic Mr. Coffee, and when it breaks, buy a new one. (Save the caraeff.) I got rid of my ‘fancy’ coffee maker, and I have not looked back.

  • steve Link

    PD- Those people were maybe pro-worker, and the workers still lost their jobs. It was legal. When compensation can be manipulated to be so high for executives, then maybe there is merit in reducing their pay as it would reduce incentives to get rich at the expense of employees.


  • I agree with steve’s implicit claim above: there is a problem with corporate governance. I suspect that the increased role of funds in stock ownership is a factor in that but, since I don’t really know why or how it happened, it’s unclear to me how to fix it. Maybe it’s time to make interlocking directorates illegal.

  • Greyshambler Link

    interlocking directorates
    They sit on each other’s boards and vote on each other’s compensation.
    What would you expect to see?

  • PD Shaw Link

    Most of the layoffs are at Disneyland, which California government ordered closed 7 months ago. Will Warren join with the local union in asking the governor to allow furloughed workers to return to their jobs?

    I don’t think the mysteries of executive compensation have anything to do with this. There has been a loss of customers, so people whose job is entirely with customer service are on the front-line.

  • There has been a loss of customers, so people whose job is entirely with customer service are on the front-line.

    Not just that but Disney management has decided those customers won’t be coming back for the foreseeable future but streaming, which doesn’t require a lot of customer-facing jobs, will only expand. So they’re reorganizing accordingly.

    Developments of that sort have been foreseen for some time. I am among those who have lamented the undue emphasis in policy on increasing the number of commodity jobs as a disaster waiting to happen. The disaster wasn’t caused by COVID-19 so much as catalyzed by it.

  • PD Shaw Link

    Disney’s business is selling its brand, and I think they will be back to selling their brand through their parks. The people losing their jobs appear to be mostly part-time workers providing extra entertainment (street musicians and performers, costumed characters) and performing shows that aren’t efficient at 25% capacity. The concern from people that go every year is that the parks might become more like Six Flags, basically rides and none of the lagniappe.

    The jobs I mentioned aren’t really unskilled jobs though, there are a lot of arts/entertainment jobs, which people take as part-time because they enjoy it and there aren’t a lot of opportunities.

  • The jobs I mentioned aren’t really unskilled jobs though, there are a lot of arts/entertainment jobs, which people take as part-time because they enjoy it and there aren’t a lot of opportunities.

    The average wage of a member of Actor’s Equity is about $40,000. And, as you say, there aren’t a lot of opportunities. As I keep telling people, you don’t become a performer because you want to or because you like it but because you need to.

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