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this post was submitted on 06 Feb 2024
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“Fastest growing in real income” sounds really fancy.
But it’s a bit misleading. I assume you’re looking at percentage gains. For someone working 40 hrs/week 42 weeks a year, a dollar raise (which is huge for that “lowest quintile”), would equate to a bit more than 2,000 per year.
At federal minimum wage of $7.25/hr, that dollar gain represents an increase of 13%. At 15 an hour, its a 6% gain. At 200k/year? Barely a percent. For Walmart CEO, for example, who’s salary is 24.1 million is barely even worth mentioning at .08%.
Said another way, Walmart has 2.2 million “associates” which iirc, is everyone whose not a manager. Let’s say 3 million people who aren’t corporate because I don’t care to go get the accurate stats and frankly want to keep the math easy.
So if they gave them all a 1 dollar raise, that would cost Walmart 3 million dollars. Last year, Walmarts annual gross profit was 147.568 billion, with a 2.65% increase over ‘22. An increase of 3.8 billion dollars.
You know the difference between a million and a billion? About a billion. That hypothetical dollar increase would have been a rounding error on their financial statements.
I think your numbers are off. It would cost $3m to give 3m workers a bump of exactly one dollar on exactly one paycheck. That's not a 13% increase. It's not even a 0.01% increase.
If you actually wanted to increase the wage of 3m full time workers from $7.25 to $8.25, it would cost $6 billion.
This isn't really relevant. Gross profit is Walmart sales minus what it paid manufacturers for its products. So if it buys a TV for $200 and sells it for $300, that's $100 in gross profit.
Gross profit is used to pay employees, rent, utilities, advertisers, etc. The amount left over after paying the bills is the operating income. Then they pay taxes on that, and the actual earnings (aka net income) are left over.
Nearly all of Walmart's gross profit was used to pay employees, etc. Their operating income was $23 billion in 2023, which is a decrease of 20% from the previous year. Of note, this coincides with pay increases for Walmart's hourly workers, from $17.50 to $18/hr on average.
That's a mountain sized "etc" covering mainly shareholder dividends and artificial profit minimizing for tax avoidance purposes.
The publicly reported profit margins are always AFTER those things and as such as informative about reality as having literally no information.
No, operating income does not take dividend payments into account.
The fact is that employee payroll/salaries is one of Walmart's biggest expenses by far, and gross profit does not include it. So you cannot use gross profit to argue that Walmart could afford to give its workers a raise.
It's the equivalent of looking only at someone's salary and then saying they should put more away for retirement. You are ignoring their expenses.