Economics for Cheerleaders

With the Super Bowl finished (yeah Seahawks!) media attention has switched from the teams and players to the cheerleaders. A couple of recent articles caught our attention and, of course, we just couldn’t resist the temptation to comment. 

ABC News is reporting that a Cincinnati Bengal Cheerleader is suing the team over what she claims is a $2.85 per hour wage. The NY Daily News, meanwhile, published an article about the Oakland Raiderettes suing their team for similar reasons. While we don’t claim to know a lot about cheerleading, we do know a lot about economics and the way markets work. Given that, we feel it necessary to warn the cheerleaders that brought these suits to beware of the law of unintended consequences.

We checked a few of the NFL websites and found that the pay wasn’t all that great, and most had a very strict contract. These are not working conditions that we would be willing to accept, but then, we didn’t apply. A cheerleading squad consists of 30 very fit women, each of whom successfully made it through the audition process and accepted the terms of their contracts. The teams that we looked at admit that these are part-time jobs. No one should expect to make a decent living as a part-time cheerleader. 

That, in itself, suggest that there is some other non-pecuniary benefit to being an NFL cheerleader. Opportunities listed on team websites include modeling, exposure, networking, personal appearances and promotions. Indications are that between 200 and 1000 applicants pay $25 each to apply to be cheerleaders each year. They then attend training seminars just for the privilege of trying out. In economic parlance, there is an excess supply of cheerleaders. Most teams have at least 6 applicants for each available spot. 

If the $2.85/hr. figure claimed in the Bengals lawsuit is accurate, the equilibrium wage rate for cheerleaders is likely close to zero. The exposure, it appears, is sufficient compensation for the duties that they perform. 

What happens if the Raiderette and Ben-Gals are successful in their lawsuits and the NFL is forced to increase he pay of cheerleaders? Unfortunately for the existing cheerleaders, they may lose their jobs. Supply curves are upward sloping. An increase in the wage rate increases the number of people that are willing to work. If there are 200 people applying to be cheerleaders when the rate is a purported $2.85/hr., how many will apply at $7.85, the minimum wage in Ohio? Certainly more than 200. As the wage rate rises, it becomes sensible for professional dancers to audition. Not only does the number of applicants rise, but so too does the quality of the applicant. 

If, and when, the wage rate approaches the equilibrium level, the number of applicants will decrease and the quality of the applicant decreases. This fundamental rule of labour markets applies not only to NFL cheerleaders, but to bank presidents as well.