Walmart

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This is in response to the following article.

http://robertreich.org/post/87431048120

I’m getting a little tired of everyone picking on Walmart.  Yeah they are a huge multi-national corporation that is raking in the bucks.  They may not pay that great or have great service but it’s not like they hire exclusively the best and the brightest.  The highest criticism is that they are bringing in untold millions in profit while paying their workers barely above minimum wage.  Let’s break down some of the numbers.

First the good side, Walmart Inc. employs 2.2 million people worldwide and about 1.3 million in the US. http://corporate.walmart.com/our-story/our-business/locations/  They have been innovators in retailing and bringing down prices.  Yes part of that is in wages but a lot more is in more efficient logistics especially product tracking.  They know what people want and are able to keep just enough stocked so that it’s usually there without a lot of waste.  It’s a shame they can’t seem to keep enough people at the cash registers but I suspect that is a purposeful accounting as well, just aggravating enough to complain about, not bad enough to go elsewhere.

Walmart’s profits last revenues last year were $476 Billion with a net income of $17 Billion http://www.forbes.com/sites/realspin/2013/11/27/why-do-1-4-million-americans-work-at-walmart-with-many-more-trying-to/

While $17 Billion is a huge number that is only 3.5% profit, most companies don’t stay in business with profit margins that low.  According to Wiki http://en.wikipedia.org/wiki/Walmart Walmart’s assets are worth $204Billion.  Think of it like a bank account.  They are receiving 8.3% return.  Pretty good for this day and age, but nothing spectacular.   They, like the last favorite target the large oil companies, get dinged on absolute numbers with no consideration to the percentages.

How about the income gap? The total compensation for the 6 executive listed to the SEC was $75.8Million for an average of $12.6Million http://www1.salary.com/Wal-Mart-Stores-Inc-Executive-Salaries.html I don’t know how this rates to other years but it appears to be skewed by a large equity payment to the executive vice president.  Now it can be argued whether multi-million dollar payments to any one person are worth it but effectively they are getting about a 1/10 of 1 percent of profit payment each.  Not exactly a big factor in Walmart’s bottom line.

But, But, But that’s like 500 times what the average employee earns.  So what.  Say they all work for $1 each and the payouts divided up to each employee, I’ll even only use US employees.  That’s a whopping $63/year for each person.  Executive compensation isn’t the problem.

Maybe you think the 8.5 % interest rate or 3.5% profit margin is excessive.  Take all the profits and roll them back in.  ALL THE PROFITS  together divided up would only be a $14K raise for each employee.  Yes a nice raise, especially for someone only making $22K but Walmart wouldn’t exist if there was no profit to be made.  Finally where would retail pricing be if it were not for Walmart?  It is reported that 42% of the shopping at Walmart is by people who make less than $40K/yr.  Those people would probably have even more problems if it was not for Walmart’s cost cutting.

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