That’s assuming they keep their margins the same. The thing is Amazon isn’t manufacturing anything so their “thin” margins aren’t as sensitive to increased labor costs as 2-4% suggests.

Paying 18$ for something your selling for 20$ is a 10% margin, taxes and CC processing fees are similarly inflexible. So if 2-4% of the final price is profit then they could raise their internal costs by 10% and still be profitable.

> if they are earning 2%-4% profit margins

They're not (depending on the product).

My wife used to work in Halloween costume design for a wholesaler (and some of her costumes did end up in Target and Walmart, which was cool to see), and the retailers' margins on those were at least 50%.

As I said, the margin does depend heavily on the product, but do not assume that across-the-board average margins are anywhere near that razor-thin.

That's a markup, not a profit margin. A profit margin is after all expenses, which a wholesaler doesn't know about.

Yeah, and I don't think it would be terribly unusual for 50% markups to translate to low-single-digit profit margins in cost-competitive retail sectors - those both seem like about the right ballpark overall. Retail has a lot of costs and wages are one of the big ones.

That is irrelevant because the entire organization’s profit margins are where increased wages would come from.

My point is that the entire organization's profit margins are not likely to be anywhere near 2-4%.

That is what their 10-K filings say.

They are incentivized to hide investments as operating expenses for tax reasons, which muddles the picture.

Source? What are the incentives? Why do the most highly valued companies in the world report much higher profit margins?

I would need a good reason to believe the executives and owners of retail businesses do not want to report higher profit margins.

The incentives are simple, profits are taxed.

To simplify, if you want to say develop new software you can call it a capital investment and pay for it with after tax money or call it operating expense and pay for it in pretax money. Guess which one is a better deal.

Regardless of how the expense is classified, the amount of additional money available for wages is still the net income figure. The owners will still want as much net income as possible. They are not going to want to waste money just so they do not have to pay 20% of it to taxes.

The trick means real net income is larger than what’s on the books/10-K filings. Misclassified investments are not wasted money, simply hiding how much money is available for other expenses.

It’s like the old trick of paying an offshore subsidiary in a tax heaven licensing fees to use your own IP with the added advantage of being able to directly profit from the use of these investments. Nobody looking at the books would think such things are actual expenses, but companies must pretend they are.