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Comment by manigandham | Hacker News Reader

This is a direct attack on competitors, designed to enlist the help of the federal government to raise payroll and put pressure on arch nemesis Walmart and any other company that has lots of retail other jobs that are not conducive to automation.

Remember that Amazon thinks 5 years ahead, and they waited for the perfect PR and political threshold to announce these changes and capitalize on the news.

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Back in my day, Walmart was the great evil retailer, threatening to put everyone out of business. Many towns had their retail core destroyed by having a Walmart open, defeat all the small businesses, then close.

Are we supposed to penalize Amazon for foresight?

I didn't say anything about penalizing them. The point is that it's a shrewd business move planned out years ago. It wasn't done out of purely good intentions and may not have the desired effect, and many people seem to miss that.

Who cares?

If it benefits more people then what difference does it make as to why it was done?

Because it might not actually benefit more people? The posted article is about warehouse workers losing bonuses and stock, which would negatively affect anyone already over $15/hour (which happens to be quite a few who have multi-year tenures).

This change has long-term repercussions in total current and future jobs offered, within Amazon, its competitors, and the wider labor market with govt influence. Is is not worth caring about such wide-reaching externalities of a $1 trillion company?

That isn't what I said - I said if it does benefit more people. If it doesn't, then my statement doesn't follow.

People always act like the sky is falling. Minimum wages were higher in terms of actual value many years ago and the world didn't end then and it won't end now.

Does it really benefit more people though?

Walmart and Amazon are prime examples of centralizing forces that slurp up wealth into urban areas and increase wealth inequality. Sure minimum wage goes up, but at the cost of more money leaving circulation in rural economies. It’s a non-trivial topic.

Rural economies are too small to matter, there are more people who stand to benefit in cities and generate more economic prosperity in cities.

Why should I care about a dying small town in the rust belt?

If you compare the UX at Walmart vs, say, Costco (which pays higher wages) I'm not so sure that paying the lowest is good business. i.e. is 1 Costco employee equal in productivity to 1 Walmart employee? I suspect not.

https://www.bloomberg.com/view/articles/2013-08-27/why-walma...

Walmart pays less because it has much lower profit margins. It serves far more customers and the average employee is a great deal less skilled. And it’s cheaper, with greater product choice. The average Walmart employee is definitely worse than the average Costco employee but Walmart is clearly the better business. It has higher gross profits, employs more people and serves more people.

Walmart only really has great profit margins in areas without competition.

So sure when it has a local monopoly it ends up with great margins, but in high competition areas the stores are far less profitable. https://www.businessinsider.com/states-where-people-spend-th...

>Walmart pays less because it has much lower profit margins.

Huh? Is that a rule? So when a given corporation's GPM drops, they have to give their workers a pay cut?

It’s a description of the economics of a corporation. If they have so much in revenues and so much in non wage costs the difference either goes to wages or profit. If revenues drop either profits will drop or wage costs will.

In the very long run your pay will tend towards your productivity but ease of replacibility will also play a role among other things. Sculptors and aerospace engineers are both highly skilled but there are many more jobs for the second than the first so they get paid more.

In the long run it is almost a rule that if gpm drops wages will. Profits could also drop. The mix of compensation could change. They could keep wages the same but fire the least productive staff so the wage bill drops but the remaining workers do more work.

That article is paywalled for me, so I did some quick research. It looks like Walmart's gross profit of 25% is almost double that of Costco's 13%. Am I doing the math correctly?

>> Walmart [1]

Total Revenue (TR) = 500,343,000,000

Gross Profit (GP) = 373,396,000,000

Gross Margin = GP / TR = ~25%

>> Costco [2]

Total Revenue (TR) = 129,025,000,000

Gross Profit (GP) = 17,143,000,000

Gross Margin = GP / TR = ~13%

[1] https://finance.yahoo.com/quote/WMT/financials?p=WMT

[2] https://finance.yahoo.com/quote/COST/financials?p=COST

I was wrong on gross margins. You’re right. Walmart still can’t adopt Costco’s business model. It sticks many more things, in much smaller units, in way, way more stores and the average employee is not as skilled.

https://www.forbes.com/sites/greatspeculations/2017/02/06/th...

> While Walmart’s gross margins are more than double those of Costco’s, an efficient model with significantly higher revenues per square foot ensure that Costco’s gross earnings for the same size of a store are higher than Walmart.

I'm not sure why they have to be 1 to 1 in worker productivity. They fill the specific roles they're looking for, and the companies aren't very interchangeable in either products or scale so it's hard to compare UX in any standard metric other than marketshare and goods throughput, in which case Walmart is bigger and better.

Seriously? A checkout operator at Costco is doing a significantly different job than one at Walmart?

You will get to compare the UX if you walk into any Walmart store...

It seems like you're conflating several things. Productivity of the worker is different from the UX of the store brand and neither have anything to do with the job role.

A checkout operator at Costco can be 2x as efficient as a checkout operator at Walmart while having a completely different customer UX (both the worker and the store itself) and being paid different wages. So what? Walmart and Costco serve different markets and sell different products so of course they will be differently run businesses.

Nothing about this is abnormal so I don't understand your comparison. They are not interchangeable other than looking at them as general retail companies.

If, like Costco, you refuse to sell to poor people, yes, you can get a much better profit margin.

But poor people still need food and various other necessities. I'm not convinced it's possible to pay high wages and also serve poor people.

Ever heard of Aldi ?

> This is a direct attack on competitors, designed to enlist the help of the federal government to raise payroll and put pressure on arch nemesis Walmart and any other company that has lots of retail other jobs that are not conducive to automation.

Good. I hope they force their competitors to pay employees better wages.

For warehouse work? As the rest of the comments show, it's never that simple.

Good for them. This sort of thing is exactly what's supposed to be good about a free market (when it works!) - competition.

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