If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(Forbes)   How industry is killing its own profit margins by offering workers salaries of minimum wage or slightly more. Before your spittle-flecked rejoinder, note that this article appears in that noted commie, anti-capitalist rag Forbes   (forbes.com) divider line 49
    More: Interesting, minimum wages, profit margins, salary, fast food restaurants, capitalists, Richard Florida, foodservice, communists  
•       •       •

2404 clicks; posted to Business » on 11 Mar 2014 at 9:43 AM (29 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



49 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest
 
2014-03-11 09:30:52 AM
Way to not read the article, subby.

Before your ignorance-flecked rejoinder, try reading past the headline to see what the columnist is actually saying, you stooge.
 
2014-03-11 09:50:10 AM
It's the usual Forbes hit piece against paying workers more.  They're just a mouthpiece of big business, no surprises here.
 
2014-03-11 09:58:47 AM
TFA utterly eviscerates the idiotic idea that employers are killing their own profit by not paying higher wages.

Great find, subs!
 
2014-03-11 10:01:12 AM
Your blog sucks.
 
2014-03-11 10:08:57 AM
> Perhaps most importantly, if Ton is right it suggests that unions and liberal advocates should not be protesting low paying chains and demanding higher wages but instead joining up with private equity firms to buy these companies, raise wages, and reap the profits.

i.imgur.com
 
2014-03-11 10:24:29 AM
The TFA is no better than the Fark Headline.  Let's blame a merchandizing failure with our core shoppers on higher wages.  <sarc> Yeah, they are connected. </sarc>

Well, I guess Forbes editors are about as motivated as Fark moderators.  Whatever generates a click, no matter how idiotic.  Does Steve still own that rag?  If he does, I hope he's happy with the quality put out under his name.
 
2014-03-11 10:39:15 AM
I absolutely loved the Taco Bell reference. I worked at one and *every* employee there made exactly minimum wage except the upper management.

They shut down earlier this year despite a) being the ONLY Taco Bell in a 10 mile radius and b) being RIGHT NEXT to a University due to  "insufficient income."
 
2014-03-11 10:39:19 AM

IrateShadow: > Perhaps most importantly, if Ton is right it suggests that unions and liberal advocates should not be protesting low paying chains and demanding higher wages but instead joining up with private equity firms to buy these companies, raise wages, and reap the profits.

[i.imgur.com image 446x600]


They want unions to buy up companies?  The workers controlling the means of production? Same old Forbes promoting communism again!
 
2014-03-11 10:44:30 AM

ajgeek: I absolutely loved the Taco Bell reference. I worked at one and *every* employee there made exactly minimum wage except the upper management.

They shut down earlier this year despite a) being the ONLY Taco Bell in a 10 mile radius and b) being RIGHT NEXT to a University due to  "insufficient income."


This. Also FTA: Are we to believe despite the hundreds of millions spent trying to shave seconds off of drive-through fullfillment time, and the above minimum wage that they offer, these firms nevertheless underpay their workers?

I think what he's missing here is the difference between high level corporate strategy and low level franchise owner tactics to make profit.
 
2014-03-11 10:44:47 AM

TwoHead: They want unions to buy up companies?  The workers controlling the means of production? Same old Forbes promoting communism again!


Show me a union in this country that can buy Walmart, Target, Mcdonald's, Yum Brands, or Darden.
 
2014-03-11 11:04:29 AM
I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!
 
2014-03-11 11:28:37 AM

oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!


There's no way I'm buying it.  Some select industries, usually the ones notorious for  endemic slim margins, like low- and mid-end restaurants, are always fighting to stay in the black.  Most modern industries that suffer from them do so due to entrenched, anti-consumer or anti-competitive forces like movie studios demanding 99.999% of ticket revenue from theaters, or Big Food racking up the huge margins so that grocery chains can't make much on top.

