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Billionaires aren’t as bad as you have been led to believe they are…
I’m not a guy who generally defends billionaires. I mean, they have their own, sometimes hired help, to make sure they keep out of trouble.
But sometimes this whole us vs. them, 99% against the 1% is overtly ridiculous.
It’s not as cut and dry as 140 characters or as an evening news sound “byte” and yet, here we are in a world that relies on a 24 hours news cycle and sound bites are all we get. Tweets in the form of “news” are the norm.
Whole Foods Employees
Last week, Jeff Bezos took some heat thanks to a story that broke surrounding the COVID-19 situation and how sick employees might be paid while necessarily taking off work due to having contracted the virus.
Firstly, as low paid as many service industry professionals are, they are essentially the lifeblood of the day-to-day needs of the people.
They have to be in the store, in contact with people who are sick, or we won’t get our groceries. They have to continue to ensure that we have a generally uninterrupted food supply, or we would riot. They are necessary parts to the system. And they cannot be replaced by robots yet. That means we are at the mercy of regular human ailments that can occur when in times of panic or difficulty like COVID-19 is presenting.
People are going to get sick. You couldn’t train enough staff or make a profit if you are in the midst of a panic, regardless of the benefits or wages. There are too many variables negatively affected in times such as these.
Even in a best-case scenario, the profit margins are generally lower than 12% on grocery across the board. That’s in a perfectly optimized scenario. The way the grocery companies make money is by volume. At some point volume is constrained by panic buying.
Now to the point of my opinion on this topic…
People don’t really get how things work for billionaires, business, or even benefits. So here are some facts, yes, facts, about the three above “B’s”.
Billionaires, Business and Benefits:
In a Friday March 13, 2020 article published by MotherBoard (VICE) and republished by Common Dreams (and other media outlets which aren’t going to be tediously listed here), a quote by a former Whole Foods Employee was highlighted for maximum effect.
“You’ve got the richest man in the world asking people who are living paycheck to paycheck to donate to each other,” Matthew Hunt, a former Whole Foods employee who led a drive to unionize Whole Foods workers, told Motherboard. “That’s absolute bulls**t(word edited by this author). With the amount Jeff Bezos makes in one day, he could shut stores down and pay employees to stay safe.”
Here are some problems with that line of thinking:
- You’re doing it wrong. Jeff Bezos doesn’t make 215 million dollar’s a day, no matter how many blog posts you have read that say that. He averaged a net worth increase over a year period that equated to 215 million dollars a day. That means, that his value in all assets, liquid and ILLIQUID (a huge majority of that net worth) increased that much over the past year and therefore equates to a large sum of money “per day”. If the market is down on Amazon for the day, Jeff Bezos loses the equivalent of a certain amount of money. It’s not like someone comes over to his house and takes billions of dollars from under his mattress, or out of his bank account. It just means for that day, or week or month, the calculation of his annual, and by derivative, his daily “earnings” is impacted.
- Shutting down stores doesn’t allow the business to continue to make money. Furthermore, during these times, the increase in sales that leads to barren shelves can actually hurt a business more from PR, and other intangibles more than the increased gross sales impact their bottom line in a positive way.
- Paying employees to stay safe is not a business ideal in the most basic sense. Sure, you want employees to stay with you, be loyal to you, and be able to safely, securely perform the job, it’s a value to you to have good employees that can perform their job. But there are millions of people who would gladly take the job with zero benefits, or at a decrease in pay, simply to have some income stability. It’s a competitive market. Yes, employers should be good to their employees, but the market doesn’t factor that in very highly in the grand scheme of things, at least not at the lower level of service work, which includes grocery verticals.
- The basic premise of this story and “reporting” was wrong. This wasn’t and still isn’t a Jeff Bezos decision/problem. The existing structure of the company, whish existed before Amazon, and by extension, Bezos, were affiliated with Whole Foods, had been adopted with buy-in from employees. This included the concept of contributing to a pool of PTO (paid time off) which would support sick employees through specific employee contributions towards it. It’s much more complex than this former worker, or any “reporter” is making it out to be.
- Grocery stores typically have a realized net profit margin of about 2-15% depending on the type of goods they sell and the specific volume they deliver to consumers. This is not a market sector that makes a ton of money percentage wise. And during times of uncertainty, their entire year can be ruined by a month-long shutdown. Losing roughly 10% of their yearly sales because of a complete full-footprint shutdown, means that there are far reaching economic impacts, including investors selling the stock, devaluing the market capitalization and positioning the stock for financial weakness. This means that even if Bezos is making billions on Whole Foods yearly, which he is not (at least it’s not a major piece of his wealth architecture at this point – a topic in and of itself); he would be taking a loss during store closures, and even if the store does stay open during the COVID-19 disaster, it will be hurt in the long-term by investor sentiment and the broader market.
So is Jeff Bezos the new Lex Luther?
