Case Study: Under Socialism, Walmart Workers Would Get a 20% Raise.
Case Study: Under Socialism, Walmart Workers Would Get a 20% Raise.
A look at the 2023 Walmart Annual Report and how much value is being extracted from workers at the country's largest employer.
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According to Socialist theory, Capitalism is immoral because it centers on the generation of profit, which is the value of what workers produce minus the cost of their wages and other business expenses. Under a Capitalist framework, owners, not the workers, are entitled to this profit, which is also called surplus value.
For example, if I, a shoe factory owner, hire you to make a pair of shoes that I sell for $100 dollars, but I only pay you $25 dollars to make the shoes and $10 to upkeep the factory, I just stole $65 dollars from you. The value of your labor, as measured by what consumers will pay for the shoes, is $100. But, you only got $25 dollars. It cost $10 to provide the overhead and material expenses for the day, meaning I, the owner who did not contribute labor, took $65 dollars away from you, the worker. Capitalists call this $65 profit. Socialists call it surplus value.
It is the goal of Socialists to do away with the theft of Capitalist profit by moving towards a system in which the workers, not the bosses, own their workplaces, entitling them to control their lives and reap the full value of their labor.
To understand how this works in the real world, we’ll examine the business operations of the country’s largest employer, Walmart, to see just how much surplus value is being extracted from the 2.2 million employees that run the superstore franchise.
The 2023 Walmart Annual Report
Note: All figures come from the Walmart 2023 10-K Report. If you’d like a consolidated view, Macrotrends provides a compact breakdown.
Last month, Walmart released its 2023 annual report detailing the company’s financial performance from January 31st, 2022 to January 31st, 2023. With over 10,000 stores and almost 150% more employees than Amazon, the chain of superstores is the principal employer and provider for many American municipalities and towns.
During this time, Walmart generated $611.3 billion in total revenue for a gross profit (revenue — the cost of goods sold) of $147.57 billion, which was a healthy 2.65% increase from the year prior. Unfortunately for our purposes, the report does not provide a line item for “labor costs.” Instead, wages and benefits are lumped in with marketing, rent, electricity, insurance, and other operating expenses, which Walmart labels, “Operating, Selling, General and Administrative Expenses.” These costs amounted to $127.14 billion, yielding the company an operating income of $20.428 billion. After detracting non-operating expenses (restructuring debt, interest payments, etc.), Walmart had a pre-tax income of $17.016 billion. The corporation paid about $5.724 billion in taxes, netting a profit of $11.292 billion (this is labeled “income from continuous operations” on the report).
So, from January 31st, 2022 until January 31st, 2023, the value created by all Walmart workers was $611.3 billion (total revenue), and it cost $594.27 billion to operate the business (COGS + operating expenses + non-operating expenses). After taxes, the profit of Walmart, which is the value of the Walmart workforce’s labor minus all expenses and taxes, was $11.29 billion.
To calculate how much Walmart workers would make if the do-nothing owners weren’t taking a profit, we’ll simply divide this $11.29 billion amongst the 2.2 million Walmart employees. This is an overly simplistic calculation, as Walmart encompasses different entities (Sam’s Club, Jet.com, etc.) across many countries, meaning the specific income boost for each job role is sure to vary. But it will provide a ballpark of how the financial situation of the median Walmart worker would improve by moving from Capitalism to Socialism. It should be also noted that the exorbitant salaries of Walmart executives, some of whom make close to $40 million a year, are included in the company’s operating expenses. Under any true Socialist framework, Walmart employees would control the company democratically, ensuring executive salaries are proportional to their contribution, meaning the majority of highly-inflated C-Suite salaries would be spread across the workforce, leading to even greater financial gains for Walmart workers.
Were the $11.292 billion in profit to be divided between Walmart’s 2.2 million workers, each employee would get a pay raise of approximately $5,132.73 a year. This may not sound like much, but consider that the average American Walmart cashier makes approximately $11.81 an hour, or $24,564.80 annually, before taxes. That’s an annual salary increase of 20.80%. If we assume the typical Walmart cashier is the sole breadwinner for a family of three (which is the median American family size), then that 20.80% would literally move them out of poverty, raising them above the corresponding Federal Poverty Line of $24,860.
This is only a glimpse into the wonderful world of Socialism. By eliminating the theft of profit at just one company, we could move millions out of poverty, setting them on a path to live happy, healthy, and purposeful lives.
Imagine the utopia we could build if we took this principle and applied it to the entire American economy, and then the world.
How would the elimination of Capitalist profit impact your life? Share your experiences in the comments. And as always, please like, share, and tell a friend about this article.
Great analysis, as always. To add on to this, I think their pay raise would theoretically be higher in a socialized workplace because, not only would profits be shared, the removal of a profit motive would lead to increased efficiency within a company. Streamlining processes, reducing redundant software and consolidating to the best working systems, plus potentially replacing middle management positions that essentially provide no value to workers and only exist to uphold capital. People always conflate capitalism with innovation and I feel it couldn't be more the opposite. Capitalism stifles growth of the many in order to protect the growth of the few.