I thought I´ll add a point from corporations viewpoint. I am not justyfying their actions, although the low wages are often not entirely their fault,
but the fault of the whole model.
I was recently having a chat with a friend of mine, who is in the board of the largest food chain round here. We were talking about the salaries and I
asked him: "Why are the salaries so low in your company?". He gave a simple answer: If I rose the salaries of every lower level employee by 1 euro an
hour, the company would be in extreme loss and bankrupt within years".
1000 pounds does not seem as much, compared to the profits the corporation is making. Yet one has consider that you can not rise the salary of only
one person. If one lower-level employee gets 1000 pounds extra, everybody has to get their salaries raised. Now imagine a company has 10,000 workers.
Rising everybody salaries by 1000 pounds a year, it would cost 10, 000, 000 pounds for the company. Raising the salaries by 1000 a month would mean
120,000,000 pounds extra costs.
I took one well-know British retail company Sports Direct. I do not know how well they are paying there workers, although I can assume they are not
paying well.I do not know any retail store who does.
They have around 18,000 workers. Based on Google search, I found the base salaries were around 14k for lower level, which is low salary in England.
Now imagine rising the salaries of all of them by 12k a year. It would be around 216 million extra pounds for salaries. The operating income was 158
million pounds, 105 million after taxes. If salaries were raise, it would means 58 million pound loss in every year.
If Walmart raised the salaries of all their quite low-paid employees by 10k a year, leaving 200,000 highest salaries, it would mean the company has 5
billion dollar loss every year.
McDonalds would be losing around 5 billion dollars if we left out 800,000 of the highest paid workers...
There are so many people working in every major company that even small raises add up to a huge amount of money for the company.
We can also not forget the stockholders. The stockholders make the value of the company. If nobody wants to buy the stocks, the value is inexistent.
Basic Supply and Demand makes up the value of a stock.
If I as an investor buy some stocks, I do not want them to lose value. In order to earn well from the dividends I need to make quite an investment.
Apple is paying 3,05 dollars dividends on every share this year. Every share costs 450 dollars. Paying 450 dollars to earn an extra 3 dollars is quite
a risk, isn´t it? One needs to pay 450k to earn 3k dollars every 3 months. Imagine now if the profits were lower. Not many people might buy. The
stock loses 10% of its value. I have lost 45,000 dollars. You now might understand why companies need to think on their shareholders also... It is
very risky to buy stocks in the firsthand.
The system is complex and even big companies do not have it easy. . The CEOs have extreme responsibilities in front of shareholders. 10% loss in
company value might lose billions of invested money, of the money of others who have decided to purchase the stocks.
The system is created to be like that, it is not good for the lower-level workers and never can be, as there are too many of them and the company
holds also responsibility over people who have given them their money to operate with. The profits are not high enough for everybody to earn well, as
the investors have taken a great risk in order to earn even something from the stocks (Paying 450k to earn 3k with the risk of losing much more, but
also gaining much more if the stocks value rises by 10% I earn 45k)
The current system is never able to benefit everybody...
edit on 31-5-2013 by Cabin because: (no reason given)