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These wall street publicly traded companies are largely owned by the people behind the finance industry. They are ones magically creating the money. Kroger is just one of their brands names, they can use for anything. Right now, they choose to own RE brick and mortar and fill with food. I dont know what the terms of their liabilities are. They likely are not short term. Even small mom and pops will refinance once in a while.
Not even close. Who are you trying to fool with all this misdirection?
But I'm curious, Brownpine, why you think they should. Can you elaborate?
Since I appear to be responding to a die-in-the-wool capitalist, here's your answer. Because I'm a proud American and I want my fellow Americans to live comfortably. You know what happens when people live uncomfortably? Instability. Pick a city or town in the U.S....pick a country on this planet where people are being paid poverty wages and tell me that you would gladly live in that country. When people can earn a living wage to support themselves, we have a society.
If you would like to spend Kroger's money, why don't you ask all the shareholders - including public sector pensions, private sector pensions, charitable trusts, university endowments, 401K holders, IRA holders, SEP-IRA holders, Roth-IRA holders, and regular people savings for college for their kids, savings for their own retirement, savings for a downpayment for a house, savings for a vacation, savings to give to the Church of their choice, etc - ask them if they are willing to have a smaller pension check and less money for college & retirement just so Kroger can give some people a raise the employees have not earned and do not deserve?
This smart-ass question doesn't deserve attention because it's a ridiculous ask. Furthermore, your logic is questionable b/c Krogers closing stores doesn't equate to more sales and profit for Kroger. In fact, if they keep closing stores in jurisdiction that are asking for higher wages, you can expect Kroger to fill that sales deficit by increasing prices at other locations. Since you're so "pro-screw the employees", would you be okay with your employee slashing your salary beneath minimum wage or below market value just to satisfy shareholders? Definitely not.
You seem to be under the misconception that stock buybacks are bad.
I seem to be under the misconception based on what? A response to this thread where, in this instance, I'm backing the employees? Buybacks have their place...not just in this instance where employees are risking their lives and should be compensated for taking on the additional risk.
They are not bad.
They are a VERY, VERY GOOD THING. Not in all cases. The hope is that the buyback price > intrinsic value. Doesn't ALWAYS work out this way. I would reckon in a low-margin business like groceries, the probability of buybacks heavily favoring shareholders may be quite low. A reasonable company would reinvest the profits back into the business - i.e., pay their workers more, invest in physical assets, etc. Such is the concept of opportunity cost.
Companies help workers not by being philanthropic (handing out bonuses and raises) or by carelessly investing in new operations, but by investing capital carefully in profitable ideas, new products, and new business models. Just in the prior paragraph, you stated that buybacks are a "Very Very Good Think". Now you're stating the opposite...so what is your position? Buy back shares (which Kroger opted for)? Or reinvest back into the company?
Especially during election cycles, a common canard of the Progressive Left is that stock buy-backs benefit primarily the people at the top and come at the expense of “worker training, equipment, expanded operations, research, new hires, or higher salaries.”
Economic logic has never been strong among such people, but the effort to paint stock buy-backs as bad stands out for its complete incoherence. Your overgeneralizing again.
Share buybacks and dividends are great. They get cash out of companies that don’t have worthwhile ideas and into companies that do. An increase in buybacks is a sign the tax law and the economy are working well.
Let me start by illustrating that share buybacks do not automatically make shareholders wealthier.
Suppose Company A has precisely $200 of assets: $100 in cash and a factory worth $100. It has issued two shares, each worth $100. The company’s shareholders collectively have $200 in wealth, because the shareholders collectively own the $200 of assets.
Are you with me so far??? Yeah...but what does this have to do with Kroger? This example has nothing to do with Kroger.
Imagine that Company A uses its $100 in cash to buy back one share. Now its shareholders have one share worth $100, and $100 in cash. As a result of the share buy-back, their wealth is still $200. It is a wash. Shareholders are NO wealthier.
That cash, now in the hands of shareholders, is then deployed by investing elsewhere in the economy.
Wouldn’t it be better if the company used the extra cash to expand operations? No. Maybe this company doesn’t have any ideas worth investing in. Not every company should expand at any given moment.
Moreover, by returning cash to shareholders, shareholders can now re-balance their portfolios to remain on the Pareto Efficient Frontier with optimal asset class allocations.
