That doesn't follow, at all. You're measuring the 40% increase in profits relative to the amount of profits but the 1% increase in wages relative to the amount spent on wages, and those pots are generally very different in size - in fact, the smaller the amount of money that goes to profits compared to workers, the more biased against workers and towards profits measuring this way makes it look. Generally in retail, wages are one of the main costs and are a lot bigger than profit margin outside of small specialized companies.

Also, that article reads like propaganda. They carefully avoid quoting any figures that are meaningfully comparable. For example, the industry-wide figures they quote compare the average increase in profit for selected entire large companies for a year not to the increase in their annual staffing bill, but the increase in one hour's pay for one worker. The only comparison between total staffing bills and anything else is for one cherry-picked company that increased its pay to staff whilst making a loss on its US operations over the time period they're looking at and having a 68% drop in overall profits, if I'm reading the linked report correctly. But they carefully don't compare to that company's profits at all.

It’s a good point, especially considering retail profits in sectors like food can be as low as 2-3% of revenue, so a 40% increase might be an extra 1% of revenue, while labour costs might make up 30-40% of costs, so if those went up by the same absolute percentage then the chain would be losing money (which would presumably then allow them to cut everyone’s wages by the same proportion by the same logic?)

If the profit margin is 2% but it increases to 3%, that’s a 50% increase in profit.

Yep. And if wages cost 33% of the income, to increase the worker pay by three percent will take 100% of the additional profit. That is why a 50% increase in profit tells you nothing about how much wages can increase.

Yes, the same trick can be used when writing a scientific paper: "we improve process X's accuracy by 150%!" (when the base is 1% accurate, it is now 2.5% accurate).

This trick is used all the time. In my previous SaaS company we used to write case studies to show the impact caused by our product on the business' bottomline. A typical impact used to be like conversion increased from 10% to 12%. However, this impact used to seem very tiny and absolutely not case study worthy.

Hence, we would deliberately calculate impact by taking not the previous sales but the previous conversion rate as the denominator. Thus, would 10 to 12% growth would go like "we increased Y's conversion rate by 20%."

Can't be mathematically disputed and totally clickbaity at the same time.

In that case, it’s not particularly misleading. All else equal, I’d expect an increase of 20% of sales, not an increase of 2%. Sure, a clarifying footnote/endnote would be nice.

>> companies are going to continue to try to hold on to as much of that increase as possible for themselves

Shareholders are going to continue to try to hold on to as much of that increase as possible for themselves. It is too easy to place blame on heartless corporations. Place the blame squarely on the flesh-and-blood people running and benefiting from corporations. Those profits aren't sitting in a big vault at Amazon. They are sitting in the bank accounts of every Amazon shareholder.

This is wrong. If Amazon earns $1bn extra profit the market cap of the companies shares could/should increase at least $1bn (depending on how it was made, and any future prospects for repeating the win).

However, no money is transferred to shareholders unless Amazon do a buy back or issue a dividend, it's just a revaluation. If those shareholders starting selling, only market forces (belief in Amazon) keep the price up. Shareholders can't demand their share of that $1bn in most cases, short of suing the company.

Stocks can and do trade below book value. Companies with net $1bn in the bank can have a market cap below $1bn in inefficient markets.

It's not market inefficiency causing that, but rather expected value. If a company has $1bn in the bank and you expect them to squander it, then you'd be foolish to value them based off of it.

This same logic explains the value of Amazon; they plow profits back into the business, making the future business bigger and more valuable. Their shareholders clearly agree with that type of longer-term thinking and have rewarded Amazon's growth with giant valuations repeatedly over the years.

With a high enough net worth you don't need liquid assets, large banks provide <1% interest rate loans that get paid off by your estate. Saves on taxes as well

>Shareholders are going to continue to try to hold on to as much of that increase as possible for themselves.

I mean the small shareholders generally don't make much comment about anything, and certainly not about wage control at a company they invest in.

>Those profits aren't sitting in a big vault at Amazon. They are sitting in the bank accounts of every Amazon shareholder.

sure, if the company pays dividends quarterly or if the board doesn't make some other decision on what to do with the money, and of course until the dividends are paid it does sit in Amazon's accounts.

on edit: I see nly made the same point with more technical observations https://news.ycombinator.com/item?id=28927742

So you mean you, me, your grandmother, and everyone else with a 401k or pension?

Stock ownership, along with other forms of wealth, is very unevenly distributed. Far more so than even income.

"Wealthiest 10% in U.S. Own 89% of Stocks and Mutual Funds"

The wealthiest 10% in the U.S. hold 45% of real estate, 54% of pension entitlements, 85% of private businesses and 34% of consumer durable goods.

https://www.thestreet.com/investing/wealthiest-10-pct-in-us-...

You might also care to revisit HN's guidelines:

https://news.ycombinator.com/newsguidelines.html

Particularly:

Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.

Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.

Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.

Eschew flamebait. Avoid unrelated controversies and generic tangents.

Throwaway accounts are ok for sensitive information, but please don't create accounts routinely. HN is a community—users should have an identity that others can relate to.

A 401k with a vesting schedule geared at minimizing the already empheral retirement contribution businesses don't want to provide hoping on turnover with vesting to reduce payout and for those remaining with enough disposable income to contribute hefty amounts to their 401k? Sure.

Even 401ks are evaporating in significance so that is becoming a less valid point. Given the typical audience here, you and me sure, but the vast majority aren't reaping rewards or able to tie money up in unrealized gains they cant magically realize like many with piles of investments (often tax free).

Why are 401k's evaporating in significance?

Curious Brit here.

Not sure what OP is referring to because 401(k) balances are at all time highs [0].

[0]: https://www.cnbc.com/2021/08/19/401k-balances-hit-a-new-all-...