Walmart Enjoying 6.2 billion in subsidies

[smackababy]

It's only meaningless to those who want it to be meaningless which is why you're throwing up an example of someone with 10 children and trying to claim it as a legitimate barrier to implementing things.

No-one is saying that increasing the minimum wage will solve all problems for eternity, allowing us to close down the treasury and disband the IMF, just that it's one thing that will make a difference and nudge things in the right direction.

Except, that nudge will effectively cost Walmart the lost subsidies plus the cost of raising every worker's wage to the new minimum. Do you expect Walmart to simply eat that cost? Let's say it works out to $6.2 billion and the cost of wages. Is Walmart going to just take the profit it? Of course not. That is now how business works. They will have to do something to offset the cost (layoff workers, raise prices, etc.). So, the majority of those minimum wage workers will not have to pay a higher cost of goods, as a good portion of them probably shop at Walmart. How much would that lower their new purchasing power? Would some of them now qualify for assistance? And, if so, do we raise the minimum wage again?

 

[berzerker60]

Every economics thread on this forum:

1. "Here's a problem. I suggest A as a solution."
2. "If you do A, it will just cause [plausible but theoretical problem]"
3. "Actually, this has been studied a lot and in reality, though plausible, that problem doesn't occur in reality."
4. "No if you do A it will just cause [plausible but theoretical problem] everyone knows that it's just common sense."
[GO TO 3]

Actual evidence from reality has no claim on 'common sense' when it comes to economics, where everyone assumes his own experiences and pet theories can be extrapolated perfectly to the world.

 

[Veliko]

Except, that nudge will effectively cost Walmart the lost subsidies plus the cost of raising every worker's wage to the new minimum. Do you expect Walmart to simply eat that cost? Let's say it works out to $6.2 billion and the cost of wages. Is Walmart going to just take the profit it? Of course not. That is now how business works. They will have to do something to offset the cost (layoff workers, raise prices, etc.). So, the majority of those minimum wage workers will not have to pay a higher cost of goods, as a good portion of them probably shop at Walmart. How much would that lower their new purchasing power? Would some of them now qualify for assistance? And, if so, do we raise the minimum wage again?

These are the same arguments that have been raised every time the issue of the minimum wage crops up yet it doesn't actually happen in reality.

Walmart will benefit because of all the other non-Walmart employees that are now buying additional things from their stores.

 

[fskimospy]

Every economics thread on this forum:

1. "Here's a problem. I suggest A as a solution."
2. "If you do A, it will just cause [plausible but theoretical problem]"
3. "Actually, this has been studied a lot and in reality, though plausible, that problem doesn't occur in reality."
4. "No if you do A it will just cause [plausible but theoretical problem] everyone knows that it's just common sense."
[GO TO 3]

Actual evidence from reality has no claim on 'common sense' when it comes to economics, where everyone assumes his own experiences and pet theories can be extrapolated perfectly to the world.

So, so true.

 

[smackababy]

These are the same arguments that have been raised every time the issue of the minimum wage crops up yet it doesn't actually happen in reality.

Walmart will benefit because of all the other non-Walmart employees that are now buying additional things from their stores.

The minimum wage has never seen an increase of the proportions advocated. going from $7.25 to $15 is a 100% increase, with the premise that the majority of workers will be able to get off government assistance, thus eliminating the bulk of Walmart's subsidies.

Is there any study that this? I've yet to see any, but that doesn't mean they don't exist.


Regardless, the reality is that even at $15 per hour, you're bringing in under $32,000 a year before taxes (assuming 40 hours a week, with paid vacation). That is hardly enough to have a comfortable living single, especially without a roommate. Throw in kids, and you're still in poverty. Does increasing this do anything for those already receiving assistance? Would a family of 4 still no longer need assistance on a single, minimum wage job? Of course they would.

 

[Veliko]

The minimum wage has never seen an increase of the proportions advocated. going from $7.25 to $15 is a 100% increase, with the premise that the majority of workers will be able to get off government assistance, thus eliminating the bulk of Walmart's subsidies.

Is there any study that this? I've yet to see any, but that doesn't mean they don't exist.


Regardless, the reality is that even at $15 per hour, you're bringing in under $32,000 a year before taxes (assuming 40 hours a week, with paid vacation). That is hardly enough to have a comfortable living single, especially without a roommate. Throw in kids, and you're still in poverty. Does increasing this do anything for those already receiving assistance? Would a family of 4 still no longer need assistance on a single, minimum wage job? Of course they would.