I absolutely guarantee you that at the very least, the first step, and often later steps in the chain of manufacturing for any good sold in the US, from underwear to steak to Corvettes, is sold (if only to a retailer) for between 130% and 900% what it cost to produce, advertise, and ship.  There is absolutely no way things cost so damned much otherwise.  Acme can't sell you a reasonably priced box of cereal because Post charges them $4.00 wholesale for a box it cost them $1.00 to make and ship, which could have cost 35 cents if some Monsanto subsidiary hadn't tripled the price of corn that month.  Nobody is satisfied with 10% or 20% anymore, it has to be 40% growth per quarter or you're fired.

Capitalism means "driven by capital", or in this case, the owners of the capital, the first step in the chain, the folks who own the land, the factories, the patents, the government leases, the right-of-way, the IP, etc.  They are starving us all, little by little and they must be stopped.  If they prevent us from doing so in the market, we must go to the courts.  If that fails, someone will eventually have to resort to violence, and we will all be sorry then.
 
2014-03-11 11:34:45 AM

oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!


I see. That's why  CostcoIn'N'Out, QuikTrip, Trader Joe's, PatagoniaGap, and the like, have all folded, are closing stores left and right, or are swimming in a sea of red ink.
PS You need to learn how inventory turns affect the bottom line for low-margin industries.
 
2014-03-11 11:39:44 AM
Well I could argue the whys-n-wherefores FTA all day, however I'm compelled to comment that Forbes mobile browser makes me want to stab my own eyes out with a fork.

/if you slide a degree left or right when scrolling HERE HAVE THIS NEXT ARTICLE RIGHT NOW, YOU WANTED IT RIGHT?!? THATS WHY YOUR THUMB MOVED 4 MICRONS IN THE HORIZONTAL PLANE!!!!

//Also subbys headline is way misleading, but I see that's been covered.
 
2014-03-11 11:41:23 AM
oh_please: Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

I was traveling for business recently, and stopped in a mall, because it was Saturday and I was bored. Nice structure, clean, well-lit, and I just kept thinking "I can't make this business model work".

And that was before I went into the record store. Not only could I not make that business model work, I concluded there was no way it was open on its own accord, but was more likely serving as a front to launder money.
 
2014-03-11 11:41:36 AM
FTFA: these jobs at Taco Bell require a surprising amount of dexteriosness and skill

"Dexteriousness?"  Really?  How the hell did you get a writing job at all, let alone one at Forbes?
 
2014-03-11 11:59:19 AM

TheOtherGuy: oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!

There's no way I'm buying it.  Some select industries, usually the ones notorious for  endemic slim margins, like low- and mid-end restaurants, are always fighting to stay in the black.  Most modern industries that suffer from them do so due to entrenched, anti-consumer or anti-competitive forces like movie studios demanding 99.999% of ticket revenue from theaters, or Big Food racking up the huge margins so that grocery chains can't make much on top.

I absolutely guarantee you that at the very least, the first step, and often later steps in the chain of manufacturing for any good sold in the US, from underwear to steak to Corvettes, is sold (if only to a retailer) for between 130% and 900% what it cost to produce, advertise, and ship.  There is absolutely no way things cost so damned much otherwise.  Acme can't sell you a reasonably priced box of cereal because Post charges them $4.00 wholesale for a box it cost them $1.00 to make and ship, which could have cost 35 cents if some Monsanto subsidiary hadn't tripled the price of corn that month.  Nobody is satisfied with 10% or 20% anymore, it has to be 40% growth ...


I don't pretend to know about all sectors of the retail market, like food and such, but I suspect you're pulling those numbers out of your ass.

I was merely pointing out that consumers in the US will shop on three things: price, price, and price. The rise of super-volume, low-margin retailers has absolutely killed the retail labor market, because it's now a race to the bottom, that's why I got out when I did. Plus retail management is a freaking grind, and I sure as hell wasn't going to be paid LESS for working 50-70 hours per week.

As for your comment, There is absolutely no way things cost so damned much otherwise, I don't know how old you are, but on the whole, retail goods are WAY less expensive than they used to be.
 
