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Raising the MW guarantees that all companies will earn less profit. Raising the MW does not guarantee that all employees will spend all of the increase on their employer's goods and services, which would be the only way that an increase in the MW would not have a negative financial impact on said company.
They will spend it on *some* company's products or services. Doesn't have to be the one they work for, for the aggregate effect to be zero.
...[*]At a company like Walmart a single percentage point less of profit would equal $3000 more per employee annually, a significant improvement.
As a Walmart shareholder, I don't consider losing a percentage point to be improvement. Just the opposite. It would have a detrimental impact on the value of my portfolio.
Moreover, public sector pensions invest in Walmart; I wonder if public sector retirees would be willing to have their pensions cut so Walmart could pay their employees more...
I work for a very profitable hospital and we live on a 2% profit margin. We have investments as well and they average an additional 2% profit margin. Hospitals are not all that profitable. LOL
As a Walmart shareholder, I don't consider losing a percentage point to be improvement. Just the opposite. It would have a detrimental impact on the value of my portfolio.
Moreover, public sector pensions invest in Walmart; I wonder if public sector retirees would be willing to have their pensions cut so Walmart could pay their employees more...
People always try to pay the less possible for products and services... so why would companies be any different?
I dont get this thinking against walmart and other companies by people, that those same people strive to pay the least possible for the products - I bet most people try to find the best price and given the choice they go for the lowest price on the exact same product... so why on earth they think companies would do differently?
This is a question that has no true answer. There is a difference between markup and profit which is manipulated through accounting methods. These methods will invariably produce the smallest result possible to lessen the tax burden. This "gray money" is the real profit, and the way it is distributed excludes the stockholders and employees. You will never really know exactly how much "profit" a corporation made, only the result which they reported to the IRS. Try reading a financial statement and then backtracing every line item, chargeback, depreciation expense, R+D, advertising expense. If you had access to everything and a year or so to look it over in depth, you might be amazed by what you would find.
They will spend it on *some* company's products or services. Doesn't have to be the one they work for, for the aggregate effect to be zero.
My point still stands: there is no guarantee that the entire increase will be spent, and any claim to the contrary is either naive or intellectually dishonest. Some employees will save the increase, some will invest it, and some will export it to family members in foreign countries.
My point still stands: there is no guarantee that the entire increase will be spent, and any claim to the contrary is either naive or intellectually dishonest.
I believe you should direct that comment to yourself.
The real measure is whether the workers who are earning more money from the MW increase have a greater propensity to spend than the rest of the population. And they do.
So aggregate spending would be expected to increase. But even if it didn't, savings or investment would increase, which isn't a bad thing.
Please tell us exactly what the effective minimum wage should be. What I mean is, at what wage rate will reach an equilibrium between the owner's profit on his investment, time, effort, risk and opportunity costs and the retention of employee jobs?
Should the minimum wage be the same in New York City as it is in Morgantown, West Virginia?
You mention Wal-Mart by stating that they should accept a lower profit in order to give employees a raise. Why? Labor is priced at market rates. If Wal-Mart could not attract quality employees, the market would force them to either shut down OR to pay more money. For its' most recent fiscal year, Wal-Mart's pre-tax profit margin was just 5.1%.
Now, you want them to give each employee a $3,000 raise? Do the math: $3,000 x 1,600,000 US employees = $4.8 billion. This leaves $20 billion in pre-tax profit, for a margin of 4.1%.
Wal-Mart paid $6.2 billion in dividends last year. So, what you are proposing is to give the employees $4.8 billion of stockholders' money not for an increase in productivity, efficiency, safety, attendance or profitability, but just because you have an arbitrary number in mind.
What you are REALLY saying is that employees should get more, and screw the shareholders. With a payout ratio of about 38%, you are taking $1.82 billion in dividends, and $3 billion in cash flow, out of shareholders' pockets for some feel good handout.
The company belongs to the shareholders. Employees are free to leave any time they like. If they have no skills to offer, that is not the fault of Wal-Mart. Since almost anyone can get a job at Wal-Mart, we have to assume that they do not have very strict employment requirements. Because almost anyone can get, and do, this job, Wal-Mart (or any other retailer) does not have to pay Google-like money.
Arbitrarily giving away shareholder money to satisfy some ridiculous fantasy is the stuff of childish liberal fantasy.
1) those majority shares in just about all companies is owned by executive management, especially CEO's, so just exactly who would an employee wage increase take from?
2) supply and demand. Lower profit means lower share price, which takes from whom? The owners/shareholders who are really executive managements, expecially CEO's. Joe citizen may think he is a company owner, but he gets nothing but crumbs in the form of dividends, while the elite get stock options plus great big old bonuses. Let's hear it for the system.
What? Management owns the most? That is so untrue... Other than family businesses where most shares still lie with the founders - not the management - most shares Lee with funds and with early venture capitalists.
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