How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More

[GGG]

Originally Posted by OMG!WTF!

The other thing is that people are only looking at the extremes. Average CEO pay in Canada is about 140k. Average retail is about $16. It's often a case of people looking at a dozen crazy top 12 CEO salaries and then suggesting everything needs to change so this tiny sample can feel the justice.

Does that include all companies, or all publicly traded companies?

[Slava]

Originally Posted by GGG

My issue is that we have an inefficient market. I don't like inefficient markets. The argument for high CEO pay is that they bring results and have responsibility. This is not borne out by the evidence. So the reason that the CEOs get paid the way they do is because they can and there is no incentive to fix it.

Its an inefficient market with perverse incentives. I don't like those. By tying executive pay to minimum wage you could incentivise higher paying front of the line workers.

Well that might be the case, but I don't think that regulations are the path to efficiency.

[Azure]

Originally Posted by GGG

That might be possible at some points in the wage spectrum for a company that is drastically underpaying

There EBITD is 33 billion so each dollar increase in wage would cost them 6% of their profit. Though you are correct at some points on the curve you could increase profitability by increasing Salaries.

One reason for increased profit of stores by raising wages is that most of the money would just be recycled back into Walmart. Its the same economic argument that the best form of stimulus for an economy is giving poor people money because they spend it on consumables instead of saving it or spending outside the country.

There was a study done a while ago about Walmart employees doing most if not all of their shopping at Walmart due to their 10% discount.

Honestly, considering what Amazon and Costco are doing, Walmart needs to do something drastic to keep up.

[OMG!WTF!]

Originally Posted by GGG

Does that include all companies, or all publicly traded companies?

That 140k number is all companies. The numbers iggy likes to quote are literally the top 10 ceo's total compensation package, vs the lowest possible wage earners hourly only pay. It's a really dumb comparison. This is more what I was getting at....

https://www.fraserinstitute.org/blog...-pay-in-canada

Even in Canada people look at the top 100 companies on the TSX and compare those CEO salaries to minimum wage earners so you can manufacture some outrage.

[Gozer]

Originally Posted by Locke

Okay, assuming this to be true I'm not approaching this from the perspective of an employer, I'm approaching it from the perspective of a consumer.

Your question was "who is the target of this influence?"
We all are, in every sense.

Originally Posted by Locke

Be that as it may though, is that assertion not true? Is an artificial increase in wages not detrimental to private business?

No.
There is certainly a common-sense appeal, and visceral attraction, to the concept of arbitrary burdens on private business.
But, if we agree that a minimum wage is part of the social contract, then it is no more detrimental to business than regulations on pollution or taxation - it's an appropriate burden.

Originally Posted by Locke

Okay, assuming this to be true I'm not approaching this from the perspective of an employer, I'm approaching it from the perspective of a consumer.

Be that as it may though, is that assertion not true? Is an artificial increase in wages not detrimental to private business?

You say: 'Management makes too much!'

Thats not a point that I'm inclined to disagree with you on, but it also doesnt really reflect on this particular aspect of business either.
.
.
Ceteris Paribus, an external force arbitrarily increasing a cost of doing business (in this case minimum wage) to an extreme that takes it beyond what the market deems reasonable so quickly that businesses are not afforded the opportunity to transition smoothly, is that not detrimental to Private Businesses? And even moreso to those that cant control their costs to the same extent as others?

The management quote wasn't mine, but I agree it's not terribly relevant and we wouldn't agree on everything.

Your question about an unreasonable minimum wage is defining the issue as problematic.
There is a minimum wage that is too high for the market. A public policy could be reckless and irresponsible in this manner. Academically, that is true. But it's a red herring.

In reality, and on the topic of my posts in this thread, the current wages of Walmart impose an external subsidy to Walmart. Walmart is able, and chooses to, pay a full-time worker a wage that is considered unliveable by the government.
Whether or not the governments assessment is accurate is debatable, and would need to be reconsidered constantly, but I agree with the current assessment.


So, currently, Walmart pays their staff so little that the taxpayer supplements this wage. Joe's Hardware needs to compete with Walmart in this toxic job marketplace; Joe has to choose between an ethically dubious wage or a non-competitive one. He can pay his staff too little to live on, and oblige them to take govt aid, or he can pay them a respectable wage (which is yet another cost he isn't competing fairly on) AND have those wages taxed to subsidize the Walmart employee.

