Let’s assess the effects this change could cause on real numbers.
Note: This is a duplicate of a part of a comment I’ve written here above as a response, but I don’t want it to be buried. Hope that’s fine
I’ll take Nutrien’s 2023 audited financial statement as an example. (Numbers in brackets are what’s deducted to get what’s not in brackets)
- Sales - 29056
- Freight, transportation, distribution - (974)
- Cost of goods sold - (19608)
- EBIT - 8474
- Interest - (w/e)
- EBT - 1952
- Taxes - (670)
- Net earning - 1282
Out of cost of goods sold (2858) is cost of labour, let’s also add (626) from general administrative expenses, and just say it’s all wages.
- Effective tax rate - 670/1952*100% = 34,3% (wow, that’s a lot for where I live, also ignoring mining tax for simplicity)
Let’s see what happens to our efficiency if the changes take effect.
All of costs can be divided into Fixed and Variable ones. Labour, in this case, is Variable because we can manipulate it by employing more staff to compensate for reduction in working hours and keep the sales at the same rate. (Contract workers are usually Fixed Cost, but it’s all relative, as no Fixed Cost is ever truly fixed.)
Going from 40 => 32, we have a 20% reduction in working hours. Mind you, this doesn’t mean there will be a 20% hit to productivity. It may be more, it may be less (most likely less), for simplicity let’s say it’s 20%. So, we need 20% more workers to compensate. (2858+626)*120%=4180.8
- New EBT = 1952 + 2858 + 626 - 4180.8 = 1255.2
- New net profit = 1255.2*(1-34.3%) = 824.7. Mind you, the effective tax rate will probably be lower if employment affects deductibles and/or grants tax privileges.
So, our net profit margin went from 1282/29056 = 4.4% to 2.8%. Looks bad at first glance, but it’s also a bad year. A year prior net profit margin was at whopping 20.3%, so a decrease from 4.4% to 2.8% would be nothing in comparison.
Will it result in increased prices? Yes, but it will also lead to economic growth, because more free time = people spend more money = companies earn more = companies grow faster, but so does inflation. If they can manage the inflation, I don’t see why this couldn’t be possible.
Reducing net profit doesn’t have any impact on pricing in capitalist markets. It’s not like capitalists have some specific profit percentage they are allowed to hit (unless they’re in a very regulated industry like grid or water supply). They want infinite returns, and they’ll increase prices as much as the market allows to generate more profits.
Capitalists don’t look at a net profit of 4.4% and say “yup that’s enough”, but if it were 2.8% they’d say “damn guess we have to increase prices for customers, I really wish we didn’t have to do this”.
They might increase prices as a retaliatory measure. The same way businesses slashed hours as a result of Obamacare. They didn’t have to, but it benefited them to, and they didn’t see a downside.
They might be able to increase prices, blame it on this law, and have people who are aligned politically with them put up with it and maybe even support their business more to “stick it to the libs”. They already do this with things like inflation, blaming it on Biden and then increasing prices far more than necessary.
Great idea, love it as a former factory worker myself. Hope it gets traction but let’s be real, it has a Republican Christian chance of getting into heaven to get enacted into law at least for now.
As a white collar worker, of love to see a bill that just sees white collar workers just get paid their equivalent hourly wage when we go over 40. Fucking crunch due to unrealistic manager bullshit schedules.
Imagine I manage a business where my employees earn $1000 a week, working five 8-hour days. Suppose my profit margin per employee is 10%, resulting in a $1100 return for each one.
Now, if a new law mandates that I pay my employees $1000 for a 4-day workweek, my operation could start incurring losses. The question then arises: where would the necessary additional funds come from? Likely, I’d have to increase my prices. I’m open to considering this arrangement, but I seek clarity on the strategies to mitigate such financial gaps. Should a 4-day workweek lead to a 20% hike in prices, I’m uncertain about the benefits of this change…
I’m all for a more healthy work/life balances, but typically businesses don’t like to incur extra expenses, so I would predict if workers are present 20% less, businesses would charge 20% more to make up the gap, which means workers would end up needing to earn more money, which may lead them to work more hours, making this change pointless.
If this came with some consideration from the federal government, like “we will give a 20% tax break to businesses that do this” I would consider the idea funded and I think it may work. Otherwise, this just feels like voting our way into price increases.
Do you think your overhead would also decrease if you only had a 4-day work week?
Look at it this way. Let’s say I run a widget factory. I have a worker, Joe, that I pay $1000/week to. Each day, Joe creates me a widget that I can sell for $220. That means at the end of the week, I have 5 widgets I can sell for $1100, yielding me $100 profit.
Now, we move to a 4 day work week. I pay Joe $1000. He creates me 4 widgets, still worth $220 each. I sell them for $880 total. I now lose $120 each week.
Under the current plan, it seems the guidance is that Joe will magically start working faster and produce more than 1 widget per day. If he does not, my other option is to increase the price of widgets or to decrease the amount of money I pay Joe.
So you won’t be able to steal as much of the value Joe creates from him and instead have to pay him a fairer share? Oh darn. You mean you won’t be able to live in luxury while others do the work for you?
Fuck off lmao
Which will be struck down almost unanimously because the US government is a cesspool of liches and ghouls.
I mean, yes? That’s kind of the point. This is how we shift the conversation and put pressure on politicians. Put these bills forward and make people vote them down on the record, so those votes can be used against them.
And how’s that been working out for you guys so far?
Honestly? Pretty well, relative to the “cry about it and do nothing” strategy.
Is that why your current “left” party, that’s in power has pumped more oil than any country to ever exist, has twice the migrants detained in cages than when trump left office, breaks strikes, and bends over backwards to supply arms to a country engaged in genocide?
I think you should be more honest about how well its working.
I’m sure all these things you just wrote definitely have no nuance or context to them
I’m sure you’re fine with it as long as it’s slightly better than the republicans lol. This is what decades of lesser of two evils politics gets you: evil.
Well it wouldn’t make sense to be fine with the worser option would it
And I’m not fine with it, but what’s the realistic alternative?
I’m not from the US btw, I just have a morbid curiosity watching it from afar
America doesn’t have a left party, what are you talking about? Do you think Bernie won the presidency or something?
Exactly.
I mean, screwing with the Overton window has worked great for Republicans. It’s absolutely fair play to use the same tactic from the other side. Frankly, it should have been done the second it became apparent that Republicans in general were trying to push the window to the right.
My boss just told us all how this will “remove our lunch and break times and take away all holidays” trying to scare us. Leeches, all of them.