Now suppose Company B has an idea for a profitable new venture that will cost $100 to get going. The most natural move for investors is to invest their $100 in Company B by buying its stock or bonds. With the infusion of cash, Company B can now fund its venture: it hires people, it purchases capital assets, it brings products to market that people wish to buy.
The frequent rise in stock price when companies announce buybacks proves the point. In my example, Company A’s share price stays fixed at $100 when it buys back a share. But suppose before the buyback investors were nervous the company would waste $40 of the $100 cash. Imagine an overpriced merger or excessive executive bonuses or a stupid geographic expansion. Not every investment is wise!
The $100 of cash, stuck inside Company A, would be valued by the market at $60, and the company’s total value would be $160, or $80 a share. If it spent the $100 to buy back one share, the other share would rise from $80 to $100, the value of its good factory. When a company without great ideas repurchases shares, the price of the remaining shares rise. Buying one share back, even overpaying at $100, raises the other share's value from $80 to $100. This stock price rise is no gift to shareholders. It is just the market’s recognition that $100 has been saved from inefficient investment.
Share buybacks are a great way to get money out of firms with no ideas, into firms with good ideas. We want firms to invest, but we don't necessarily want every individual firm to invest at every point in time. That's the classic fallacy that I think is turning Washington DC on its head. Best of all we want money going from cash rich old companies to cash starved new companies. Buybacks do that.
You don't make employees better off by expanding willy-nilly, issuing raises that were neither earned nor deserved, or by handing out bonuses.
Not all companies should make new investments all the time, and some of the best investments come from new companies that don’t have profits yet.
Clearly, the common complaint that buybacks are just a way for managers and shareholders to enrich themselves is exactly wrong.
This is not a common complaint. The chief complaint of buybacks is opportunity cost. Does a company like Kroger expand it's share price to the benefit of its shareholders organically through reinvesting and building market share? Or do they go the gimmicky route that you're suggesting by buying back their shares and artificially inflating EPS? Kroger HOPES that demand will grow once they buy back. But they're in such a low-margin business that the market will likely, and should, look at this move as a poor use of cash.
I'll leave you with this - Kroger v Trader Joe. Which would you rather shop at and why? For me, I prefer TJs b/c the employees are cordial, helpful, and are seemingly happy to be working for their employee - irrespective of location. As a result, the shopping experience is great. Kroger's? Not so much depending on where you shop. I wonder if it has to do with TJs paying their employees better?
This is not a common complaint. The chief complaint of buybacks is opportunity cost. Does a company like Kroger expand it's share price to the benefit of its shareholders organically through reinvesting and building market share? Or do they go the gimmicky route that you're suggesting by buying back their shares and artificially inflating EPS? Kroger HOPES that demand will grow once they buy back. But they're in such a low-margin business that the market will likely, and should, look at this move as a poor use of cash.
I'll leave you with this - Kroger v Trader Joe. Which would you rather shop at and why? For me, I prefer TJs b/c the employees are cordial, helpful, and are seemingly happy to be working for their employee - irrespective of location. As a result, the shopping experience is great. Kroger's? Not so much depending on where you shop. I wonder if it has to do with TJs paying their employees better?
Actually, Kroger bought a stake in a European online grocer a few years ago (Ocado). They also raised dividends and--how did we miss this?--gave $2/hour hero pay to thousands of employees last year, along with emergency leave and PTO if they're diagnosed with COVID. They're now giving employees bonuses for getting vaccinated.
Morningstar's take on Kroger's management is, "Recent share buybacks have likely generally come near or below our valuation, and while Kroger has purchased stock at inopportune times in the more distant past, we believe it has wisely balanced shareholder capital return with investment into the business."
Actually, Kroger bought a stake in a European online grocer a few years ago (Ocado). They also raised dividends and--how did we miss this?--gave $2/hour hero pay to thousands of employees last year, along with emergency leave and PTO if they're diagnosed with COVID. They're now giving employees bonuses for getting vaccinated.
Morningstar's take on Kroger's management is, "Recent share buybacks have likely generally come near or below our valuation, and while Kroger has purchased stock at inopportune times in the more distant past, we believe it has wisely balanced shareholder capital return with investment into the business."
So says Morningstar...
I didn't forget the temporary bump in pay. Kroger is closing b/c it is being asked to bump pay now, which it should. Didn't know about the European online grocer purchase. Good for them....I suppose.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by Brownpine
The past is the past. These are different times. Minimum wage jobs should provide some basic standard of living just like white-collar jobs do. Because we live in a global, connected world, practically any and every job can be done by someone else. So the concept of unskilled worker is now a misnomer. Ask the bookkeeper, paralegal, or financial analyst who was replaced by their overseas counterpart. So do we as a society wait until white-collar people lose more jobs to remote foreign workers, robots, and AI before we pay people a living wage? I don't think so.