So, no, Jeff Bezos isn’t profiting like crazy during a time where the real CEO of Whole Foods (John Mackey), has suggested that employees donate their own PTO to other members of the workforce. An innovative policy that has been available to workers for years. This is not an Amazon decision, and not even a Mackey decision. The employees can, at their option, move PTO accumulated off of their employee record and donate it to a different employee to help that employee during times of need.
Whole Foods should be praised for innovative thinking with regards to Human Resources management and employee benefits. At any other time in history this is a story about innovative HR leadership, not harping on Billionaires loosely tied to a brand acquisition.
What about the schools that are out, that aren’t paying sick leave to employees? What about industrial manufacturers that cannot afford to pay sick leave just because of an event that they didn’t cause (like a pandemic)? Are we up in arms about that? Or do we just think Jeff Bezos and evil Amazon are the problem?
Another core piece to several of the posted stories comes in the form of a tweet by @KanielaIng from March 13, 2020 that reads:
If I were a billionaire right now, I’d “hire” and double the wage of any Whole Food employee who is willing to simply stay home for a few months. It’s hard to understand this grotesque level of greed.
Mark Kaniela Ing is a former Hawaii House House of Representatives member from 2012-2018. He is also a self-proclaimed Democratic Socialist. That’s a presentation of fact not opinion or judgment.
Let’s unpack that one really quickly:
Firstly, with all due respect, that is probably why you are not currently a billionaire. With business acumen like that, you’d likely have trouble running a company spanning such a large footprint and having such low overall margins as must exist to be successful in the grocery segment. I don’t know if you are successful in business or not, and it doesn’t matter to me if you are – because statements that separate reality from emotion don’t have any real weight in the business world at this point.
Note: I’m not trying to flame you or start a fight, but billionaires don’t usually get to be billionaires by making poor economic decisions, like reversing the reality of wages.
That said, here are some figures:
Whole Foods has about 90,000 employees across all stores.
The average level of pay is $15.69/hour USD.
Let’s assume the average (across the whole company this would be conservative) is 25 hours a week. It is likely to be well more than 30 hours per week, but for the sake of finding baselines, let’s assume 25 hours.
Let’s also assume that we are not including the very smart executives in that pay average and forget about the profit raising leadership they have been in charge of.
So, you are saying that you would pay 90,000 employees for a few months, double their average pay rate just so they could stay home.
All of this, while you made ZERO dollars through sales of product, and alienated the vast food supply economy by not accepting vendor orders, not contributing to US food security, and not continuing contracts in place in order to accomplish this lofty goal.
As a Billionaire, you’d be spending approximately the following amount to be so righteous.
That’s almost half a billion dollars to be benevolent for 3 months.
All for what? The sake of saving face on a tweet or grabbing a few followers or likes? Let’s talk more about reality…
It’s noble that you think that way, but it’s impractical, even stupid, and probably accomplishes less in goodwill, than it causes in long-term problems for the overall economy, the people who need food, and the overall viability of several thousand vendors and the entire organization you are a head of.
Perhaps it’s a little bit easier to make that statement if you had 100Billion dollars attached to your net worth. Would you actualize that half a billion-dollar stock sale to get the money before or after the market dropped your net worth by 25%?
Would you say the same thing if you were only worth 1.1 Billion dollars?
It seems a bit unrealistic that you would. And no one would blame you for protecting what wealth you did have instead of following through on lofty promises based on garnering a few twitter followers.
Some final notes:
You’re right to think that big business has faults – it does. You may even be right that Jeff Bezos is not a great guy, what do I know, maybe he isn’t a great guy? But to associate the idea that a billionaire is Lex Luther-ing all over the place while poor little paycheck to paycheck employees are suffering, and he wants to take more of their money so he can pad his status as the world’s current richest man – that’s kind of ridiculous.
Remember, at this point, we have no reason to believe that anyone/company/government could have controlled the outbreak of COVID-19 such that it wouldn’t have had such an impact as it already has had.
It won’t be Jeff Bezos who tells employees to go home and shuts down stores, it will be at the behest of the Government agencies.
Some basic economic principles and common sense should help you to understand how reality actually takes form.
As a final note: before this even came to “light” as a “story”, Amazon had stepped up and offered 2-weeks of pay to sick members (COVID-19 related) of all core and subsidiary businesses under the Amazon umbrella. It also had the following comment that conveniently didn’t run with the original posting of the “breaking story” across the internet.
QUOTE from Amazon/Whole Foods:
“This is a longstanding Whole Foods Market program from prior to the acquisition. Amazon is matching all funds to the Whole Foods Fund since the acquisition to support the team needs during this unprecedented event, and all Whole Foods team members have access to the 2-weeks paid time off related to coronavirus that was announced for all Amazon employees.”
What are your thoughts? Am I way out in left field? Did I get this one wrong? Did I say something too sensitive? Let me know.