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View Diary: Understaffing is hurting Walmart, says equities research firm (176 comments)

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  •  Raising the minimum wage would help (3+ / 0-)
    Recommended by:
    viral, Cassandra Waites, Tonedevil

    It would allow more of their employees to actually buy more stuff in their stores.

    Has anyone thought about the huge amount of pent up consumer demand is out there?  If wages were raised for the US working class, people would be buying stuff like crazy.  The US economy would fully recover within months, not years.  

    I don't understand why Wall Street and corporate America keep suppressing US consumer spending through high unemployment and low wages.  We've reached the point of diminishing returns on the low wages and high unemployment scheme a long time ago.

    Money is property, not speech. Overturn Citizens United.

    by Betty Pinson on Mon Feb 10, 2014 at 02:08:03 PM PST

    [ Parent ]

    •  Do the math. (0+ / 0-)

      Say Walmart paid an extra dollar an hour, and say that their employees all spent that dollar on Walmart goods (ignore taxes). Their pretax margins are about 5%. So they'd recoup 5 cents for every extra dollar paid. And that's assuming 100% recapture.

      •  False. (0+ / 0-)

        Because most of their expenses are fixed. Their profit on that dollar varies, but it would be the gross profit on the item purchased because the fixed expenses would not rise.

        For example, if I purchased part of a "pint" of Haagen Dazs ice cream with that dollar (wholesale $.99, retail $3.79), the gross profit on that dollar would be close to 74 cents. Their fixed expenses to sell that extra carton of ice cream would be zero. So the net profit would also be 74 cents.

        •  Wrong, sorry. The cost of goods (0+ / 0-)

          include not merely the wholesale cost but also the cost of logistics getting those items to a floor. The fixed costs are tiny at Walmart.

          •  That is why I picked Haagen Dazs (0+ / 0-)

            as an example. Besides the high margin, the manufacturer provides the freezer and stocks it. The logistical cost is zero.

            Not every product has that high of a margin, But WalMart is a high volume, high profit business. If they can't charge a high margin, and move a large volume, they don't stock it for long.

            And you're wrong about the fixed costs. But once those fixed costs have been met, the gross profit from every additional sale just enhances the bottom line. Obviously to deal with a large increase you have to hire an additional stocker and checker, but at eight bucks an hour, spread over that large volume the percentage this costs is tiny.

            •  Did you read the comment? (0+ / 0-)

              The 5 cents back was based on 100% of the salary spent at WMT. 100%! Tell you what - inflate your fixed costs all you want, but use a realistic spend rate. You'll end up with even LESS than 5 cents back.

              •  We were discussing the percentage (0+ / 0-)

                of each additional dollar spent at WalMart that would be profit, which is variable depending on the specific product but is considerably more than 5%. I don't know where you are getting your numbers, but I've worked there and discussed profitability with the store manager. And know what the wholesale/retail price split is on some items.

                I never said or implied that every dollar in additional wages would be spent in-store. But it would only have to be something like one in ten to make that nickel per dollar paid.

      •  Your math assumes that ONLY Walmart is raising (0+ / 0-)

        what they pay, and that only Walmart employees would be thus spending more at Walmart.  If we get a universal minimum wage raise, a lot more people who work all over the place will be spending that extra money at Walmart as well.  So that .05 recoup is only if they were entirely a 'company store', and not open to people who worked elsewhere.  In reality, most people who shop at Walmart don't work at Walmart, so if the minimum wage goes up, Walmart will rake in a heck of a lot higher percentage thanks to all of the non-Walmart workers shopping there.

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