In 1938, the United States was climbing slowly out of the great depression. It was a time where the free wheeling days of robber barons hoarding cash with largely ineffective charities was more fully understood. The older generation was familiar with how the poor were treated with grueling work schedules, no days off, chained in work rooms and searched upon exit to ensure no stealing, young children pulling twelve hour days instead of going to school, and little liability when it came to product defects. The younger generation, informed by the Great Depression, know how the rich did everything they could to remain rich while squeezing every drop out of the middle class. These experiences led most of the country to embracing Franklin Delano Roosevelt's New Deal approach and believed that the federal government could stop how private businesses abused the poor and middle class.
Hugo Black authored the Fair Labor Standards Act of 1938. It was a compromise. His vision of the bill granted more rights to the worker and gave an impression of what we would think of as European socialism-infused democracy. The final bill had a great impact on society. It is why we think of eight hours as a work day and 40 hours as a work week. It established overtime rules. It put limitations and prohibitions on types of child labor. The act established the federal minimum wage.
Over time, the act was amended and often extended. For instance, Dwight D. Eisenhower called for the expansion of coverage for work that fell under the minimum wage laws in 1955. Typically, the act is altered once or twice every decade. Minimum wage slowly moves upward. More and more types of work fall under the scope of the act. And, powerful lobbying groups are sometimes able to nip lawsuits in the bud by having congress pass special exemptions for types of work. For instance, the 1996 Small Business Protection Act exempted tipped employees from minimum wage.
Over the past few years, Major League Baseball has been
lobbying hard to ensure they can exempt minor league players from FLSA. It would be beneficial for MLB to get this because they want to end the court cases that might force them to pay minimum wage and overtime. The claim from Major League Baseball is that minor league players are exempt because they are seasonal/recreational employees, which would be akin to carnival workers. Some arguments on the periphery have included that players in the minors are more or less involved in internships where (1) employee and employer understand what compensation will be delivered, (2) that the work benefits the employee more than the employer, and (3) that the employment is a needed aspect to a final occupation. The internship argument tends to be more of a garnish than a main argument because internship arguments would often be undermined by exclusivity rules in the contracts the players sign.
Minor league players have
argued that the current system exploits players. I cannot find the current Minor League Baseball agreement, but the numbers communicated to me are these:
Monthly Salary
Dominican Summer League: $300
Rookie League: $950
Short Season A: $1150
Low A: $1300
Hi A: $1500
AA: $1700
AAA: $2400
Players are not paid by the club for spring training or instructional leagues. Short season payment covers two to three months. Full season payment covers five months. This means the yearly expected salary for minor leaguers at various steps would be:
Yearly Salary on Level
DSL: $900
Rookie: $2850
Short A: $3450
Low A: $6500
Hi A: $7500
AA: $8500
AAA: $12000
If a player repeats a level, he is usually entitled to a raise of about $50 a month. If you are in the minors and score a 40 man roster spot, your pay increases to $88,000. If your first contract expires (six full seasons after you sign it) and you are a free agent, you can negotiate for a higher salary if a team is willing to hand you one. As you can see, there is good reason why minor league teams send out pleas for people to host players. With their salary, they cannot afford rent. It is why it is not uncommon to hear about four or five players sharing space in two room apartments while in the minors.
Wait, what about signing bonuses?
Players signed outside of the top ten rounds see signing bonuses ranging from $1,000 to $100,000 dollars for signing a 6.5 year contract. Senior college players typically sign for $10,000 in the first ten rounds. At any time, an organization has about 10% of its minor leaguers as guys who had a signing bonus for more than $500,000 for that 6.5 year contract. International players often sign for far less and often send much of their meager paycheck back home to their families.
As you may know, baseball is a nine billion dollar industry. Revenue for each team ranges from the low 200 million mark for the Rays to over 500 million for the Yankees. Assuming that each team has 250 minor leaguers in their system, it costs each club about 1.53 million dollars to pay salaries for every minor leaguer in the system (If clubs also paid for spring training, that would add 0.27 MM). The public line by MLB is that it would be cost prohibitive to put minor league players under FLSA scope. You often hear a few things, such as how thankful minor leaguers are of having this opportunity (which though the severity is different in scale, this was something you often heard about child labor or back breaking hours before FLSA went into effect). You also hear organization lament about what if they had to tell their guy who wants more batting practice time that he has to go home because his hours are up (which is silly because you can do whatever you want off hours and MLB teams can pay for overtime).
