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

Amazon is a global company right?

What makes this a complicated question is that every McDonald's location is an individual franchise that pays McD's a licensing fee plus supply costs. Each location's profit margins and losses are otherwise their own. So the answer varies location by location.

teacher guy wrote:

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?

The 'I don't think these jobs are meant to...." old chestnut needs to be put away for good. It's absolutely ridiculous to use that as an excuse for why the biggest companies in the world can't pay a little more. Oh...they never 'meant' to pay a living wage? My Bad ! Sorry.,For asking!

I don't think humans were 'meant' to spend their life working for low wages to make a billionaire even more money, but that's just me.

You're portraying the biggest, richest companies in the world as if they are a lemonade stand hiring kids for the summer. How do these companies manage to keep running once school starts and their entire labor force goes back to school? what a mystery!

....and if you think only 1% of people working for Walmart are over 30, then you are absolutely clueless.

I presume the point of this exercise is to show that the argument that these companies can only be profitable paying $10-11 is hour is laughable. They keep millions of Americans living in near poverty purely to increase already strong profits. These low wages are not a necessity for profitability. America would be a better place if these companies paid a little more. And they can easily afford to.

That's the point.

Why bring on new employees when the customer will perform a task ?

The customer vs. the employee. Guess who wins.

https://www.dallasnews.com/business/retail/2021/07/16/walmart-is-testing-an-all-self-checkout-supercenter-in-plano/

No. They only offshore their accounts their to avoid paying taxes like the rest of us poor schmucks.

I didn't read the whole thread, but I just came by to say that this thread is a trainwreck of bad math and I hope it stays up.

It is not a zero sum game. Every dollar of increased employee compensation does not as a matter of course equal a dollar of profit lost. First, increases in employee compensation can be achieved in part by cutting costs. Walmart spends about $110 mil a year on its top 6 C-suite executives. VP level jobs at Walmart range from $250-450k. Walmart is also a fairly inefficient retailer and has spent billions over the years chasing after market share often at the expense of profitability. A Walmart in my neighborhood went in on very pricey real estate just so Walmart could try to poach market share from a very successful Target nearby. The Walmart has badly underperformed because the neighborhood gentrified very quickly and a bunch of much nicer regional grocery chains moved in. Walmart could boost profits significantly by dumping stores that are on valuable real estate.

Finally, Walmart can do something that is very radical. It can raise its prices ever so slightly to cover the cost of raising wages. Companies like Walmart and Amazon do not want to go there for a very different reason. Walmart and Amazon make billions through monopsony. They are the largest buyer of consumer goods and have the ability to force manufacturers to drop their prices in order to be able to sell their goods to Walmart or Amazon. Every time Walmart and Amazon negotiate with suppliers/manufactures, it goes like this: "We will pay you X"; "That is not enough, we need Y"; "We can't pay Y"; "Sure you can. Raise the price"; "Goodbye".

You misread the post....i did not state that 1% of Walmart employees are over 30. Lol?????

That person serving coffee at McDonalds will be replaced.

***************

Ask for a roast beef sandwich at an Arby’s drive-thru east of Los Angeles and you may be talking to Tori — an artificially intelligent voice assistant that will take your order and send it to the line cooks.

“It doesn’t call sick,” says Amir Siddiqi, whose family installed the AI voice at its Arby’s franchise this year in Ontario, California. “It doesn’t get corona. And the reliability of it is great.”

https://www.usatoday.com/story/money/2021/09/06/automation-booms-after-pandemic-putting-human-jobs-line/5746816001/

These companies have all spend big-time to prevent their employees from forming unions so as to have a less asymmetric bargaining process. If you figure net profits, you're missing out on where the owners make most of their money--in the share price. And too if you raise wages, you might well raise sales and reduce training costs by retaining experienced labor and making them happier to do their jobs. Home Depot is a good example of how a corporation often loses money because it has too few employees to direct customers to what they need.

have all spent

One factoid is that McDonald's is raising starting salary to BETWEEN $11 and $17 per hour, while $11 is the minimum at Walmart, and Amazon is offering $17/hr to start. The pay for McDonald's workers only applies to corporate-owned restaurants, which are only 5% of its world base. Now the CEO of McD's ($21.7 million) earned 3,101 times that of its median worker, who earned $7,617 in 2017.

"For the past few decades, as The New York Times reported, the majority of corporate profits have been going to corporate investors and chief executives, whose compensation is often based on stocks, or foreign mergers and acquisitions."

https://www.businessinsider.com/ceo-pay-vs-typical-worker-amazon-mcdonalds-facebook-2018-12

I went to a Walmart several times this fall. So, I have some information on just how bad Walmart is. They have a section that is supposed to have hardware. I went there because I needed something and Home Depot closed early on a Sunday night. It is terrible and random. Their school supplies were spread out around much of the store with no information as to where they should be. My kids and I went to six different spots in the store looking for the supplies and they not only had major, major redundancy of some things (the very same supplies--in no way comprehensive at all--were in three or four different locations in the store), but they lacked most of what was needed for the typical county student and had about 1/10th the employees needed to help find things. Then the checkout--some of which was automated--had long lines and almost no movement. We still needed help for stuff that wouldn't scan, for instance.

So, there are many, many ways for a company like that to improve.

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.

If they increased hourly pay by $12.30 they'd probably still have a few billion in profit leftover, just because worker productivity would increase. They'd attract better employees who'd be willing to work a bit harder and there'd be a lot less turnover. You'd also see fewer videos of Amazon drivers screaming obscenities in public (I actually witnessed an angry Amazon driver doing this in my own neighborhood last week). Sales would probably go up a bit because there'd be better customer service and people would feel better about ordering from them.

Important to remember that even if the margins are tight (which they aren't in Rojo's napkin match), there is still room to pay employees more.

Large companies have massive overhead costs, inefficiencies, lobbying expenses (sometimes hundreds of millions), stockholder dividends, CEO bonuses in stock, and tons of other things that would be considered "unnecessary expenses" or "inefficient business practices". They get to do all these things BECAUSE they pay their workers so little. That's why big chain grocery stores and fast food places are terrible to work for--all the excess value of your labor goes to 50 other people instead of you, none of whom are also doing productive labor for the company.

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 preliminary answer.

Are employees Amazon's only operating expense?

yyyyt 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 preliminary answer.

Are employees Amazon's only operating expense?

It's math about the "profit" not the "revenue" dipstick. The 21.33 billion is already after expenses, including employees. You aren't intellectually capable of contributing to conversations like this.

I think using net income is misleading. Free cash flow likely better representation of the money available to invest in wages. Free cash flow takes a company's earnings and adds back the non-cash expenses like depreciation and amortization. It also takes into account changes in working capital and capital expenditures. In end it represents basically what the business actually has in terms of $ to spend. Usually FCF is reported separately from the other financial statements since it's not officially acknowledged by US GAAP.

Per their 10-ks:

Amazon 2020 FCF was $31.0B

Walmart 2020 FCF was $25.8B

A lot of this money ends up being used for reinvestment wherever company's strategic focus is, shareholder return (buying back stock, issuing dividends) or other financing activities like paying down debt.

There'd still be a profit because they would just increase the prices of the things they sell you if they pay their employees more....

Jeff Bezos is the Bekele of money