[Senator Clay Davis]

I actually would have thought it was because I've been asked 732 times about the Wal-Mart Mastercard. That has to increase sales right?

[Wiggum_PI]

Originally Posted by OMG!WTF!

That 140k number is all companies. The numbers iggy likes to quote are literally the top 10 ceo's total compensation package, vs the lowest possible wage earners hourly only pay. It's a really dumb comparison. This is more what I was getting at....

https://www.fraserinstitute.org/blog...-pay-in-canada

Even in Canada people look at the top 100 companies on the TSX and compare those CEO salaries to minimum wage earners so you can manufacture some outrage.

Yeah, not really sure I'm buying the numbers in Iggy Oi's chart. Looking at Walmart's 2016 annual report, the president and CEO Douglas McMillon's salary is $1,263,231. Using the 60hr/week times 50 weeks suggested by the chart, works out to $421/hr not $6898/hr.

However, the CEO did make an additional $18,545,566 in compensation through stock options, bonuses, pension/deferred compensation, etc.

So like Delgar said before even if the CEO made zero dollars in salary, he would still be making huge multiples of money over a front line worker.

[jammies]

Originally Posted by Slava

Well that might be the case, but I don't think that regulations are the path to efficiency.

Please explain how limiting executive salaries will limit "efficiency". There are empirical studies that show that executive compensation, as GGG has stated numerous times, has no or even negative correlation with company performance. Look it up yourself, the very first Google result of my search is this Forbes article:" http://www.forbes.com/sites/susanada.../#49d7e50f293a.

If salary doesn't correlate with performance, then limiting one isn't going to limit the other. The market ISN'T correcting this, so arguments that it will are simply wrong. Further, whether or not a hugely profitable company can afford such salaries is not relevant, what is more relevant is whether poorly performing companies can afford them - if your annual profits are $20 million, a $7 million dollar CEO vs a $2 million dollar one makes a very large difference. Not to mention, it isn't just CEOs who make artificially high salaries, but CFOs, COOs, CIOs, and other executives as well.

There is a common misconception that these executives are wealth creators, and thus deserve as much money as they can be given. This is false. Investors and entrepeneurs create wealth, while executives are employees. In a private company, someone might be all three, but in a public company, the vast majority of CEOs are hirelings, not capitalists. That they are awarded status and money as if they were the latter is the product of a system of cronyism, and the exploitation of humanity's admiration for "leadership" as an simplistic, popular, and usually illusory explanation for collective success.

[Slava]

Originally Posted by jammies

Please explain how limiting executive salaries will limit "efficiency". There are empirical studies that show that executive compensation, as GGG has stated numerous times, has no or even negative correlation with company performance. Look it up yourself, the very first Google result of my search is this Forbes article:" http://www.forbes.com/sites/susanada.../#49d7e50f293a.

If salary doesn't correlate with performance, then limiting one isn't going to limit the other. The market ISN'T correcting this, so arguments that it will are simply wrong. Further, whether or not a hugely profitable company can afford such salaries is not relevant, what is more relevant is whether poorly performing companies can afford them - if your annual profits are $20 million, a $7 million dollar CEO vs a $2 million dollar one makes a very large difference. Not to mention, it isn't just CEOs who make artificially high salaries, but CFOs, COOs, CIOs, and other executives as well.

There is a common misconception that these executives are wealth creators, and thus deserve as much money as they can be given. This is false. Investors and entrepeneurs create wealth, while executives are employees. In a private company, someone might be all three, but in a public company, the vast majority of CEOs are hirelings, not capitalists. That they are awarded status and money as if they were the latter is the product of a system of cronyism, and the exploitation of humanity's admiration for "leadership" as an simplistic, popular, and usually illusory explanation for collective success.

And again, there are mechanisms to correct this perceived inequality. All my point is here, is that if people are that concerned then they should use the system that exists.

[Gozer]

Originally Posted by Slava

And again, there are mechanisms to correct this perceived inequality. All my point is here, is that if people are that concerned then they should use the system that exists.

For instance, I'm sure that Wells Fargo would have regulated themselves and fired their own executives if those damn regulators got their boot off the free market's throat.

[jammies]

Originally Posted by Slava

And again, there are mechanisms to correct this perceived inequality. All my point is here, is that if people are that concerned then they should use the system that exists.