2014-03-11 12:00:50 PM

Psychopusher: FTFA: these jobs at Taco Bell require a surprising amount of dexteriosness and skill

"Dexteriousness?"  Really?  How the hell did you get a writing job at all, let alone one at Forbes?


That's Dumbass for "I have no clue that seeking short-term profit at the expense of long-term stability and growth will kill this company dead sooner than later. And I certainly can't apply this concept to an entire economy or simply contrast US economic growth from 1945-1979 with growth from 1980-present."
It's also Dumbass for "I can't figure out how making sure that everybody is paid a living wage is Very Good Thing(TM) for an entire consumer-driven economy."
Here it is in simple, NSFW language.
 
2014-03-11 12:11:17 PM

demaL-demaL-yeH: oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!

I see. That's why  Costco,  In'N'Out, QuikTrip, Trader Joe's, Patagonia,  Gap, and the like, have all folded, are closing stores left and right, or are swimming in a sea of red ink.
PS You need to learn how inventory turns affect the bottom line for low-margin industries.


Are you dense?

I never said that retailers are closing stores left and right. I'm all about companies who can make profits while paying their employees good wages, I'm not saying it's impossible. I'm saying that there isn't as much money there anymore, and employees are taking the hit. P.S. You need to brush up on your reading comprehension.
 
2014-03-11 12:15:55 PM
Mah gawd, it's as if higher wages will actually lead to more SPENDING!
 
2014-03-11 12:34:17 PM

IrateShadow: > Perhaps most importantly, if Ton is right it suggests that unions and liberal advocates should not be protesting low paying chains and demanding higher wages but instead joining up with private equity firms to buy these companies, raise wages, and reap the profits.


As a syndicalist, I support this idea.

But as has been said, good luck with that - the employees who are living on scratch have a collective savings in negative numbers. Employee owned companies do exist, though a portion of those that call themselves "employee owned" are really "owned by the CEO and execs with other employees having token stock".
 
2014-03-11 12:34:30 PM

HotIgneous Intruder: Mah gawd, it's as if higher wages will actually lead to more SPENDING!


RTFA.
 
2014-03-11 01:01:24 PM

oh_please: demaL-demaL-yeH: oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!

I see. That's why  Costco,  In'N'Out, QuikTrip, Trader Joe's, Patagonia,  Gap, and the like, have all folded, are closing stores left and right, or are swimming in a sea of red ink.
PS You need to learn how inventory turns affect the bottom line for low-margin industries.

Are you dense?

I never said that retailers are closing stores left and right. I'm all about companies who can make profits while paying their employees good wages, I'm not saying it's impossible. I'm saying that there isn't as much money there anymore, and employees are taking the hit. P.S. You need to brush up on your reading comprehension.


See those bold parts up there? We call them false premises. Now if I hadn't linked direct evidence that they're false, you might have a case. But I did, so you have no excuse.
These businesses in what are considered typical low-wage industries - fast food, grocery, gas/convenience store, warehouse, and clothing - pay working wages. What they have in common is long-term planning, a strategy that covers at least a decade, and very low employee turnover relative to their industries. Somebody figured out two things: 1) They want to stay in business for the long run, so it pays to plan for this. 2) Employee turnover is a huge contributor to costs.
Again, I strongly suggest you do a little research on how profit margins and inventory turnover are linked. Then you might be able to understand why Trader Joe's, Costco, and In-N-Out are profitable in spite of[SIC] paying living wages.
 
2014-03-11 01:55:45 PM

adamatari: IrateShadow: > Perhaps most importantly, if Ton is right it suggests that unions and liberal advocates should not be protesting low paying chains and demanding higher wages but instead joining up with private equity firms to buy these companies, raise wages, and reap the profits.

As a syndicalist, I support this idea.

But as has been said, good luck with that - the employees who are living on scratch have a collective savings in negative numbers. Employee owned companies do exist, though a portion of those that call themselves "employee owned" are really "owned by the CEO and execs with other employees having token stock".


