> "There's a surplus of customer eager to pay the lowest possible price even if that means exploiting workers."
This is just wrong. First, Amazon’s prices and their wages for warehouse workers aren’t directly connected. If they were, amazon wouldn’t have posted 200B in profit in 2021. Given the 1.6mil employees, that’s $125k per employee of profit. Amazon could pay MUCH more, and still hold the same prices.
Second, the hunger for cheap stuff is driven at least in part BY LOW WAGES. If you’re making minimum wage - you’re going to buy the cheapest things you can find.
edit: i'm getting beat up in the comments because I used gross profits rather than $YOUR_FAV_PROFIT_METRIC
I stand by using that number. If you think I am actually suggesting they distribute 100% of their profits to every employee you're straw-manning my point. I'm suggesting cutting a slice off profits, exec pay, and stock grants, and giving that to the lowest paid employees - since the company would not make that money without their labor.
A significant portion of Amazon profits comes from AWS. If you remove AWS from the equation, AWS does make money, but not the truckloads you are pointing. And AWS profits are in now way linked to amazon warehouse workers salaries.
If Amazon increases wages - and thus prices - what do you think will happen:
1. People will still buy amazon because they have a higher wage so they ca afford it
2. People will buy more stuff from another store that provides cheaper prices while exploiting Chinese workers instead of American ones.
And note that Walmart/Target/Home Depot/ and all the other retail public companies have profit margins of low single digits. It is safe to assume Amazon has the same low single digit profit margins from its retail operations.
There is no reason to ignore fixed costs (aka using “gross profit”) for the purpose of calculating how much extra cash a company could be paying its employees. Net income (aka profit) is the extra cash flow that could have been spent.
> Net income (aka profit) is the extra cash flow that could have been spent.
It's possible gross profit is the wrong metric, but the premise that net income is the right metric isn't something I accept. Net income is the money left over after it's been allocated out as the company has chosen. i.e. all the salaries have been paid, stock grants have been made, buildings and utilities are all paid, stock buybacks have been allocated, etc
If they allocated a little less to exec pay, and a little more to warehouse worker pay, I don't even think they'd need to cut into the 33B they have leftover.
But EVEN if we accept the compensation amazon has and only allow ourselves to play with net income - 33B is STILL $20k per employee. Do you know how life-changing $5k/year is when you're making 29k/year? That still leaves 15K of profit per employee (or 25B) that can go to people who didn't work for it.
Net income is all the money left after all the expenses are paid. Stock buybacks have no impact on net income (they are part of the cash flow statement, not the income statement).
Excluding all the things you said to get to the metric you like means Amazon can function without executives, software developers (no stock grant expenses), warehouses (no buildings and utilities expenses).... Which is plainly not true.
Yes, I agree, your straw-man is plainly false. Amazon does need executives, software developers, and warehouses.
Amazon is a functioning + profitable business. If it can't continue to be a functioning + profitable business if it pays every employee a good wage, it doesn't deserve to exist anymore - it needs to die to make room for a business that CAN do that. But I don't actually think that amazon has to exploit its workers in order to stay profitable, and I think the numbers (at very least the 33B in net profits) back me up.
You are welcome to start your own Amazon competitor with however much profit you would like.
If you are willing to accept less profit than Amazon, then you should be able to steal customers and employees by offering lower prices and better quality of life at work.
Same goes for Walmart/Target/any other retail business.
Maybe all the execs at these established retail businesses working for decades know what they are doing. Or maybe people posting on the internet know how they could be running the business better and delivering goods and services at lower prices and paying workers more.
If I were a betting man, I would bet that you would soon find profit margins are about as low as they can get for retail businesses and the competition very stiff.
> I think the numbers (at very least the 33B in net profits) back me up.
That profit is coming from AWS, Amazon video, and from the commission they collect from 3rd party sellers, not their retail operations.
By the way, I am all for better labor laws and higher quality of life at work laws. I just do not see the point of criticizing individual businesses, especially those running at low profit margins with no moat. They are obviously in cutthroat competition already, otherwise the profit margins would be higher.
