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Comment by TheOtherHobbes | Hacker News Reader

You'd think with all that cash Bezos could afford to pay his minions a humane rate.

But he just doesn't care.

Aren't their margins like, razor-thin? Obviously at Amazon scale, even razor-thin margins mean huge profits, but that doesn't mean that you have any wiggle room within the profit.

Imagine you have 100 people working for you, and off of each person, you make 10 cents a day. Now imagine you grow your business and you have 1,000,000 people working for you. At 10 cents per person per day, you're now making $100,000 a DAY! You're rich! If you wanted to give back to your employees, just remember that each one produces 10 cents of profit. If you gave them all 10 cents extra per day, it means nothing to any one of them, but your business now makes $0 profit.

If your margins are so thin that people are forced to pee in bottles instead of going to the bathroom then your company shouldn't exist.

Also if you're having employees carried out because they can't keep productivity up during 100F + east coast humidity, your company shouldn't exist.

http://techland.time.com/2011/09/21/amazon-employees-carried...

They're not forced to do anything, including work there.

Not directly. But since people like Bezos own most of the productive machinery of the world, people really don’t have a choice except to work for one of the capital owners. In past times, people were free to work the land for themselves, as the land was held in common. Now somebody owns everything, and those of us who want to eat actually have almost “no choice” but to work for someone else.

Unless Amazon and the other mega-corps destroyed all the other companies that you could have worked for. Or if all the other companies have the same policies and work hard to set a fixed wage. Or if you have a criminal record and only Amazon will take you to pick packages...

Seriously, there should be a law against this. This is almost bordering on inhumane practices.

A billionaire built on modern slavery?

Your margins are so thin that you're worth $150,000,000,000. Right.

That's largely the value of his stock, though. Not defending him or the inequality as such, but it's not as if he's got $150 bn in cash that he could just distribute to his employees.

He has $150 bn in stock that he could just distribute to his employees.

It would not remain worth $150 billion if he did. It would crash quite spectacularly.

You realise that right now he has personally the money to give each and every one of his employees $256 000 in cash or stock options. Thats more than many of his employees make in 5 years.

Most of these people don't own their own house. Many of them have probably never travelled outside of the country.

That's not his entire company, thats just his own personal wealth. Imagine if his c-suite and upper management all pitched in too.

He does not have it as money, he has shares. Rich people do not hold substantial cash or bank deposits; at their scale it is almost criminally wasteful to do so.

His shares are market-priced. He is "worth" $150Bn because of today's share price, but there is no single pool of money available to buy him out. So in practice, he is worth a billion here, a billion there, so long as he doesn't scare the fishes.

If he transferred his shares to his employees, the price would crash and each employee's slice of the pie would not be worth $256,000 any more.

The same goes for creating a massive new supply of RSUs or share options. These dilute existing shareholders who, unsurprisingly, resent that other people get for free or at a discount what they paid for at market price. Accounting rules require these to be considered as expenses, meaning the reported profit or loss looks worse.

What would work better for Amazon's lowest-paid workers would be a higher wage. It's a more predictable and effective source of wealth sharing than showering lottery tickets from a helicopter.

The point was not to suggest that he actually did that. The point of my comment was to illustrate the incredible amount of wealth he has earned that runs counter to the idea that amazon can't afford to raise wages.

Amazon’s net income per employee is 33,000 USD [0]. This means every Amazon employee could get a 30,000 USD raise and Amazon would still be profitable.

[0] https://csimarket.com/stocks/singleEfficiencyeit.php?code=AM...

Net income, like the cost of their rent, inventory, infrastructure, R&D, advertising, acquisitions are all taken into account before coming to this figure? Or is it just employee costs like salary and benefits? I find that hard to believe, but if it's the case, then they clearly don't have razor thin margins, and what I said before simply doesn't apply to Amazon.

The number is the net revenue (income minus all operating expenses, including salaries/wages, facilities, goods, taxes, etc) divided by the number of employees.

