... but a good average to figure on is the retail price of an item represents 1/3 material cost, 1/3 Labor cost, and 1/3 overhead and profit. Thus, if WalMart raised wages by 33%, assuming they didn't cut costs elsewhere or reduce profit margin, then their retail prices would increase by roughly 10%. And if a customer did much of their shopping at WalMart, representing lets say 10% of their income, then the 10% price increase represents only 1% of their income. Certainly not a back-breaker, considering the economic boost of a few million WalMart employees seeing a 33% wage increase would provide... not to mention the savings made by getting them off food stamps and housing assistance, etc.

ProSense

(116,464 posts)

5. Walmart could pay workers $14.89 an hour without raising prices

Reply to Faux pas (Original post)

Wed Apr 9, 2014, 11:35 AM

Apr 2014

Walmart could pay workers $14.89 an hour without raising prices

by Laura Clawson

Walmart can easily afford to raise pay for its low-wage workers by $5.83 an hour, to an average wage of $14.89, a new report from progressive think tank Demos concludes. All the retail giant has to do is stop its massive stock buybacks—which only serve to enrich a shrinking pool of shareholders, not to improve productivity—and put that money toward its workers.

Walmart spends $7.6 billion a year buying back shares of its own stock:

... which reduces the number of shares traded on the market so that the same level of earnings are distributed over fewer owners, making each remaining share worth more. Those owners who keep their stake in the company see the value of their holdings increase even if the company’s performance does not change.

The main owners who have kept their own stake in the company are the Walton family, who now own more than 50 percent of the company. If you're of the "companies should only care about their shareholders" school of thought that's driving the race to the bottom on wages and jobs, consider this:

Even for investors, the intended beneficiaries of a share buyback, the value of this financial maneuver is often illusory. As a prominent business analyst explained to the Wall Street Journal last year, "the evidence overwhelmingly shows that heavy buyback companies usually create less value for shareholders over time… Many managements have become so infatuated with how buybacks increase earnings per share that these distributions are crowding out sound business investments that create more value over time."

Paying workers more or adding worker hours would be a sound business investment for Walmart by reducing worker turnover, which is predictably very high. Or by fixing the problems with bare shelves that have left many customers unhappy. Or by turning the very large Walmart workforce from people who need food donations and government assistance into people who make a living wage and can afford to shop at Walmart.
(Via Salon)

http://www.dailykos.com/story/2013/11/19/1256723/-Walmart-could-pay-workers-14-89-an-hour-without-raising-prices

http://www.democraticunderground.com/10024067021