Last night I was on my way home...

from a pleasant evening of playing Buzztime and enjoying a wonderful meal and for some reason I wanted talk radio rather than music on the way home.  I ended up tuning in two fill-in hosts and they were ranting about how awful WalMart treats their employees by not giving them health benefits.  They even went so far as to point out that the WalMart CEO earned $18 million last year, which is what 700 average WalMart employees earn.  Apparently some employee of WalMart went on television and said he wasn't going to go to work on Friday and that a company that keeps prices low by keeping his wages low should be able to pay him a living wage, provide health benefits and enable him to support his child.

I got curious about a few things and pulled up WalMart's annual report for 2011.  I already knew that WalMart has roughly 1.4 million employees worldwide.  While they aren't all in the U.S. and neither are all of the financial numbers I'm about to quote from, let's pretend for a moment that they are, for the purpose of illustration.

WalMart's gross revenues in 2011 were $418 billion.  On that gross reveue they had operating income of $25 billion.  Those are pretty good numbers.

Now if it were to cost $2,400 per year per employee to get them a decent health plan (and that's a conservative estimate, the real cost would probably be higher), that means an added annual expense of $3.36 billion.  That's roughly 1/8th of their operating income.  That's expensive.

So WalMart would probably have to increase prices to do this.  Adding a one dollar per hour increase to every employee, assuming that all 1.4 million were to be made full-time would cost another $2.9 billion.  That's only $2,080 per year per employee. With an average wage of $8.81 now, most would think just adding a dollar per year would be nowhere near enough.

Again, this is a problem with no easy answer.  People want low prices.  Local merchants can't compete with WalMart's pricing because of their ability to buy in bulk, to eliminate middle-men in the supply chain, and by keeping their operating costs low.  Would people be willing to pay more to WalMart to ensure their employees had a living wage and benefits?

This isn't about what changes Obamacare will bring about in the future.  This is about evaluating the costs of things and what people are willing to do to support these kinds of changes.  Will people pay another $0.50 to $1.00 per pizza so that all of the employees of Papa John's got benefits?  Maybe. 

But it isn't as simple as waving a magic wand, reducing the salaries of CEOs and using that money to pay for benefits.  Even though far too many CEOs are overpaid, what they are paid isn't enough to fund benefits for all employees everywhere.