That's why he suggests labor teaming up with private equity firms, who do have the money. Private equity wants increased profits, labor wants higher wages.

If the theory that higher wages do actually lead to higher profits is true, then this would be a match made in heaven.
 
2014-03-11 01:59:22 PM

Debeo Summa Credo: adamatari: IrateShadow: > Perhaps most importantly, if Ton is right it suggests that unions and liberal advocates should not be protesting low paying chains and demanding higher wages but instead joining up with private equity firms to buy these companies, raise wages, and reap the profits.

As a syndicalist, I support this idea.

But as has been said, good luck with that - the employees who are living on scratch have a collective savings in negative numbers. Employee owned companies do exist, though a portion of those that call themselves "employee owned" are really "owned by the CEO and execs with other employees having token stock".

That's why he suggests labor teaming up with private equity firms, who do have the money. Private equity wants increased profits, labor wants higher wages.

If the theory that higher wages do actually lead to higher profits is true, then this would be a match made in heaven.


Private equity firms do not want to invest in things that lead to higher profits. They want to invest in things that generate quick profits.
 
2014-03-11 02:30:13 PM

demaL-demaL-yeH: See those bold parts up there? We call them false premises. Now if I hadn't linked direct evidence that they're false, you might have a case. But I did, so you have no excuse.
These businesses in what are considered typical low-wage industries - fast food, grocery, gas/convenience store, warehouse, and clothing - pay working wages. What they have in common is long-term planning, a strategy that covers at least a decade, and very low employee turnover relative to their industries. Somebody figured out two things: 1) They want to stay in business for the long run, so it pays to plan for this. 2) Employee turnover is a huge contributor to costs.
Again, I strongly suggest you do a little research on how profit margins and inventory turnover are linked. Then you might be able to understand why Trader Joe's, Costco, and In-N-Out are profitable in spite of[


I'm curious as to the "direct evidence" you linked.

All you linked was some press releases for a few B&M companies that were expanding, and most of them weren't what I was talking about in the first place. I get what you're trying to push, it just doesn't have anything to do with what I originally said. Read it again, and not just the parts that make you mad.
 
2014-03-11 02:34:12 PM

max_pooper: Debeo Summa Credo: adamatari: IrateShadow: > Perhaps most importantly, if Ton is right it suggests that unions and liberal advocates should not be protesting low paying chains and demanding higher wages but instead joining up with private equity firms to buy these companies, raise wages, and reap the profits.

As a syndicalist, I support this idea.

But as has been said, good luck with that - the employees who are living on scratch have a collective savings in negative numbers. Employee owned companies do exist, though a portion of those that call themselves "employee owned" are really "owned by the CEO and execs with other employees having token stock".

That's why he suggests labor teaming up with private equity firms, who do have the money. Private equity wants increased profits, labor wants higher wages.

If the theory that higher wages do actually lead to higher profits is true, then this would be a match made in heaven.

Private equity firms do not want to invest in things that lead to higher profits. They want to invest in things that generate quick profits.


How quick? Average holding period for PE investments is over 5 years. Surely that is enough time for the miraculous benefits to the bottom line of higher wages to manifest themselves.
 
2014-03-11 02:34:53 PM

Debeo Summa Credo: If the theory that higher wages do actually lead to higher profits is true, then this would be a match made in heaven.


See 1950-1980. It was a match made in heaven. Then the capital owners decided they didn't want to build value over years, they wanted it all and they wanted it now.
 
2014-03-11 02:37:04 PM

oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!


Part of the problem, of course, is that we're subsidizing the wages of the biggest retail corporations, as a society, by letting them effectively supplement extremely low wages with food stamps and other standard of living increases.  Those should be paid entirely by Walmart, McDonalds, etc., themselves.  We should not be picking winners and losers in this fashion, yet we are.
 
2014-03-11 02:54:13 PM

Scorpitron is reduced to a thin red paste: oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!

