Go ahead and guess: If Amazon and Walmart paid every employee $xx more per hour, their profit would go away

So here we go.

Amazon reported a net profit in 2020 of $21.33 billion U.S. dollars.

Amazon has 1.3 million employees. If they work on average 2,000 hours a year (50 x 40), that means there are 2.6 billion work hours.

That means their profit per hour worked is $8.20.

That is your preliminary answer.

I am having a hard time following...

it looks like Amazon could likely easily afford to up the pay of hourly staff at and average $2.50/hr. They would not even need to do it for everyone, but if they raised the pay by $2-3 for those making less than $16/hr that would likely make a substantial difference in the lives of their lowest paid employees.

I would argue that the lowest paid drivers probably work harder (and are more valuable to the company) than low level managers and low level white collar workers.

rojo wrote:

So here we go.

Amazon reported a net profit in 2020 of $21.33 billion U.S. dollars.

Amazon has 1.3 million employees. If they work on average 2,000 hours a year (50 x 40), that means there are 2.6 billion work hours.

That means their profit per hour worked is $8.20.

That is your answer.

The math here is problematic. You're trying to assess profit by treating a net profit like a gross. Net profit is anything in the plus when ALL is added and subtracted...including salaries.

Let's do it now for Walmart.

In the US they made 17.38 billion. They have 1.5 million employees. That would be 3 billion working hours in a year. Meaning the profit per hour worked is $5.79.

Now I did realize a flaw to my quick calculations that mean my numbers are too low. I just realized the number of workers includes part-time workers. Walmart doesn't have 1.5 million full-time workers. Amazon's numbers similarly included part-time workers.

if the workers on average only work half-time, then we need to double the numbers.

If they on average work 2/3rd of a full day, then we need to increase it by 50%

So let's increase those numbers by 50%.

Walmart would be $8.69 and Amazon would be $12.30.

rojo wrote:

So here we go.

Amazon reported a net profit in 2020 of $21.33 billion U.S. dollars.

Amazon has 1.3 million employees. If they work on average 2,000 hours a year (50 x 40), that means there are 2.6 billion work hours.

That means their profit per hour worked is $8.20.

That is your answer.

Their profits already take into account employee pay so they could give their staff an EXTRA $8.20 on top of their current pay before it becomes zero.

Also, Amazon massively re-invests into its business which offsets the amount of profit it makes.

Tatar... wrote:

rojo wrote:

So here we go.

Amazon reported a net profit in 2020 of $21.33 billion U.S. dollars.

Amazon has 1.3 million employees. If they work on average 2,000 hours a year (50 x 40), that means there are 2.6 billion work hours.

That means their profit per hour worked is $8.20.

That is your answer.

Their profits already take into account employee pay so they could give their staff an EXTRA $8.20 on top of their current pay before it becomes zero.

Also, Amazon massively re-invests into its business which offsets the amount of profit it makes.

lol. ya. that's what he is saying.

and all you haters can suck it. Track and field would be almost impossible to follow without this place.

But of course there are dozens of people here who could do it better. they just haven't tried yet.

Tatar... wrote:

Their profits already take into account employee pay so they could give their staff an EXTRA $8.20 on top of their current pay before it becomes zero.

Also, Amazon massively re-invests into its business which offsets the amount of profit it makes.

You can't increase their pay by some fixed amount based on profits from one year. And as this person said, they re-invest a ton of their profit to keep growing. If everything from their profit gets paid back to their employees they're unable to grow and keep doing new things. The only reasonable thing would be to keep their pay rates the same, but add in some profit sharing. Give different thresholds that pay out a certain percentage of the worker's salary based on the profits of the company, and still leave some for re-investment. This way if it's a bad year, Amazon doesn't have to go bankrupt promising higher pay just because they had a good year last year. And they can also keep re-investing to become a better company. But I would not say that the low pay people are the most important, yes they do a job that is needed, but they are extremely expendable. So many people are capable of doing a warehouse job. The manager argument is the only real example that I think people aren't worth the money. But the many software developers they have, they are extremely important. You can't have incompetent people handling their data and allowing bugs to show up left and right. There is so much more to Amazon than shipping stuff from warehouses. A ton of their income is now from AWS and other services beyond shipping physical products. And those jobs require specific skills that more than 99% of people don't have.