Those mechanisms not only aren't working, but the problem is getting worse, so your "point" seems contradictory to reality. You could deny it's a problem at all, which I suppose you are with "perceived inequality", but arguing that the current system can fix the problem, when it clearly doesn't, hasn't, and can be therefore predicted with certainty to continue not doing so, is nonsensical.

[Oling_Roachinen]

I really don't get the need to regulate too high of salaries. A company should be capable of making their own decisions even if they may or may not be detrimental to the company. It's pretty much the basis for a free economy, giving the company control. If that means an executive or two get more than they may be worth, so be it. All they need to do is answer to shareholders, and that comes down to profits. Don't invest in a company if you don't like how the company is ran.

On the other end, there should be government regulations to protect the lower class from being exploited and the tax payers having to subsidize a companies workers. As it stands now, that's not the case in the States.

[Jason14h]

I really don't get the need to regulate too high of salaries. A company should be capable of making their own decisions even if they may or may not be detrimental to the company. It's pretty much the basis for a free economy, giving the company control. If that means an executive or two get more than they may be worth, so be it. All they need to do is answer to shareholders, and that comes down to profits. Don't invest in a company if you don't like how the company is ran.

Exactly. Just because shareholders have typically accepted this, doesn't mean it is good business practice.

There is a reason the board who represents the shareholders have to approve these things.

The CEO's main job is increase shareprice in a public company, and if they do so they are rewarded, since the shareholders are happy.

This has nothing to do with the wage workers are paid.

[Slava]

Originally Posted by Gozer

For instance, I'm sure that Wells Fargo would have regulated themselves and fired their own executives if those damn regulators got their boot off the free market's throat.

Well the CEO is out and the shares are down by about 20%. It appears that the market does have a way to deal with the issues there?

Originally Posted by jammies

Those mechanisms not only aren't working, but the problem is getting worse, so your "point" seems contradictory to reality. You could deny it's a problem at all, which I suppose you are with "perceived inequality", but arguing that the current system can fix the problem, when it clearly doesn't, hasn't, and can be therefore predicted with certainty to continue not doing so, is nonsensical.

Have you ever voted in a say on pay resolution?

[peter12]

Originally Posted by Jason14h

Exactly. Just because shareholders have typically accepted this, doesn't mean it is good business practice.

There is a reason the board who represents the shareholders have to approve these things.

The CEO's main job is increase shareprice in a public company, and if they do so they are rewarded, since the shareholders are happy.

This has nothing to do with the wage workers are paid.

I think that it has been demonstrated that this is all but impossible for a CEO as an individual initiative.

[Gozer]

Originally Posted by Slava

Well the CEO is out and the shares are down by about 20%. It appears that the market does have a way to deal with the issues there?

Serious?

That's 'cause regulators found them to be committing fraud.

[Slava]

Originally Posted by Gozer

Serious?

That's 'cause regulators found them to be committing fraud.

So what are we arguing here? I thought it was about whether salaries for CEOs ought to be regulated? So here you have an example where without that regulation (and regulations in other areas) the CEO was booted and the shares are down by 20%. What would the point be of regulating his salary in that case?

[Gozer]

Originally Posted by Slava

I don't think that regulations are the path to efficiency.

That's the argument.

As for the actual regulation, I personally would advocate a 99% tax rate on annual income over $10million. Then you can feed your ego and feed the poor at the same time.

[CaptainCrunch]

Originally Posted by Gozer

That's the argument.

As for the actual regulation, I personally would advocate a 99% tax rate on annual income over $10million. Then you can feed your ego and feed the poor at the same time.

Or you could give a incentive for any donations to charities over $2 million bucks a year so that these people could give their money more willingly.

Why does everything have to be the government paying robber baron. And where's the guarantee that the government is actually going to feed the poor with general tax revenues as oppossed to pissing it away on something stupid.

Why don't we incentivize people instead of punishing people that are successful by sticking a tax gun up their a$$ and pulling the trigger.

[Oling_Roachinen]

Originally Posted by CaptainCrunch

Why does everything have to be the government paying robber baron. And where's the guarantee that the government is actually going to feed the poor with general tax revenues as oppossed to pissing it away on something stupid.

Government shouldn't worry about feeding the poor until Calgary has at least two or three dozen more blue circles around the city.

And I don't see why we should only tax those making over 10M with 99% tax brackets. By the world metrics, anyone making over $50,000 a year is already part of the global 1%. I think that's a good place to start taxing 99%, or at least 98%.