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Average Walmart worker earned $19,177 in 2017 while CEO Doug McMillon took home $22.8m – a ratio of 1,188-to-one. Yes its a big number, however I don't see anyt

Average Walmart worker earned $19,177 in 2017 while CEO Doug McMillon took home $22.8m – a ratio of 1,188-to-one. Yes its a big number, however I don't see anything wrong here. Walmart has around 2.3m workers, Doug's salary is roughly $10 per worker per year. Also, $23M is chump change as he is doing a great job in moving Walmart (just this morning Walmart stock increased 10% == $26B - 1000x his salary). Salaries are only part of the equation. For example, Drew Houston (founder of Dropbox) is worth $3 billion while an software developer at Dropbox has net equity of less than $1 million. Thats 3000-to-1.

jmcqk6 8y ago
So what about the fact that the average worker earned a salary low enough to qualify them for foodstamps (given a household size of 2)? Basically walmart is paying these low wages and getting subsidized by the federal government so that their workers can eat. Or when you say "I don't see anything wrong here" are you really just limiting yourself to the difference between average worker salary and ceo pay?
- zdragnar 8y ago
  Worker pay is a function of the available supply of people capable and willing to work the job and the opportunity cost of not filling the position. The opportunity cost of not filling a low paying job is generally quite low. Likewise, the wages for such jobs vary quite a bit, moreso than cost-of-living differences would account for. If you want to price wages based on some moral virtue, you will risk losing investors, or hurt poor people (aka your customers) by raising prices. In your scenario, it isn't Walmart that's being subsidized, it's a community with so many people desperate for work but not qualified enough to get a better job that they're willing to take a job that doesn't pay enough.
  - aerotwelve 8y ago
    Don't you think there are plenty of people out there that would be willing to do Doug's job just as well (or better) for < 22.8 million?
    - goobynight 8y ago
      You could say that about you and me as well. Time and place matter. He was there at the right time, sold himself and got a contract that essentially guarantees someone can't just come in and undercut him in a month.
    - zdragnar 8y ago
      There certainly are. Some of them might even have the experience that would lead the board to believe that they could do it successfully. What's the point? CEO positions should be chosen by random lottery? The company either offered a large enough chunk of money to attract the most talented / experienced individual they could, or Doug negotiated strongly enough to convince them that hiring him to CEO would be worth paying him that much.
  - ryandrake 8y ago
    You're describing the system we currently have, one of many possible systems, not some natural law. Our system is rigged to require people to work in order to survive, guaranteeing a perpetual high supply of labor, which, not coincidentally, guarantees a race to the bottom in terms of wages.
    - zdragnar 8y ago
      > Our system is rigged to require people to work That is a very strange thing to say following a comment about natural law, considering there is nothing about nature that guarantees you a right to live. Rather, specialization of economy and and social safety nets means that it's a hell of a lot easier to survive working even a low paying job than it is to try otherwise. As it stands right now, even if you taxed 100% of the income reported by the top 1% of earners, we might not close the government's budget gap, let alone expand the government's budget to guarantee survival for all citizens (not to mention the economic chaos that would result in taxing 100% of all income earned by anyone).
      - ryandrake 8y ago
        > That is a very strange thing to say following a comment about natural law, considering there is nothing about nature that guarantees you a right to live. I think we agree there is no natural law when it comes to macroeconomics, which is a human invention, and the various economic systems that each come with their own strengths and weaknesses. What we have now is better than primitive hunter-gatherer economy, but we seem to be stuck with this belief that only "more extreme capitalism" can make things better. > As it stands right now, even if you taxed 100% of the income reported by the top 1% of earners, we might not close the government's budget gap, let alone expand the government's budget to guarantee survival for all citizens (not to mention the economic chaos that would result in taxing 100% of all income earned by anyone). I don't think anyone proposed taxing 100% of anyone's income. A 100% marginal tax after a certain AGI sounds intriguing, and is not far from what was implemented in the USA back in the mid 20th century, to no apparent detrimental effect on the economy.
        8y ago
  - jmcqk6 8y ago
    > or hurt poor people (aka your customers) by raising prices. This is bullshit. Walmart profits are such that they could pay higher wages without changing prices. Sure, i'll accept you'll piss of investors by paying higher wages. If your only judgement of whether something is good or not is how much money it makes for investors, then that's the thing to optimize for. If your goal is to have functioning communities, perhaps that would lead to a different analysis. Not to mention that the reason walmart is able to get away with paying lower wages is because of those subsidies. If their workers can't eat, they would be forced to do something else. Don't ignore that relationship
gonvaled 8y ago
> just this morning Walmart stock increased 10% == $26B - 1000x his salary And? You said that Walmart has 2.3m employees. Why do you attribute that stock increase to one of the employees?
dingaling 8y ago
How the stock moves is not of relevance to the daily operation of a company; stock loses its direct benefit after the point of first sale. Actually I see that one could argue that stock becomes a negative benefit if executives become obsessed with watching it e.g. Mr Musk
s73v3r_ 8y ago
"Yes its a big number, however I don't see anything wrong here." You don't see anything wrong with a CEO taking home insane amounts of money while his average employee can qualify for food stamps?