Part of the problem, of course, is that we're subsidizing the wages of the biggest retail corporations, as a society, by letting them effectively supplement extremely low wages with food stamps and other standard of living increases.  Those should be paid entirely by Walmart, McDonalds, etc., themselves.  We should not be picking winners and losers in this fashion, yet we are.


Yep, probably true, but everyone that wants this utopia isn't willing to pay for it. Lots of people talk a good game, but if prices go up, it's OH DAMN and "It's not fair", and "I shouldn't have to pay for people that have (insert # here) kids, and to hell with that, I'm voting it down".

Honestly, I'm not sure...
 
2014-03-11 03:20:37 PM

Sergeant Grumbles: Debeo Summa Credo: If the theory that higher wages do actually lead to higher profits is true, then this would be a match made in heaven.

See 1950-1980. It was a match made in heaven. Then the capital owners decided they didn't want to build value over years, they wanted it all and they wanted it now.


But if higher wages increased profits, you'd think that owners would raise wages, increase profits and then sell the now more highly profitable company, making huge profits! Or, outside investors would buy companies, raise wages to unlock this value, then sell to make a quick profit.

Why doesn't this happen do you think?
 
2014-03-11 03:25:24 PM

oh_please: demaL-demaL-yeH: See those bold parts up there? We call them false premises. Now if I hadn't linked direct evidence that they're false, you might have a case. But I did, so you have no excuse.
These businesses in what are considered typical low-wage industries - fast food, grocery, gas/convenience store, warehouse, and clothing - pay working living wages. What they have in common is long-term planning, a strategy that covers at least a decade, and very low employee turnover relative to their industries. Somebody figured out two things: 1) They want to stay in business for the long run, so it pays to plan for this. 2) Employee turnover is a huge contributor to costs.
Again, I strongly suggest you do a little research on how profit margins and inventory turnover are linked. Then you might be able to understand why Trader Joe's, Costco, and In-N-Out are profitable in spite of[

I'm curious as to the "direct evidence" you linked.
All you linked was some press releases for a few B&M companies that were expanding, and most of them weren't what I was talking about in the first place. I get what you're trying to push, it just doesn't have anything to do with what I originally said. Read it again, and not just the parts that make you mad.



oh_please: I was a big-box electronics manager for almost 10 years until 2007.
While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.
10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.
TO THE ROMEROCOPTER! AWAAAAAY!


demaL-demaL-yeH: I see. That's why  Costco,  In'N'Out, QuikTrip, Trader Joe's, Patagonia,  Gap, and the like, have all folded, are closing stores left and right, or are swimming in a sea of red ink.
PS You need to learn how inventory turns affect the bottom line for low-margin industries.


Almost all of these companies are in a low-margin industry. They pay a living wage. They are profitable and expanding. Their prices are not out of line. Unlike their competitors, they aren't closing stores, facing declining profits, operating off indirect government subsidies, plagued by high turnover, under investigation for unfair labor practices, or harming long-term prospects and profits by focusing on short-term profit maximization. They aren't being run by sociopaths, in other words.

So the next time you want to claim that people can't be paid living wages due to low margins, oh, please, just farking don't.
 
2014-03-11 03:27:46 PM

Debeo Summa Credo: Sergeant Grumbles: Debeo Summa Credo: If the theory that higher wages do actually lead to higher profits is true, then this would be a match made in heaven.

See 1950-1980. It was a match made in heaven. Then the capital owners decided they didn't want to build value over years, they wanted it all and they wanted it now.

But if higher wages increased profits, you'd think that owners would raise wages, increase profits and then sell the now more highly profitable company, making huge profits! Or, outside investors would buy companies, raise wages to unlock this value, then sell to make a quick profit.

Why doesn't this happen do you think?


Because of demonstrably idiotic beliefs like yours about how economies work, and a corporate culture that rewards counterproductive behaviors.
 
