Is this a workable idea? Payroll must exceed profit.

[Jaundice James]

"Any company’s payroll must exceed it’s profits or pay a penalty equal to the difference between payroll and profit."

Is it doable? (I don't care if Republicans would go along with it - I try not to judge the value of ideas based on what Republicans think of them.)

What do you think about the idea itself? Would it work if implemented? Would the general public support it as a campaign platform?

[dipsydoodle]

1. Pay a penalty to whom.

.

[ret5hd]

2. i would bet this is already the case.

[dipsydoodle]

3. Probably is in most cases

.

[Jaundice James]

7. You think? I don't know...

Some companies are making BILLIONS in profits a year. You think they're paying that much in salaries?

Think of what companies pay for other companies they buy up. Netflix paid stockholders twenty times their IPO. Fast food workers are barely making more than I was making when I was a teenager more than twenty years ago, and McDonalds is so flush they're going to build a new store every day in China for four years. Mom and pop may be making a 3% profit, but the big boys have it figured out.

[TheWraith]

4. No doubt. nt

[Ikonoklast]

5. They'd just give the CEO a bigger bonus.

The proles would still get their pittance.

[Jaundice James]

8. Yeah, we'd have to...

make part of it that no more than, say, 10% can go to less than 10% of the people. I don't know. Just spit-ballin' here.

[doc03]

12. +1

[zbdent]

19. and that would be factored in as "payroll" ...

which would play well for the "corporation" ...

[karnac]

6. Interesting idea but I don't think it would effect many or some badly.

My small business costs are close to 60 percent labour. about 20 percent net-taxable profit.

a large nasty corporation like EXXON has a profit margin ranging from 5-10 percent with about 50 percent gross going to labor expense.

i wonder if it also would be fair to an author who might need an editor/secretary at 50k a year. does that mean if he nets a million he has to give the secretary 950 thousand?

turn it around to see the absurdity clearly. imagine what my workers would say if i penalized them 40 percent because my profit was too small.

[Jaundice James]

10. Interesting. I wasn't really...

thinking about small businesses. What if we made it a condition of going public? (Which always seems to be when the really bad behavior begins.)

Do you really think Exxon is giving 50% of gross to labor? I find that really hard to believe. I wonder how I could get my hands on some profit vs. payroll figures.

Again, I'm just spit-ballin' here. Looking for an idea.

[karnac]

23. well, we can extrapolate....

gross earnings 384 billion
net earnings 30 billion(9.4 percent . for reference Apple computer's profit margin is about 50 percent)

employees 83 thousand
average wage 100 thousand(very rough)
labor costs are 8.3 billion
(other expenses about 350 billion)

Links:

http://www.payscale.com/research/US/Employer=ExxonMobil_Corporation/Salary/by_Industry
http://en.wikipedia.org/wiki/ExxonMobil

So it appears you are right and I am wrong about exxon.

But the problem remains the same. if you penalize the difference between profit (23.7 billion ) that reduces the profit to zero. for the company there is no point to producing oil. or hiring 83,000 people who also pay taxes if they had a job.

We run into the same problem the author would have hiring a secretary. or even a nanny.

[Jaundice James]

26. Thanks for...

the links.

I'm not talking about reducing profit to zero. I'm trying to balance profit and payroll. Let me research and revisit. Thanks for the help.

[jtuck004]

25. Well, here's a source for 2008, shows

about 80,000 employees, 45 Billion in net profit. If each of those employees were making 100K, that would be about 8 million.

http://sourcewatch.org/index.php?title=Exxon_Mobil

But their costs for drilling and production take a good chunk from their gross.

There are details here: http://www.stock-analysis-on.net/NYSE/Company/Exxon-Mobil-Corp/Financial-Statement/Liabilities-and-Stockholders-Equity

hth

[vminfla]

9. Feel good measure that does not recognize the realities of many industries

Facebook has approximately 2,000 employees and is expected to have an operating income of $2 Billion. Are we going to give the door man and every other employee at least a million dollars a year just to satisfy some arbitrary standard?

[Jaundice James]

11. OK, but...

Where's it going now? To stockholders who are sitting by the pool watching their portfolios grow.

The salary of that door man has gone down, relative to the cost of living, since Reagan. I'm not saying he should be paid a million dollars, but he shouldn't be making minimum wage either while the company he works for (and those stockholders) lobbies Republicans to try to lower the minimum wage.

[vminfla]

13. OK, but...

arbitrary standards and regulations are not the remedy for this.

[Jaundice James]

16. What is? And what's arbitrary about wanting companies...

to make sure their people are sharing in the company's wealth, instead of having the company's wealth built at the expense of the workers?

It may be radical, but it's not arbitrary.

[vminfla]

17. An arbitrary metric was cited

profit must be < payroll. this is an arbitrary fiat. why? it may be radical, but it is also arbitrary.

[dkf]

20. Then wouldn't the owners only hire themselves and outsource the rest?

[TBMASE]

14. Payrolls do exceed profit

When you throw in actual Payroll and related expenses like FICA and SUTA, it will usually more than triple profit

[Jaundice James]

15. Alright, we'll put this one back on the drawing board...

But this IS a drawing board of sorts. Let's hear ways to fix this idea.

[zbdent]

18. Somehow, I don't think that's possible ...

since "profit" is a result of taking the gross "income" and subtracting the financial obligations, which actually includes "payroll" ... so you can't really calculate "profit" without factoring in "payroll" ...

[Jaundice James]

22. Good point. n/t

[GreenStormCloud]

21. Needless. If a company is charging too much for the product they will lose business to competitors.

Companies don't operate in a vacumm. No profit and they go out of business, too much profit and their competitors will cut them off at the knees. The exception are those companies with government protected monoplies. They get to do what they want too.

And don't forget that a company will usually have other expenses as well as payroll. A steel mill has to buy raw ore and coal, for example. An airline has to buy airplanes and fuel.

[Jaundice James]

24. But you left something out...

Companies ARE choosing more profit over paying their people better (part of why salaries keep going down while profits are going up - and investors insist on it), so it's not just what they charge for their products.

[GreenStormCloud]

27. If a company pays too little they won't get the quality employees that they need.

They are competing with other companies for good employees. Unfortunately, U.S. employees are also in competition with overseas employees who will work for lower wages. That both hurts and helps. I does lower wages here but it also allows us to pay much less for much of what we buy. I would not be able to afford my computer if it was made here.

[Jaundice James]

28. How very Libertarian of you. You sound like Ron Paul. ; ) n/t

[GreenStormCloud]

29. Competition is just a fact of evolution. It can't be legislated away.

You can try to build a wall around a country and be totally self-sufficient but then you end up like North Korea. The best you can do is moderate the competition to level the playing field somewhat. Even then a perfectly level field is impossible.