jmcqk6 8y ago

So what about the fact that the average worker earned a salary low enough to qualify them for foodstamps (given a household size of 2)? Basically walmart is paying these low wages and getting subsidized by the federal government so that their workers can eat. Or when you say "I don't see anything wrong here" are you really just limiting yourself to the difference between average worker salary and ceo pay?

zdragnar 8y ago
Worker pay is a function of the available supply of people capable and willing to work the job and the opportunity cost of not filling the position. The opportunity cost of not filling a low paying job is generally quite low. Likewise, the wages for such jobs vary quite a bit, moreso than cost-of-living differences would account for. If you want to price wages based on some moral virtue, you will risk losing investors, or hurt poor people (aka your customers) by raising prices. In your scenario, it isn't Walmart that's being subsidized, it's a community with so many people desperate for work but not qualified enough to get a better job that they're willing to take a job that doesn't pay enough.
- aerotwelve 8y ago
  Don't you think there are plenty of people out there that would be willing to do Doug's job just as well (or better) for < 22.8 million?
  - goobynight 8y ago
    You could say that about you and me as well. Time and place matter. He was there at the right time, sold himself and got a contract that essentially guarantees someone can't just come in and undercut him in a month.
  - zdragnar 8y ago
    There certainly are. Some of them might even have the experience that would lead the board to believe that they could do it successfully. What's the point? CEO positions should be chosen by random lottery? The company either offered a large enough chunk of money to attract the most talented / experienced individual they could, or Doug negotiated strongly enough to convince them that hiring him to CEO would be worth paying him that much.
- ryandrake 8y ago
  You're describing the system we currently have, one of many possible systems, not some natural law. Our system is rigged to require people to work in order to survive, guaranteeing a perpetual high supply of labor, which, not coincidentally, guarantees a race to the bottom in terms of wages.
  - zdragnar 8y ago
    > Our system is rigged to require people to work That is a very strange thing to say following a comment about natural law, considering there is nothing about nature that guarantees you a right to live. Rather, specialization of economy and and social safety nets means that it's a hell of a lot easier to survive working even a low paying job than it is to try otherwise. As it stands right now, even if you taxed 100% of the income reported by the top 1% of earners, we might not close the government's budget gap, let alone expand the government's budget to guarantee survival for all citizens (not to mention the economic chaos that would result in taxing 100% of all income earned by anyone).
    - ryandrake 8y ago
      > That is a very strange thing to say following a comment about natural law, considering there is nothing about nature that guarantees you a right to live. I think we agree there is no natural law when it comes to macroeconomics, which is a human invention, and the various economic systems that each come with their own strengths and weaknesses. What we have now is better than primitive hunter-gatherer economy, but we seem to be stuck with this belief that only "more extreme capitalism" can make things better. > As it stands right now, even if you taxed 100% of the income reported by the top 1% of earners, we might not close the government's budget gap, let alone expand the government's budget to guarantee survival for all citizens (not to mention the economic chaos that would result in taxing 100% of all income earned by anyone). I don't think anyone proposed taxing 100% of anyone's income. A 100% marginal tax after a certain AGI sounds intriguing, and is not far from what was implemented in the USA back in the mid 20th century, to no apparent detrimental effect on the economy.
      - 8y ago
- jmcqk6 8y ago
  > or hurt poor people (aka your customers) by raising prices. This is bullshit. Walmart profits are such that they could pay higher wages without changing prices. Sure, i'll accept you'll piss of investors by paying higher wages. If your only judgement of whether something is good or not is how much money it makes for investors, then that's the thing to optimize for. If your goal is to have functioning communities, perhaps that would lead to a different analysis. Not to mention that the reason walmart is able to get away with paying lower wages is because of those subsidies. If their workers can't eat, they would be forced to do something else. Don't ignore that relationship

gonvaled 8y ago

> just this morning Walmart stock increased 10% == $26B - 1000x his salary And? You said that Walmart has 2.3m employees. Why do you attribute that stock increase to one of the employees?

dingaling 8y ago

How the stock moves is not of relevance to the daily operation of a company; stock loses its direct benefit after the point of first sale. Actually I see that one could argue that stock becomes a negative benefit if executives become obsessed with watching it e.g. Mr Musk

s73v3r_ 8y ago

"Yes its a big number, however I don't see anything wrong here." You don't see anything wrong with a CEO taking home insane amounts of money while his average employee can qualify for food stamps?