That is paying higher salaries to attract new employees. That is not giving your current employees raises.
You may pay more if you rent better space, but you are not going to pay more for the same place you are renting than you have to.
Salaries don’t work the same way as rent. Conceptually they’re the same, as above, but the dynamics is slightly different.
When it comes to rent, that’s a relatively rare event which gets much focus from senior management, and you can generally pin down pretty precisely what the desirable characteristics of a specific location are, as well as its market value, and your offer will be tailored to the specific location. When it comes to most hiring employees for a big corporation, it’s many many decisions, being made by people far below senior ranks. The senior people rely on the actual hirers to get the best people from the pool that they have available, but the way the senior people can affect that is primarily by changing the pool of available employees, which is done via improvements to salaries, benefits, working conditions and the like. It’s not practical for them to tell hiring managers “if you get an ‘8’ applicant offer them $X but if you only get a ‘7’ then offer them $Y”.
But fundamentally it’s the same trade-off of cost versus benefit, and the amount of funds available is going to affect that decision.
HR sets salaries, not the hiring manager, though the hiring manager signs off on them. Salaries are set based on education, experience, and especially the market.
In the past years, since the end of the crash, starting salaries for the people I hired zoomed upwards, totally due to market conditions. As I said, salaries for current employees hardly budged. Our profitability was more or less constant over that time.
Changing working conditions is slow and expensive, except for simple stuff like free coffee and soda. In any case study after study has shown that people leave primarily due to their management, not the quality of their office furniture.
So, you think that if the numbers come in for a company, the CEO says “screw the motion sensor lights, let’s keep them on all day?”
Right.
Rentals are like salaries - they are forever. A company is not going to move into better space just because they have the money this year. They may be out of space. They may want a better location. They may want a place closer to the CEO’s home.
If they have a windfall, they may throw a better Christmas party. During the bubble I went to some doozies. That’s like a one time bonus, not a salary increase.
And you don’t pay a penny more than what you manage to negotiate that space for. You don’t say, “Well, we settled on $20/sqft NNN, but our profits are up a bit, so we’ll go ahead and give you $21.”
OTOH, at the end of your lease, your landlord may say, “I rented this to you at $12 + 3% annum, but neighboring properties are renting for $19, and you are currently paying $16. If you want to keep the space, we are going to raise your rent.”
Then you negotiate on an increased rent. The reason for that is because the demand for property increased, not because your profits did.
That’s actually pretty close to exactly how that works out. When a job is needed, HR determines the wage, partly based on the potential applicant pool. They may not literally say, “if you get this, offer this.”, but they are going to determine how many applicants that they expect, and set their wage offer based on that.
The amount of funds only determines what profit margin is left, or if the business is viable. If you cannot afford to offer competitive wages, then you either don’t hire people, and you go out of business, or you hire people you can’t afford to pay, and you go out of business.
Wages are set by the labor pool, not by the profits of the companies that employ them.
OK, I don’t think we’re adding much if anything at this point. I stand by my prior posts and don’t think anything further is required.
I appreciate the comments in this thread. They did say some weasel words about accelerating some coming changes, so I guess they would have been going up on minimum wage anyway at some point.
I still feel trickled on, even if it’s not “trickle down” working.
I really didn’t think people would buy the idea that Wal-mart, one of the biggest companies in the world, that makes hundreds of billions (with a “B”) of dollars a year profit, suddenly can *afford *to give some of its workers a small pay increase.
But it turns out that this actually makes sense to some people.
What a pity. I thought k9bfriender summed up very well the problems with your position, and was looking forward to your response.
Oops of course I should have said tens of billions in net profit per year.
I think his post completely missed the boat, but I’ll give it one more shot.
This just ignores what I’ve been saying. You don’t pay more for the same property just because you have more profits. You pay more to get a better property. In the case of workers in big corporations, the way you accomplish a comparable end is by raising the standard salaries and thereby raising the level of the applicant pool.
That’s not how it works with big corporations like Wal-Mart, where things are pretty much set as policy at a senior level and there’s very little if any flexibility for the guy doing the hiring. There’s no “when a job is needed” for Wal-Mart. (I’ve pointed this out previously.)