For 2017 their net income per employee was around $6,000. The parent claim is off by a factor of five. $3b in net income for fiscal 2017, and an average of perhaps 450k-500k employees for the whole year.

For 2018 they might produce $6b in net income, assuming they don't go on a big spending spree (which they're prone to do). They'll average perhaps 600,000 to 650,000 employees for 2018. So their net income per employee ratio is going to be closer to $10,000. It'll still be nowhere near the $33,000 the parent claims.

$33,000 in net income per employee would require near $20b in net income this year.

Amazon does in fact have extraordinarily razor thin margins, in their retail business. AWS is very profitable, with ~25% style operating income margins. It's providing all of the net income Amazon is generating now, retail essentially reinvests its thin margins right back into growth and improving fulfillment.

Walmart has 2.5% to 3% net income margins for example. Facebook is typically up at 40% to 50% for comical contrast. Amazon's retail business will spend most of its existence with 2% to 5% type margins.

Costco had a 2% net income margin for 2017. Target was at 3.9%. High volume, low margin retail is a horrendous business, very few operators can survive with such perpetually low margins. You have to execute at an extraordinary level.

Amazon has 566,000 employees. We have to guesstimate their hours, but let's say it's about 1500 per year. That's probably really lowballing it, but even there that's 849 million manhours per year. Put another way, a raise of $1 would cost around a billion dollars. Don't forget that employers pay additional taxes and fees that scale against employee compensation meaning they get double tapped when increasing compensation. A one-off $1000 bonus for one year would cost more than half a billion dollars.

So exactly how much more do you think they should be paid?

This is the thing I think many people miss. Many companies operate on pretty thin margins. And while Amazon is well known for reinvesting their profits right back into the company, that's also the reason that they can afford to hire hundreds of thousands of people and pay them quite well for what is some of the most unskilled labor there is. You're looking at $13/hour for literally moving boxes.

Another way of looking at this is that we'd agree that America, as a whole, is quite a rich nation. Yet the surprising thing is that the entire GDP for this nation doesn't actually work out to be all that much. The GDP is of course just the sum value of the market value for all goods and services in this nation. If we completely split all proceeds from the sale of these goods and services up and divided it equally between each person, it'd only be about $60k. So exactly how much would be a fair share for a box mover in your view? Amazon has them hitting just below 50% and again I think it's quite remarkable that that's even possible.

And one final point here, keep in mind these values I've been mentioning here are averages. Talking about $15/hour for flipping burgers in [expensive city] is not really meaningful due to what is invariably localized price inflation. Many of Amazon's fulfillment centers are in areas where $13/hour is worth much more than $15/hour is in [expensive city].

That's true, but you could distribute stock more uniformly (since that's where most of Bezos's wealth comes from) and then workers would benefit from making Amazon successful.

I think a lot of the criticism on HN of capitalism is misguided and fails to account for some of the things you pointed out as well as the enormous rise in living standards over the last 200 years or so, but there does seem to be a tendency for successful people to accumulate far more wealth than they can reasonably spend.

At a guess there's a decent number of pretty well paid people at Amazon who don't need a raise.

The people who are struggling to make ends meet at the bottom end could do with one though.

$12/hour is inhumane?

If its combined with inhumane conditions as a requirement to stay employed, yes.

So what would you consider a "humane rate" to pay someone to work in inhumane conditions? $20/hr? $100/hr?

Why don't they just pay a humane rate and have humane conditions? Bezos is the only one demanding inhumane conditions and it doesn't have to be that way at all, it's an entirely contrived problem he invented to be a tiny little bit richer.

>it's an entirely contrived problem he invented to be a tiny little bit richer.

That would be why.

Amazon exists to make Jeff Bezos and the shareholders as rich as possible, full stop.

You simply do not push them into those inhumane conditions in the first place.

They could just hire more workers at $12/hr and I don't think there'd be a problem.

How about we all agree that people shouldn't have to work in inhumane conditions?

Even with better conditions, if the rate of pay isn't enough for an employee to earn a living (food, shelter, amenities) even when employed full time, it's inhumane.

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