[jerf]

Jeff's net worth isn't in cash. It's going to be affected much more strangely than your analysis suggests. If Amazon has to raise its labor costs that much, Wall Street will react in a way that is difficult to predict the magnitude, but easy to predict the direction.

Normally I'd suggest analyzing that 13.2B in terms of the profits of the company, which for instance last Jan 2019 was ~$3 billion, which if projected out for the year means you'd be proposing a pay raise larger than the profit margin for the company, which is definitely going to affect the stock price. But Amazon is a weird case where most people think that they can just turn on the spigots anytime they really want to just make money, so it's maybe not the easiest analysis.

But for most companies, they make less profit than people think, especially if they're looking at revenue numbers, and a lot of people tend to suggest things that would make a 6% profitable company (not a terribly uncommon number) become a -25% profitable company or something. Even if you tip all executive compensation back into profit, that doesn't usually do much for these large companies.

[khawkins]

Totally fair analysis and I don't disagree at all. I will add, however, that there are a few points that detract from this take.

First of all, when a company aggressively invests in hard capital, innovation, or advertising, they're building eventual value for the company and stock which improves the wealth of shareholders in the long run but rarely helps the entry-level employees in either the short run or long run. However, those costs are thrown above the line as costs and not financed by what is determined to be company profits.

When this innovation is necessary to stay competitive in the market then this is the invisible hand working properly to balance capital investment against worker living conditions. Eventually, many workers will benefit from the advancements in the form of cheaper/better goods.

However, when capital investment is used to rapidly grab near-monopolistic control of the market in an attempt to wedge out competitors, the invisible hand forces aren't necessarily at play.

If a company's leaders choose to grow at a modest pace and put more money into the well being of their employees they might not be able to grab such a dominant market share, but they'll have treated their employees better. Further, more competitors means that invisible hand forces will naturally improve services.

I think the general problem is that the FTC has been very lax in recent years. Vertical monopolies aren't treated very seriously as the means to establishing horizontal monopolies or oligopolies. On top of that, the companies are trying to jump off shore as quickly as possible to evade serious control.

[jerf]

A lot of this is why I didn't say it wouldn't affect Jeff at all, or try to predict the particular impact, but just that it would be... strange. Even if you could objectively analyze the full business picture, nobody could fully analyze exactly how Wall Street would react; the ability to do that would imply the ability to get very rich on Wall Street very quickly.

I forget where it was, but I also recently read an article musing on the idea that in the modern era we seem to have a new threat emerging where companies establish very, very firm footholds in some particular industry, and then use that to leverage their way into other industries because they can literally out-resource the entire competitor base of that industry. In some sense, in theory this has been possible for a long time, and we've had things like Samsung which are massive conglomerates, so it's not a new problem in quality, but the quantity of money that can be brought to bear this way in the 21st century may still make this a new sort of problem for trust busters to keep their eyes on.

[bduerst]

While you're right about Jeff's net worth, profit is also misleading as many times it's manipulated for tax gains/shield. Amazon is notorious for doubling down on reinvesting into capex and maintaining a thin profit margin.

Either way, Amazon profits would not be hit by the full $13B increase - more likely profits would remain unchanged, while capex and other investments would go down by that amount.

[fao_]

If a company cannot pay it's workers properly then, to be honest, it really shouldn't exist.

[dmitrygr]

The places these warehouses are at usually have low CoL, and $15/hour is GREAT wage there. People line up to get jobs there!

[icelancer]

People keep seeming to apply for jobs at Amazon warehouses making $15-16/hr, so...

[bad-joke]

Hundreds of people applied to work at the Triangle Shirtwaist Factory.

[icelancer]

Well, when Amazon warehouses in the United States are not up to code and burn to the ground, killing hundreds, the analogy will be pretty apt.

[jodrellblank]

so ... what?

People keep turning up to work on third world garbage dumps for cents/day earnings, so...

[marcusverus]

Reducing demand for labor to increase wages? What could go wrong?

[vecter]

Define "properly"

[zaksoup]

This so much. All of this analysis is predicated on the idea that Amazon has made this value for its owners through legitimate means and not by underpaying, overworking, and dehumanizing vast swathes of their workforce. It's so bizarre to me that people think it's a reasonable argument to make that "X company couldn't do Y if they payed better" and the response is just a giant shrug and "I guess their workers will have to pee in bottles and get second jobs" and not "X company therefor can't reasonable do Y"

[fao_]

You're getting downvoted but your point is bang on. I don't think people realise how horrible the conditions in Amazon's warehouses are. A year or so ago they hired ambulances to wait outside rather than turning the AC on in the warehouse. They would rather their workers risk death as opposed to paying money to cool them.

[zaksoup]

> They would rather their workers risk death as opposed to paying money to cool them.

Or rather, it’s cheaper to hire EMTs than it is to climate-control fulfillment centers. Frankly, that seems like the strongest indictment of profit-as-sole-motive I’ve heard, but of course the HN thread can’t handle much in the way of criticizing capitalism or FAANG.

Comments spreading FUD that some sort of deep tech attach of google is responsible for all the negative press get upvoted to the top when the simplest explanation is maybe tech isn’t the perfect good thing everybody wants to believe it is?

[steveads]

You're totally right. Just wanted a quick easy way to estimate the minimum hit he'd take in an admittedly fictitious world where net wealth isn't tied to the company's stock price.