2014-03-11 03:47:37 PM

demaL-demaL-yeH: Almost all of these companies are in a low-margin industry. They pay a living wage. They are profitable and expanding. Their prices are not out of line. Unlike their competitors, they aren't closing stores, facing declining profits, operating off indirect government subsidies, plagued by high turnover, under investigation for unfair labor practices, or harming long-term prospects and profits by focusing on short-term profit maximization. They aren't being run by sociopaths, in other words.

So the next time you want to claim that people can't be paid living wages due to low margins, oh, please, just farking don't.


If you want to cherry pick companies that are killing it right now, fine. As I said before, these companies are the exception, and that's great. I have no problem with that.
 
2014-03-11 03:48:19 PM

oh_please: I was merely pointing out that consumers in the US will shop on three things: price, price, and price. The rise of super-volume, low-margin retailers has absolutely killed the retail labor market, because it's now a race to the bottom, that's why I got out when I did. Plus retail management is a freaking grind, and I sure as hell wasn't going to be paid LESS for working 50-70 hours per week.

As for your comment, There is absolutely no way things cost so damned much otherwise, I don't know how old you are, but on the whole, retail goods are WAY less expensive than they used to be.


I admit I'm generalizing far more than your anecdotal electronics retail experience.  I just want you to ask yourself one question:  do things really cost less -- as in, is your grocery, utility, tax, housing, etc. bill a smaller or larger percentage of your income now than it was 10 years ago, or when you started working if it hasn't been that long?

If everything's so damned competitive, forcing those poor, benighted plutocrats to cut wages so harshly, why are prices on virtually everything - and definitely everything that's remotely a necessity --  skyrocketing?  I see you live in the US, so I'm going to have a hard time believing you can honestly answer the above question with a "no"...

I'd say electronics retailing is an anomaly thanks to Moore's Law and the simple nature of how the business benefits from outsourcing, globalization, and online retailing.  It's one sector out of dozens that is going the other direction in that consumer goods get cheaper.  Just about nothing else is.  And I'm betting that electronics are going to catch up once the rare earth stockpiles in Asia run out or Russia and China get stingy.
 
2014-03-11 04:11:34 PM
All I did was come in here to give some empirical evidence, take it for what it's worth. Most of the responses were funny.
 
2014-03-11 04:39:54 PM

TheOtherGuy: oh_please: I was a big-box electronics manager for almost 10 years until 2007.

While the article raises valid points (pay people more, they'll work harder and care about their job), it completely ignores the fact that product margins have shrunk to almost nothing, due to the rise of Wal-Mart, Amazon, etc. While that's good for consumers, it's killed employee compensation. You can raise wages and reap the benefits of customer satisfaction at the expense of no profits....there's not much wiggle room anymore. Add to the fact that B&M stores have to take into account massive overhead per store, and that wiggle room gets even smaller.

10-20 years ago, you could pay a big-box employee a decent wage, because you were making money on the product. Now, not so much. I'm not defending the corporations, I'm just being Captain Obvious.

TO THE ROMEROCOPTER! AWAAAAAY!

There's no way I'm buying it.  Some select industries, usually the ones notorious for  endemic slim margins, like low- and mid-end restaurants, are always fighting to stay in the black.  Most modern industries that suffer from them do so due to entrenched, anti-consumer or anti-competitive forces like movie studios demanding 99.999% of ticket revenue from theaters, or Big Food racking up the huge margins so that grocery chains can't make much on top.

I absolutely guarantee you that at the very least, the first step, and often later steps in the chain of manufacturing for any good sold in the US, from underwear to steak to Corvettes, is sold (if only to a retailer) for between 130% and 900% what it cost to produce, advertise, and ship.  There is absolutely no way things cost so damned much otherwise.  Acme can't sell you a reasonably priced box of cereal because Post charges them $4.00 wholesale for a box it cost them $1.00 to make and ship, which could have cost 35 cents if some Monsanto subsidiary hadn't tripled the price of corn that month.  Nobody is satisfied with 10% or 20% anymore, it has to be 40% growth ...