So how much would it cost?
There are a few ways to look at potential solutions:
Per Hour
1. Straight Time
2. Time Plus 1.5
3. Living Wage in Season
Salary
4. Living Wage Salary (whole year)
5. Living Wage + child Salary (whole year)
Hybrid
6. Split Roster
Straight Time
For this exercise, we will use Sarasota as the baseline for minimum wage for US leagues and the Dominican minimum wage. Under this scenario, we assume that each baseball player is paid in-season plus spring training for all their hours working for the club (estimated as 60 hours under employer oversight). Florida minimum wage is $8.25.
Time Plus 1.5
This approach is the same as straight time except that any hour worked over 40 hours a week would result in being paid 1.5x the hourly rate ($12.38). Florida is again the baseline here.
Living Wage in Season
In Sarasota, the Living Wage is
considered $12.00. This is a bit of a false statement because a living wage would assume 2,080 hours of work per year, while a full season plus spring training workload would be 1,548 paid hours.
|
Straight |
Time Plus |
Living |
Complex |
12771 |
14900 |
18576 |
DSL |
1491 |
1491 |
1491 |
Rookie |
6386 |
7450 |
9288 |
Short A |
6386 |
7450 |
9288 |
Low A |
12771 |
14900 |
18576 |
Hi A |
12771 |
14900 |
18576 |
AA |
12771 |
14900 |
18576 |
AAA |
12771 |
14900 |
18576 |
Total |
2.59 MM |
3.02 MM |
3.75 MM |
Increase |
1.06 MM |
1.49 MM |
2.22 MM |
AAA players really do not benefit until you reach that third option, but, over the course of their professional careers, it would benefit them in the low minors to have earnings of $12,771 or $14,900 as opposed to the $3,450 a low A player makes up to the $8,500 a AA player makes. Perhaps most interesting is that, of these, the highest increase in cost would be the living wage option at 2.22 MM a year for the entire minor league system. The Tampa Bay Rays would be impacted most as their minor league salary base would take up 1.06% of their revenue as opposed to the current projected cost of about 0.86%. For a team like the Yankees, they see an increase from 0.33% to 0.40% of their revenue.
While the above pay options improve the financial security of minor leaguers, we are still talking about poverty level employment. For a single house dweller, poverty is considered less than $15,060 per year while a wife brings the poverty level to $20,290 and a wife and kid takes you to $25,520. So, yes, almost all baseball players would remain in the poverty zone under the scenarios above. This takes us to a salary approach.
Living Wage Salary
This approach would take into consideration that players would reason a full living wage, making up those 532 hours otherwise not covered with only in-season pay.
Living Wage + child Salary
While baseball is a family sport (or at least it is sold as one), the minor leagues are quite unconcerned about providing for a player with a family. In this scenario, we consider living wage salaries and assume all players have a single child. This scenario is the same as the Living Wage Salary scenario, but with that child component.
Salaried |
|
|
|
Living |
Living +1 |
Complex |
24960 |
52000 |
DSL |
3280 |
5964 |
Rookie |
14477 |
30160 |
Short A |
14477 |
30160 |
Low A |
24960 |
52000 |
Hi A |
24960 |
52000 |
AA |
24960 |
52000 |
AAA |
24960 |
52000 |
Total |
5.17 MM |
10.76 MM |
Increase |
3.64 MM |
9.23 MM |
These are certainly more, perhaps, socially responsible figures. What these approaches do is respect these professionals as full year employees, which makes some sense as they are signed for 6.5 years exclusive to the team. What the second option does is honor and respect the families of these employees who serve as the foundation of Major League Baseball. From what I understand, this approach would be more similar to what Japanese players make in their minor leagues.
For the Tampa Bay Rays, this would increase the revenue share from 0.86% to 1.73% for the single and 4.40% for the family plan. For the Yankees, they would see it increase from 0.33% to 0.66% for the single and 1.68% for the family plan.