Once again, you can improve the applicant pool and reduce turnover by increasing salaries. How much you value these longer term and less tangible benefits versus the direct and upfront costs of paying more cash out the door right now depends (in part) on how much cash you have on hand and how your profits are (compared to expectations).
I don’t anticipate repeating these points again in response to posts which just ignore them.
I am not sure if we are talking past each other or what, but I do not feel as though it misses the point, especially as we are not actually in disagreement on some things, and yet you disagree anyway.
This in no way ignores what you are saying. I am saying that you pay more for rent because a better property will make you more money, whether it be because it has more space, better utilities, or is just a better environment in which to have better morale for your employees to make them more productive.
You do not pay more in rent because you have more money, you pay more in rent to make more money.
Same as workers, you don’t pay more for the same workers just because you have more profits.
And that is exactly what I said happens. The wage is set by HR. I literally said “When a job is needed, HR determines the wage,”, so I don’t know how you get from that that I am saying that there is flexibility for the guy doing the hiring, but it is certainly not due to me saying that.
And jobs are always “needed” at Walmart because they have high turnover. This is why HR sets wage rates for hiring. They never don’t need to hire people, so it is not a matter of them saying “We need to hire someone, pay this amount”, it’s “When you hire people to fill the positions that you need filled (and HR determines how many employees are needed to fill the positions as well), pay this amount.” The only thing the actual hiring manager does there is to decide which applicants to hire. He does not decide how many to hire or for how much.
That wage rate is based off of the potential pool of applicants, not the profit margin. The only time that the profit margin is figures into wage considerations is determining whether you can afford to pay those wages. This was not a problem for walmart pre-tax cut. (And if it is a problem, then it is your basic business model that is the problem.)
Walmart could have afforded to pay much higher wages before the tax cut, it did not do so because it did not need to do so in order to attract and maintain its workforce. With a tightening labor market, they have to pay more now. Nothing to do with their profits.
Walmart needs to pay good enough wages to get people to come in and stock shelves and check people out. They don’t need some cream of the crop for that, they don’t need college educated, and barely need high school education. They will pay the minimum required to get the minimum quality worker they need, and that’s not all that much.
I certainly have not ignored any of your points in your posts. I certainly do see where you have misunderstood my posts, to the point of literally claiming that I said explicitly the opposite of what I did, so if that is why you think that I am ignoring your posts, I have no idea what to do about that, there really is nothing I can do on my end.
OK.
Just saw this from ABC: Analysis: It’s the ‘economy, stupid’. And right now, the Trump economy is blasting off. Of course, it’s possible that these are just corporate fat cats cheering policies which benefit corporate fat cats.
[On a related note (related to something in that article, anyway), I have a BIL who is a corporate tax attorney, and he is hugely in favor of the tax cuts. He has apparently read the actual bill (at least the parts which relate to corporations, anyway) and he tells me that all (I assume that’s an exaggeration) the games that he and his fellow tax attorneys play in order to finagle to lower tax bills go away under this new law, which simplifies things considerably and removes the incentive to move money offshore. So he sees it as a win-win for everyone involved.]
I am sure there are still games to play to finagle an even lower tax bill.
No doubt.
Which is a good thing for my BIL, or he’d be out of a job. 
(I actually have two BILs in this profession, but only one is the guy who told me this.)
But less than there used to be, is the point.
Imagine that: Rich people at an economic summit are discussing… the economy.
Hey look:
There’s somebody else buying the story it’s the tax cuts, and not market forces.
Well if a company like JP Morgan is saying they’ll open new branches due to the tax cuts then that’s a reasonable statement.
Dropping corporate tax should have effects like that.
That doesn’t mean that I agree with the tax cuts. There are reasons that governments collect taxes, and this particular cut looks like a bad deal for society.
But the statement “Thanks to the tax cut, we’ll open a new office” makes a lot more sense than “Due to the tax cut, we can pay our workers more”. The latter makes zero economic sense. Don’t forget we’re talking again about a company that makes tens of billions of dollars of profit per year.
Well, if you can’t trust an upright and honest institution like JP Morgan, who can you trust?
Is it that f-ing hard to spell out the word “brother-in-law” (asks the person who just wasted a few minutes of his life searching to find out what BIL stands for)?
I thought everyone knew that one.
Now TCSROMMS might be a bit tough.