If Wal-Mart profited $15.7B in the last 3 months of 2011 because it pays its workers minimum wage, then couldn't Wal-Mart use some of those $15.7 Billion profits in only 3 months to increase workers' wages and benefits?
$15.7 billion was their profit for the entire year.
On sales of nearly $447 billion.
Which means Wall-Mart could afford to pay a living wage to its employees:
"Wal-Mart paid its top executives and board members $66.7 million last year.
"The rest of the money has to be split among Wal-Mart's remaining roughly 2.2 million employees. Of those, about 1.4 million work in the U.S.
"Assume that Wal-Mart spends about 2/3 of that on the salaries of its U.S. employees, because salaries are generally higher here.
"That leaves $66.6 billion for the U.S. workers, or $47,593.
"The Bureau of Labor Statistics estimates that 30% of the average U.S. workers' total compensation is spent on benefits.
"That means the average Wal-Mart employee's take home pay should be $33,315.
"Wal-Mart doesn't say what its actual average salary is.
"But Payscale estimated it to be just over $22,000 at the end of last year.
"The conventional wisdom, of course, is that if Wal-Mart were to hand out raises, its stock would tank. That may not be true. When Google (GOOG) announced a 10% raise for its employees three years ago, the stock dropped a bit but mostly recovered within a year.
"And Google's stock is 60% higher now than it was before the raise."
Why Wal-Mart can afford to give its workers a 50% raise - The Term Sheet: Fortune's deals blogTerm Sheet
There is zero possibility that they could give a 50% raise. Not even close.
If you drastically raised wages on only US employees, first you are being discriminatory to all the other non-US employees. You think the people in Canada or the UK, are going to look at a huge company wide pay hike for US Americans only, and not have a big huge problem with that?
They would. So at the very most, if you confiscated all profits, and divide them up to *ALL* employees (15.7 Billion / 2.2 Million employees) is about $7,000 a year. ($3.35/hr).
However, the guy who wrote that article forgot about taxes. Between benefits, and additional taxes and fees, the wage that a worker is paid, is actually 20% more than what is on his check.
In other words... If they gave all $7,000 to each employee, the company would instantly start going broke.
You make $70k but cost your boss $88k - Feb. 28, 2013
A person making only $30,000 a year, is actually costing the company about $44,000. The other $14,000 is spent on Social Security, Medicare, Unemployment Compensation, and of course all the benefits, like health insurance.
So the company can't give the employee $7,000, with incuring $2,000 to $3,000 in additional taxes regulations, and benefits costs, that the now zero profit company, can't pay.
So at the very most, very top possible amount the company could pay to each employee is a whooping $5,000.
Now... when the company needs marketing and advertising to keep customers coming to their stores, where does that money come from? Well it doesn't come ....... so they don't.... then stores close.... employees enjoying their extra $2/hr check, now are unemployed.
Now... when the company needs to update existing stores, resurface the parking lot, re-tile the floor, or do a refurbish on an old store, where does that money come from? Well it doesn't come.... so they don't... so customers stop shopping at the dingy in-need-of-updating store, and it closes, and all those employees enjoying their $2/hr raise are unemployed.
Now... when the company sees another town that could use a new walmart store, where hundreds of people need a steady job with good benefits, where does the money come from to build the store, and hire everyone? Well it doesn't come.... so they don't build it..... so hundreds of people who could have jobs, and thousands of customers who could have a great place to shop, never do.
And there are dozens of other examples. One of the reasons walmart has such quality cheap goods, is because they have invested hundreds of millions into building a distribution system, with regional centers, and low cost suppliers. All of that required having big money to invest into it. And by the way, walmart company truck drivers are some of the highest paid truckers on the roads.
Without that, thousands of jobs would not exist, and the stores would not have access to those goods, which are the very reason people shop at walmart stores. Again, without that money invested in the distribution system, customers stop shopping, the stores close, and all those employees enjoying their $2/hr raise, are now unemployed.
And as a final note.... All of this ignores how all company chains run. All chain companies, run basically the same way. The company HQ, is run separately from the individual stores. Each store, whether it's Subway, or Wendy's, or Walmart.... each individual store is its own business.
Meaning..... Wendy's Corporate could rake in $1295871892 Trillion dollars...... Doesn't matter to the individual store. If *YOUR STORE*, does not have the money to pay you a raise... then you can't get a raise. Doesn't matter how much Corporate has. Each store is its own business.
When I read that "Walmart made $17 Billion profit!"... that has no bearing whatsoever, on my local Walmart store.
This is how you can have a Wendy's down the street close up and shut down, even while Wendy's Corporate is making record profit.
Similarly, your local Walmart has to make or break, on their own, no matter what corporate does. Walmart Corporate doesn't feed dying and failing stores with money to keep them open. If they did that.... they wouldn't have a $17 Billion profit.
This is how the system works. All of that is why the article is completely wrong. No, you can't just take all the profits and give them out to the employees in wage increases. In the short term, they'll enjoy a few bucks more an hour, but in the long term, they'll end up unemployed, earning ZERO. Not a good trade off. This is why you can't have the economically illiterate pundits making policy. You'll ruin this nation, like you ruined Detroit.