The reality is that by increasing the minimum wage you are putting money into the hands of those who are most likely to spend it.

 

[fskimospy]

The minimum wage has never seen an increase of the proportions advocated. going from $7.25 to $15 is a 100% increase, with the premise that the majority of workers will be able to get off government assistance, thus eliminating the bulk of Walmart's subsidies.

Is there any study that this? I've yet to see any, but that doesn't mean they don't exist.

Regardless, the reality is that even at $15 per hour, you're bringing in under $32,000 a year before taxes (assuming 40 hours a week, with paid vacation). That is hardly enough to have a comfortable living single, especially without a roommate. Throw in kids, and you're still in poverty. Does increasing this do anything for those already receiving assistance? Would a family of 4 still no longer need assistance on a single, minimum wage job? Of course they would.

Wait, is your argument really that doubling the wages of people working in poverty wouldn't do anything for those on assistance? That's crazy. You would see a massive reduction in the percentage of people working who needed assistance. Massive.

 

[smackababy]

Wait, is your argument really that doubling the wages of people working in poverty wouldn't do anything for those on assistance? That's crazy. You would see a massive reduction in the percentage of people working who needed assistance. Massive.

My argument is that doubling the minimum wage wouldn't completely remove the burden of government assistance off the government. And, that $15 per hour (which was what was proposed by a poster in this thread) is still a far cry short of what a reasonable family could survive on without government assistance. I'd go as far as saying even people making $15 an hour with a few kids are still receiving government benefits right now.

 

[CLite]

Did you start your career making 6 digits right out of college? Or did you get raises over time as you gained experience?

No, Yes.

However, even an entry level salary for a professional or craft position is not going to be priced by minimum wage points.

 

[smackababy]

The reality is that by increasing the minimum wage you are putting money into the hands of those who are most likely to spend it.

I take that as a "No, I've no data to suggest that doubling the minimum wage has ever done what I keep asserting has happened in the past" then?

 

[Veliko]

I take that as a "No, I've no data to suggest that doubling the minimum wage has ever done what I keep asserting has happened in the past" then?

There is plenty of data about what the minimum wage has managed to achieve in the past.

 

[theeedude]

That's a better argument than saying it will boost spending in the economy.

People at lower end of income scale are more likely to spend an incremental dollar of income than those at the upper end of income scale. Hence distribution down increases overall spending and grows the overall economy.

 

[Victorian Gray]

So your argument is Walmart doesn't want to make money...

No, my argument is that you are a silly little troll who wouldn't recognize a coherent argument if one walked up to you and offered free toaster sex for the rest of your life...

 

[Victorian Gray]

The post (actually, the article quoted) is complete rubbish. It's essentially trying to argue that Costco's model (pay more, get more engaged employees) is superior. If one were to believe that logic, then you'd have to think that walmart management is completely stupid and just doesn't know how to make money, and you'd have to assume that there is one model that works best across industries. Neither one of those assumptions is correct. What works for costco doesn't mean it works for McDonalds or for Apple. We keep talking about walmart and costco as if somehow they are examples of different practices in the same industry -- they are not. They are completely different businesses serving different customer groups in different ways.

Further, while it can indeed be true that paying more up front can result in bottom line gains because of lower turnover etc, I'm pretty sure every large company (like walmart) does that kind of analysis all the time. Last I checked, walmart made $17B in net profit last year, not too shabby.

In fact, if you actually start looking at the results of costco vs walmart in terms of things that actually matter to the investor (not profit, but things like ROI, ROE etc), you'll see that walmart beats costco hands down in ROE in both absolute and percentage terms. It also beats costco in stock performance. That's not a coincidence. Nothing wrong with costco, they are terrific at what they do, but there is no reason to say that somehow their model is superior to walmart.

Cool story.

 

[QuantumPion]

No, Yes.

However, even an entry level salary for a professional or craft position is not going to be priced by minimum wage points.

How would you feel if your company hired someone fresh out of college with zero experience and gave them the same salary and benefits as yourself? Would you not think that unfair, and demand a salary increase as well?

 

[Jhhnn]

It's probably wouldn't lose money, but it does cost you $110/year just to walk in the store.