Split Roster
This scenario is a bit more complicated. This scenario considers the creation of a 60 man minor league roster. Being on this roster would provide the team the same protection that the 6.5 year first contract provides, but also pays the players on this roster a living wage salary. That 60 man number though does not consider the other 190 players needed to fill out the minors. These players would play under existing rules, but be additionally compensated for Spring Training and be free to sign with any team after the season ends.
Split |
|
|
|
60 man |
Seasonal |
Complex |
24960 |
7800 |
DSL |
3280 |
900 |
Rookie |
14477 |
2850 |
Short A |
14477 |
3450 |
Low A |
24960 |
7800 |
Hi A |
24960 |
9000 |
AA |
24960 |
10200 |
AAA |
24960 |
14400 |
Total |
1.28 MM |
1.28 MM |
Increase |
|
1.03 MM |
Under this scenario, we have a compromise. You have a two-tiered system where players the team truely designates as future stars are provided with a living wage salary and the club enjoys the protections of the first contract. Meanwhile, the other 90 players are handled much like the seasonal/recreational labor that MLB claims them to be. These contracts would be pay for play and the players would be free to sign with any organization at the conclusion of each year.
The Tampa Bay Rays would be impacted most as their minor league salary base would take up 1.22% of their revenue as opposed to the current projected cost of about 0.86%. For a team like the Yankees, they see an increase from 0.33% to 0.47% of their revenue. To me, this seems fair.
When I spoke generally about this in December, former site contributor Nick Faleris piped in with the idea that maybe this sort of structure would alter things more significantly. He suggested that perhaps many clubs would reduce the number of minor league affiliates.
This was referring to a true living salary, so that is what I will compare it to. I figured the club would keep its complex at full strength, but that it would include more half year players who were in the draft. The club would also keep its Low A, Hi A, and AA clubs. Under this scenario, the full system cost of 5.17 MM would decrease to 2.58 MM and cost 125 jobs per club choosing to go this route.
That leads us to a lot of questions.
Is the minor system oversaturated with clubs, developmentally speaking?
Are certain levels not needed for development or as a holding pen for MLB level substitution?
Is the industry of minor league baseball more important than the earnings of its employees?
Are multi-year contracted employees of MLB as minor leaguers truly seasonal labor like carnival workers?
Is it moral as spectators to enjoy the game when you know the minor leagues is full of struggling families?
It can be hard to really get a good grip about what all of this means and to see it more personally. Based on unpublished research, the typical minor league baseball player comes from a white, upper middle class home and by the age of thirty has half the earning potential and assets as a similar person from the same background that did not go into baseball. That difference in earning can have major impacts on a person's life. That difference is worth about
two years of life (my extrapolation from the data). Based on a Stanford
study, the value of a year of life is about $129,000. So, from a purely financial perspective, the players are not only making next to nothing, they are paying about $256,000 for the privilege of playing the game.
Maybe that is a question we could answer for ourselves. How much would we pay to be a professional baseball player in the minors?
-----
Addendum: I have seen some complain about the unpublished research mention. Sorry, when you work with academics, that is what happens. That is the best data I have. I can put forward worse data. If we take BLS data on earnings and how those change over time, then we see some differences even in that simple of a study methodology. Let us compare the median person (which is a lower standard than the upper middle class median of your typical entry level professional baseball player from the United States) who got a 10k signing bonus in three scenarios: (1) going to college and choosing a non-baseball career, (2) going pro and entering a non-baseball profession after four seasons in minors, and (3) going pro, entering college after four seasons in the minors. At age 30, the lifetime earnings of a person who went to college instead of a pro career is 376k. The baseball player who never went to to college is at 240k. The baseball player who went back to college, at this point, is at 223k, but that individual will bypass the high school diploma player at age 32. What we see here is a difference of 136k. That is about half of what the unpublished data suggests.
Second addendum: Using a different method to see where that upper class family kid would land, the difference in earnings of the baseball playing high school diploma individual increased from 57% more to 82% more. So initial class status appears to have accounted for much of that difference.