The point of my criticism is to show that we can do better without losing same day delivery. These companies are exploitive, and the more people who see that the more likely it is to change in one of three ways:
Through public pressure. I don’t buy from amazon anymore because of this.
Through government action. But given how partisan politics in the usa are, i wouldn’t hold my breath.
Through action from workers. Unionization and work stoppages. I think this is the most likely and the most healthy option for our society.
If you want to be a bystander while people’s lives get chewed up and spat out so a few people can get rich, that’s on your conscience.
No idea where you are getting your numbers, but Amazon did not post $200B in profit in 2021. The list of top five annual profit (adjusted to current USD) by any company ever is:
1. Saudi Aramco (2018) - $120B
2. Saudi Aramco (2021) - $115B
3. Vodafone (2014) - $113B
4. Fannie Mae (2013) - $98B
5. Apple (2021) - $95B
Hello Kenny - some clarification seems to be needed re: some financial metrics.
1. Gross profit = revenue - COGS
2. COGS = price paid to manufacturer + transportation costs from manufacturer to the warehouse and from warehouse to customer
COGS does not include warehouse rent and utilities - these are operating expenses.
Hopefully this makes it clear that my reply to your other comment was in good faith and not a straw man. The metric you proposed is not a good metric. Amazon cannot function if Gross profit is 0 --- because it would not be able to pay for the rest of the stuff it needs to function: executives, software developers, warehouses. Saying all the expenses not included in COGS are discretionary is just not true - some of theses expenses are essential.
I could use one of your numbers, $33B net income, or $60B EBITDA. But using those number accepts the premise that all of that money was allocated correctly, and it's just the 33B left over that is free to be distributed.
It's simple, just apply modern capitalism. In this case the rule is: Ford was a genius for realizing his workers need to make enough to buy his product. Anyone else who makes that realization is a dirty commie.
>Ford was a genius for realizing his workers need to make enough to buy his product
In what world does it make sense to pay your workers $20k (or whatever), so they can spend $20k on products that your company makes? Factoring in margins you need each dollar paid to your workers to generate $6.66 dollars worth of sales for you for it to break even.
...except that won't happen because supply/demand drives prices, not the inflated wages that you're paying. Your competitors will continue to pay their workers the usual wages, and laugh all the way to the bank with the extra money that they're not spending on wages, or undercut your prices.
Supply and demand also applies to the labour market. If you pay more, the best people want to work for you and you can hire the best people. Humans are not fungible, no matter how much businesses try to treat them that way.
Cars are this big advertising moving billboard. Car companies employee thousands who work in cities built around these plants. Having employees driving around earning high paying wages spending it around town has a big influence on the rest of the town/region.
seems tenuous and hard to objectify. You could also use the same argument to say that raining $5 bills from your company offices has net positive value, eg.
1. dump a sack of $5 bills from your office
2. people associate your company with giving them free stuff, thereby giving you positive influence
It can but each situation requires a multiplier. A $10,000 cash drop as a media story picked up nationally or regionally will be worth more.
In Ford's case he doubled the daily pay to 5 dollars but this also provided a steady workforce so it had other benefits because a steady workforce means a trained and more productive workforce.
Exactly—it's entirely infeasible to live in the modern world and keep up with every step of the supply chain for every product and service you use, even if the information were readily available, which it very much is not. It's not even close to being possible.
That's what laws setting floors on how shitty product-safety/work-conditions/worker-pay/et c. can get, are for. Doesn't work so hot in a world where we grant MFN (or whatever it's called now) trade status to authoritarian states with weak worker, consumer, and environmental protections, though.
Unions were supposed to protect workers, at least in theory, but they were more than happy to off-shore manufacturing and allow layoffs in the US --as long as they got to keep their union boss jobs. Cesar Chavez understood this. This is why he did not want just anybody to be able to work in the fields.
It's all related. You wanna pay less by offshoring labor? You got it! But one day that off-shoring is going to come get you and your job will evaporate and you will be happy with service sector jobs. And don't complain, you didn't want to pay $70 for a shirt and instead went to buy a $20 shirt and "saved" money but "sold" your job or the underemployed person's job now driving a clunker.
