If a business had a net margin in 2007 of 10%, and in 2007 that company's revenue was 1,000,000, then their net profits for that year were $100,000.
If that same business in 2013 has now increased their net margin to 15%, and their revenue for this year is $500,000, then their net profits for this year are $75,000.
Please explain to me if you can (which you can't) how a company can be expected to raise wages based on their increase in margin when that increase translates to a net loss (compared to prior years) in dollars for the company?
For this business (and every other business that was doing better in 2007 then they are in 2013), the net margin goes UP..... and the net profits go down. Margins are not real money. Net profits are real money. There are fewer net profits NOW then there were then.
It works like this: A company's revenue drops because the markets are in the ****ter. His overhead expenses, however, begin to increase. The only way to pay the bills is to increase prices. (You can't lower expenses because all of your "expenses" are raising their prices for the same reason you are- so THEY can pay the bills.) And the company must increase their prices MORE than the increase in their expenses in order to turn a profit. By now the company's margins are higher than they've ever been.... and the owners have never been so poor.
I would really like to see a thread with honest dialogue with regard to this issue rather than the covetous rhetoric of the OP.
Last edited by kamikaze483; 04-11-13 at 09:54 PM.
"We need to ask some very tough questions of the senator from Illinois. It's not enough to be black, it's not enough to be articulate, it's not enough to be eloquent and a media darling. The only question will be how deaf an ear, or how blind an eye will people turn in order to turn a frog into a prince." -Eddie Huff