rojo wrote:

Now I did realize a flaw to my quick calculations that mean my numbers are too low. I just realized the number of workers includes part-time workers. Walmart doesn't have 1.5 million full-time workers. Amazon's numbers similarly included part-time workers.

if the workers on average only work half-time, then we need to double the numbers.

If they on average work 2/3rd of a full day, then we need to increase it by 50%

So let's increase those numbers by 50%.

Walmart would be $8.69 and Amazon would be $12.30.

Rojo - Interesting work here. Did you account for employer payroll costs? Because paying someone $10 or $15 or $20 per hour costs the employer more than just the $10/15/20 to the employee.

Interesting quick study.

Amazon trades at a 58 P/E. For every dollar extra they spend on wages, that’s $58 against the value of the company (pretax). I realize P/E can adjust, but in a vacuum it would negatively affect the stock price.

Companies aren’t created to break even, they are created to generate returns for shareholders.

Do most Amazon workers live in underdeveloped countries?

white U.S. dude wrote:

rojo wrote:

Now I did realize a flaw to my quick calculations that mean my numbers are too low. I just realized the number of workers includes part-time workers. Walmart doesn't have 1.5 million full-time workers. Amazon's numbers similarly included part-time workers.

if the workers on average only work half-time, then we need to double the numbers.

If they on average work 2/3rd of a full day, then we need to increase it by 50%

So let's increase those numbers by 50%.

Walmart would be $8.69 and Amazon would be $12.30.

Rojo - Interesting work here. Did you account for employer payroll costs? Because paying someone $10 or $15 or $20 per hour costs the employer more than just the $10/15/20 to the employee.

You’d need to account for incremental FICA taxes. Employee pays half and employer the other half. 401k matches, etc.

If profits disappear then investors will bail and stock price takes a hit. Employee bonuses disappear.

rojo wrote:

I saw the other thread about some McDonalds paying their employees $18 an hour. Throughout my adult life, I've always raved about the McDonald's employee serving me a coffee at 5:30 am for like $10 an hour. I felt like they deserved an award. I'm glad to see them making more now.

At the same time, I understand money doesn't grow on trees.

I've always wondered how much more could a single McDonald's pay it's employees before it's profit went to zero.

I couldn't figure out how many employees work in a single McDonalds or how much a single location makes so I decided to do the math for Amazon as it's numbers are easy to find.

Guess how much if Amazon raised the pay of it's employees by xx per hour, it's profit would go to zero...

That's all

I think a simplistic analysis doesn't work. For years, Costco has taken a hit from Wall Street analysts for "overpaying" their people. However, these analysts concede that the quality of Costco personnel is higher than Wal Mart's, (hardly surprising) and that this makes a difference in productivity - not just in working harder - but smarter.

For McDonalds, an increasing trendto automation may mean fewer employees, but at the same time the ones they do have must be flexibly skilled and trained - meaning likely paying them higher wages. This is not easy for any company - McDonald's historically has profited from offering cheap entry level jobs, meaning that they know most will move on to different and arguably better jobs after McDonalds. Automation will change the rules, and it will be difficult to attract long term capable people to food service.

I didn't realize Walmart and Amazon workers had a gun Heald to their head forcing them to only work there and not pursue other employment opportunities elsewhere.

Also, I don't think these types of jobs are meant to be life long career paths. They are stepping Stones. What % of Americans over 30 work at McDonald's, Walmart or Amazon warehouse? I'm guessing it's around 0.5% to 1.5%

Figuring out the absolute max a company could pay general labor force (unskilled) based on their profits is just hilarious. What's your point?