Wrong. It's $55-

http://www.costco.com/join-costco.html

Sam's Club, part of Walmart, is $45-

http://www.samsclub.com/sams/pagedetails/content.jsp?pageName=aboutSams&pid=PS_21178976

 

[Londo_Jowo]

Wrong. It's $55-

http://www.costco.com/join-costco.html

Sam's Club, part of Walmart, is $45-

http://www.samsclub.com/sams/pagedetails/content.jsp?pageName=aboutSams&pid=PS_21178976

The Executive Membership that gives you cash back on on your purcases does cost $110.

 

[CLite]

How would you feel if your company hired someone fresh out of college with zero experience and gave them the same salary and benefits as yourself? Would you not think that unfair, and demand a salary increase as well?

You are painting a picture as if accrued work experience means these people get salary bumps. This would be a perfectly working system Quantum. I am more concerned about industries built around rotating in minimum wage folks and redirecting them to government benefits to supplement their ability to put food on the table.

The vast majority of industries are not going to be impacted by a minimum wage bump, if a burger flipper now makes 15/hr translating to 30k/yr you are not going to have people suddenly start flipping burgers if they can enter another industry at 30k/yr and also have room to grow. The burger flipper is going to be stuck at 30k/yr forever. Other industries aren't going to have to suddenly offer more money to attract talent because they will have opportunities for advancement, and most likely a more interesting job. The bottom line is the vast majority of non-minimum wage jobs are dictated by supply and demand of that skillset and the required experience/education for entry into that industry. It is not being governed by bumps to minimum wage.

The more realistic concern is a potential contraction of minimum wage jobs being offered, but the whole idea of a knock effect where a 50% bump to minimum wage means a significant impact on COL is ludicrous.

 

[Jhhnn]

The Executive Membership that gives you cash back on on your purcases does cost $110.

Immaterial. The quoted post is factually incorrect.

 

[Jhhnn]

My argument is that doubling the minimum wage wouldn't completely remove the burden of government assistance off the government. And, that $15 per hour (which was what was proposed by a poster in this thread) is still a far cry short of what a reasonable family could survive on without government assistance. I'd go as far as saying even people making $15 an hour with a few kids are still receiving government benefits right now.

It would ease the need for assistance, transfer much of the burden directly to consumers & Walmart. In a dual income full time for both minimum wage family, it would increase income to $64k, higher than the current median household income of approx $52K.

Given the current makeup of Congress, low wage workers would be lucky to get anything more than Jerb Creator! trickle down rhetoric, anyway, along with Freedumb! & guilt trips.

 

[manimal]

Would walmart have been profitable without said subsidy? If yes then they didnt need it. If so they have a flawed business model dependent on government handouts.

 

[Londo_Jowo]

Walmart isn't the only business that pays people minimum wage or slightly above. Go look at salaries for grocery store, electronics (Best Buy), home improvement, and many other companies that employ no to low skilled people. I guess these companies are receiving a "subsidy" as well.

 

[Jhhnn]

Walmart isn't the only business that pays people minimum wage or slightly above. Go look at salaries for grocery store, electronics (Best Buy), home improvement, and many other companies that employ no to low skilled people. I guess these companies are receiving a "subsidy" as well.

They are, just in lesser measure. The "no skill" remark is a smear against all low wage workers. Trust funders can have lower skill levels than low wage workers, because they don't need any.

 

[Londo_Jowo]

They are, just in lesser measure. The "no skill" remark is a smear against all low wage workers. Trust funders can have lower skill levels than low wage workers, because they don't need any.

How is a fact a smear? I started out as a non-skilled worker (bag boy) in a grocery store in 1974, worked my way up to being a stock clerk within 6 months (last time I ever made minimum wage), and then after I graduated from high school I progressed to being a butcher's assistant in the same grocery chain.

How many trust funders go to college and gain marketable skills?

 

[Matt1970]

They are, just in lesser measure. The "no skill" remark is a smear against all low wage workers. Trust funders can have lower skill levels than low wage workers, because they don't need any.

Ok Mr. "factually incorrect" he said "no to low skilled" people. Sliding a bar code over a scanner is low skilled. They can train you to do that job in less than an hour. Within one hour of starting that job you are probably doing it 90% as well as someone who has been doing it for 10 years.