The unnecessary demise of Barnes and Noble
I think many people tend to grossly overestimate the profit levels of large companies. Let&#x27;s take Amazon since they&#x27;re arguably the reason for the failure here and a company I think many perceive to be lush with money largely because of &#x27;greed.&#x27; It also hits on notions from this paper like companies just not hiring enough employees, even if only at certain times.<p>Amazon currently grosses $178 billion. However, their net income is what matters. That&#x27;s what&#x27;s left over after paying cost of goods, salaries, rent, taxes, and so on. Basically what&#x27;s left over after the mandatory expenses to keep your company running. And that&#x27;s only $3 billion. &#x27;Only&#x27; sounds funny preceding $3,000,000,000 and is undoubtedly what leads to complaints against Amazon (and here as well) that they&#x27;re just being greedy, not paying employees enough, and so on.<p>But that&#x27;s not really accurate. Amazon has 566,000 employees. If they gave each employee a $1000 raise. For those working your average 2000+ hour year that&#x27;s a whopping $0.50&#x2F;hour raise. Yet that marginal raise amounts to $0.56billion, or 1&#x2F;6th of their entire remaining revenue. Interestingly enough 1 executive earning $1million in compensation is, by contrast, only 1&#x2F;3000th of their remaining revenue. This critical calculation on the number of workers to fill any given role is why compensation and things can seem so lopsided. The sheer magnitude of the number of workers at many of these companies is very counter intuitive.<p>And this is the case for most large small margin companies. Back to Barnes and Noble, in 2016 they had a net income of -$24.5 million with 26,000 employees. Try to keep those figures in mind when considering this. I think the post that described any real solution for them as akin to &#x27;shuffling chairs on the Titanic&#x27; is very apt.<p>---<p><i>If anybody has a counter point here, I&#x27;d love to hear it. From my perspective it seems people are replacing reality with ideology, whether intentionally or not. We want to blame companies for being greedy, even when in reality the numbers don&#x27;t really support such views. All jobs are disappearing, when we have 4.1% unemployment (even the U6 is down to 8.2%!), etc. I used to feel very similarly, but the numbers simply don&#x27;t support these incredibly cynical views.</i>