And as for Kroger closing b/c they don't want to pay/reward their workers for risking their lives during COVID (which we are still experiencing), it's a double-edge sword - workers lose their jobs but Kroger loses the profit from these stores. Lastly, while Kroger refuses to pay workers a few extra dollars for risking their lives, where does it spend its revenue?
"Kroger (KR) also bought back $989 million worth of shares during the first three quarters of 2020. In September, Kroger's board authorized $1 billion in new share repurchases. Stock buybacks boost companies' stock prices by making shares scarcer, and critics say companies should instead invest that money in worker pay or benefits."- https://www.cnn.com/2021/03/11/busin...pay/index.html
I enjoy(ed) shopping at Krogers. But they're being very nasty right now and I don't like it.
So how do you define a basic standard of living? So if I want to live in California in an area like the Bay Area where the poverty level $82,200 for an individual, McDonald’s or Burger King should pay me that. Let’s see that only $41 per hour for flipping burgers. You think that’s fair? School teachers don’t make that. Is that fair to them?
The issue that hasn't been addressed yet is this: now that pretty much everybody is back at work, are we all heroes? Should everybody get a pay raise for showing up at work?
The City of Long Beach COVID dashboard shows 34 people currently hospitalized and weekly deaths in single digits. This is out of a population of 463,000. They've seen 510 hospitalizations and 186 deaths. Of the cumulative totals, over 70% of deaths were among people over 65 (i.e., probably retired) and 60% of hospitalizations among people 60 and over.
JMHO, but resources would be better allocated towards protecting the most vulnerable and improving supply chains--e.g., making more things like PPE in the U.S. More costly, yes, but we'd be better prepared next time and it would mean more jobs for Americans.
For all those complaining about increasing the minimum wage, are you promoting a permanent underclass?
The complaint is Government getting between a willing seller of labor (worker) and a willing buyer of labor (store) to artificially increase the price. The store may have beeen failing before this just put it over the edge. It is disgusting to think that even a temporary pay increase does not have an effect on employers ability to run THEIR store.
Read the CBO Report on minimum wage - it will benefit some (increase wages) but will hurt almost as many (job loss). The actual stats are 0.9M would be brought out of poverty but 1.4M would be out of a job. Not really a good tradeoff -
So how do you define a basic standard of living? So if I want to live in California in an area like the Bay Area where the poverty level $82,200 for an individual, McDonald’s or Burger King should pay me that. Let’s see that only $41 per hour for flipping burgers. You think that’s fair? School teachers don’t make that. Is that fair to them?
Can you please cite the source of this $82,200 for an individual at poverty level? I live in NYC which is the most expensive city when you combine RE, taxes, COL, etc. And the poverty level is not $82,200.
But let's use your logic for a moment - right now, people are making $10-$15 flipping burgers at your proverbial McDonald's or Burger King. Where do these people live in the Bay Area at this moment? How can they afford housing, food, utilities, etc. right now?
I also find it disturbing that in areas like the Bay Area, where people pay $20 for an avocado sandwich, $1000+ each year on a phone, and millions on a home built in the early 20th century...there are people who are resisting to paying people a few extra dollars which was what the Council was asking Kroger to do.
So I’m not a fan of the idea of anyone telling a company what they have to pay, and if Kroger chooses to close their stores in lieu of increasing the hourly pay of “front-line” workers during the pandemic that’s a decision they can make. However, I think it’s pretty crappy for a company that is doing pretty well financially not to either voluntarily increase their front line worker pay or comply with the local pay increase law given the circumstances of the past 15 months. The grocery store workers don’t have the benefit of being able to work at home, and their services have been pretty darn essential in keeping people fed. Personally, I would prefer to give my business to grocery store that tries to do better by its employees, and I’d be willing to pay more for my groceries to a store that does so. So, for me, just like Kroger can choose to close down stores, I can choose to shop elsewhere. I would encourage others to do the same. This is not a good look for Kroger.
This is exactly it. Kroger is doing fine. Their CEO's are vacuuming up the profits instead of increasing workers' pay. Then they whine about minimum wage increases, or hardship pay during a pandemic, and most of the public falls for their sob story.
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