Did you just...make all of these numbers up?

There is validity to this narrative, but this is an entirely unhelpful way of bringing it to the table.
 
2014-03-11 05:07:51 PM

RowYourBoat: Did you just...make all of these numbers up?

There is validity to this narrative, but this is an entirely unhelpful way of bringing it to the table.


I'm sorry, I forgot I was writing and defending a Masters thesis and not writing a comment on a story on the  Internet...

And no, I didn't make them up, I  estimated, based on my admittedly anecdotal prior experience in the grocery and other retail industries, just like the poster to whom I was responding did.

I guess I've also forgotten there are tons of TF-ers and Liters alike around here who will flat-out put you on Ignore the second you express any opinion around here that you didn't do 40 hours of cited research to support...
 
2014-03-11 05:19:02 PM

Debeo Summa Credo: then sell to make a quick profit.

Why doesn't this happen do you think?


You answered your own question. Investors aren't interested in building a productive company, even if it would sell for more. That takes time, years and decades, and the quarterly reports may not show exponential growth. They're after quick profit. They'll sell it now for profit now.

In the short term, they make a lot of money. In the long term, it damages the economy. It can't continue the way it has. The last 30 years have been spent bleeding dry everything that was built during the preceding 30. Dunno why anyone would expect consumers to keep consuming while doing everything possible to cut their wages.
 
2014-03-11 05:25:22 PM

TheOtherGuy: RowYourBoat: Did you just...make all of these numbers up?

There is validity to this narrative, but this is an entirely unhelpful way of bringing it to the table.

I'm sorry, I forgot I was writing and defending a Masters thesis and not writing a comment on a story on the  Internet...

And no, I didn't make them up, I  estimated, based on my admittedly anecdotal prior experience in the grocery and other retail industries, just like the poster to whom I was responding did.

I guess I've also forgotten there are tons of TF-ers and Liters alike around here who will flat-out put you on Ignore the second you express any opinion around here that you didn't do 40 hours of cited research to support...


Dude, sorry you got called out on your BS. I won't put you on ignore. Carry on, brother!
 
2014-03-11 05:33:46 PM

Sergeant Grumbles: Debeo Summa Credo: then sell to make a quick profit.

Why doesn't this happen do you think?

You answered your own question. Investors aren't interested in building a productive company, even if it would sell for more. That takes time, years and decades, and the quarterly reports may not show exponential growth. They're after quick profit. They'll sell it now for profit now.

In the short term, they make a lot of money. In the long term, it damages the economy. It can't continue the way it has. The last 30 years have been spent bleeding dry everything that was built during the preceding 30. Dunno why anyone would expect consumers to keep consuming while doing everything possible to cut their wages.


Nonsense. This is what PE firms do, despite whatever lies assholes like Robert reich have told you.

They buy companies they believe are undervalued, improve operations and profitability over a period of 4-7 years, then sell the now improved company, making a profit.

The reason liberals don't like private equity is because the way they typically improve operations and profitability often involves cutting expenses and streamlining operations, which often results in job losses.

The reason you never hear of PE firms buying companies and raising wages to improve profitability and therefore resale value is because raising wages doesn't typically help profitability, which is the point it TFA and exactly what I'm telling you here.
 
2014-03-11 06:00:17 PM

IrateShadow: TwoHead: They want unions to buy up companies?  The workers controlling the means of production? Same old Forbes promoting communism again!

Show me a union in this country that can buy Walmart, Target, Mcdonald's, Yum Brands, or Darden.


You will be able to buy Darden yourself if it keeps screwing up.
 
2014-03-11 06:10:59 PM

Debeo Summa Credo: This is what PE firms do, despite whatever lies assholes like Robert reich have told you.


I'd trust him over you. What were your qualifications again?

Debeo Summa Credo: The reason liberals don't like private equity is because the way they typically improve operations and profitability often involves cutting expenses and streamlining operations, which often results in job losses.


Funny, I already addressed this. Maybe you should ready it again.

Sergeant Grumbles: In the short term, they make a lot of money. In the long term, it damages the economy. It can't continue the way it has. The last 30 years have been spent bleeding dry everything that was built during the preceding 30. Dunno why anyone would expect consumers to keep consuming while doing everything possible to cut their wages.


Debeo Summa Credo: The reason you never hear of PE firms buying companies and raising wages to improve profitability and therefore resale value is because raising wages doesn't typically help profitability, which is the point it TFA and exactly what I'm telling you here.


Private equity won't raise wages because their idea of profitability is what will make them the most money, not what is good for the companies they buy and the people they employ.
A well-established company with sustainable growth, experienced employees, and a mature product line is, to them, nothing but value to be extracted out of the company and into their pockets.
 
2014-03-11 06:19:36 PM
Why am I even arguing with the oligarchy defender bot? I really need something better to do with my day...
 
2014-03-11 06:59:28 PM

Sergeant Grumbles: Debeo Summa Credo: This is what PE firms do, despite whatever lies assholes like Robert reich have told you.

I'd trust him over you. What were your qualifications again?

Debeo Summa Credo: The reason liberals don't like private equity is because the way they typically improve operations and profitability often involves cutting expenses and streamlining operations, which often results in job losses.

Funny, I already addressed this. Maybe you should ready it again.

Sergeant Grumbles: In the short term, they make a lot of money. In the long term, it damages the economy. It can't continue the way it has. The last 30 years have been spent bleeding dry everything that was built during the preceding 30. Dunno why anyone would expect consumers to keep consuming while doing everything possible to cut their wages.

Debeo Summa Credo: The reason you never hear of PE firms buying companies and raising wages to improve profitability and therefore resale value is because raising wages doesn't typically help profitability, which is the point it TFA and exactly what I'm telling you here.

Private equity won't raise wages because their idea of profitability is what will make them the most money, not what is good for the companies they buy and the people they employ.
A well-established company with sustainable growth, experienced employees, and a mature product line is, to them, nothing but value to be extracted out of the company and into their pockets.


Yeah, profitability = making money.

Raising wages unnecessarily doesn't increase profitability or result in the company making more money.

That's the point of TFA and what I'm trying to get across to you here.
 
2014-03-11 07:39:10 PM

oh_please: All I did was come in here to give some empirical evidence, take it for what it's worth. Most of the responses were funny.


1.bp.blogspot.com

Oh, please: What you did was make a bare claim based on false premises and gave a personal anecdote as supporting evidence.

/Hie thee to a corner and stay the fark put.
 
2014-03-12 05:32:06 AM
What I learned from TFA:
Forbes' mobile device framework for reading articles was designed by someone who was underpaid.
 
2014-03-12 10:52:21 AM
Debeo Summa Credo:

The reason you never hear of PE firms buying companies and raising wages to improve profitability and therefore resale value is because raising wages doesn't typically help profitability, which is the point it TFA and exactly what I'm telling you here.
 Taking advantage of the lagging indicator of profit as a measure of value of a company is simply more profitable than long-term, sustainable growth and restructuring. That is absolutely true. People who know how to build up over-valuation and then sell before the stink escapes are *very* profitable indeed.
 
2014-03-12 11:08:26 AM

Clever Neologism: Debeo Summa Credo:

The reason you never hear of PE firms buying companies and raising wages to improve profitability and therefore resale value is because raising wages doesn't typically help profitability, which is the point it TFA and exactly what I'm telling you here.
 Taking advantage of the lagging indicator of profit as a measure of value of a company is simply more profitable than long-term, sustainable growth and restructuring. That is absolutely true. People who know how to build up over-valuation and then sell before the stink escapes are *very* profitable indeed.


PE often raises the salaries of senior management.
 
Displayed 49 of 49 comments

View Voting Results: Smartest and Funniest


This thread is closed to new comments.

Continue Farking
Submit a Link »






Report