<blockquote>
  <p>What other economic impacts would be expected if Disney reduced it's
  net profit margin by 10% purely by increasing low wage employee
  remuneration?</p>
</blockquote>

<p>The reduction of net profit margin might exceed the percentage of wage increase if benefits, insurance premiums, and any [Disney's] other obligations are tied to wages.</p>

<p>Likewise, a reduction of net profit margins might prompt shareholders to dump Disney stocks and invest in other companies they consider more profitable and/or unlikelier to act to the detriment of shareholders.</p>

<p>Companies with significant levels of debt might experience an increase in financial costs (higher interest rates) if --for instance-- the reduction of profit margin prompts a rating agency to lower the company's grade a notch.</p>

<p>This answer is neither an exhaustive list of possible impacts nor an assessment of whether or not wages at large corporations currently are at fair levels.</p>

CC BY-SA 4.0
2018-08-02T11:10:26.180Z
2018-08-02T11:10:26.180Z
Iñaki Viggers
<p>Looking over the information in the tour I'm aware this might be too opinion based or require too long answers, so I apologies in advance if this is off topic.</p>

<p>In an attempt to keep the question tightly focused I'll restrict it to one specific example.</p>

<p>Recently Bernie Sanders has been taking aim at large corporations that make significant profits while leaving employees struggling to buy food and healthcare. One of the more prominent examples is the Disney Corporation.</p>

<p>According to online information in 2017 Disney made a net profit of <a href="https://www.statista.com/statistics/273556/net-income-of-the-walt-disney-company/" rel="nofollow noreferrer">9.8bn USD</a> and employed approx 200,000 people. If we assumed that 80% of these employees were the low wage earners referred to by Bernie Sanders, taking approximately 10% of this net profit and redistributing it as wages would allow for a pay rise for each individual of over $2 an hour.</p>

<p>A net profit of $8bn would still seem to indicate a very healthy company that would presumably be attractive to shareholders and investors. What other economic impacts would be expected if Disney reduced it's net profit margin by 10% purely by increasing low wage employee remuneration? Or what is wrong with the publicly available numbers/my understanding that means these figures are inaccurate?</p>

CC BY-SA 4.0
2018-08-03T00:37:34.133Z
Profitability by % might be a better measure. A profit of $9.8bn for me would be pretty good, but for one of the largest companies in the world, might be more business as usual.
Jamzy
<microeconomics>
Effect on Large Company on Redistributing Profit from Shareholder to Employees
Jontia
# Effect on Large Company on Redistributing Profit from Shareholder to Employees

(Asked by: username_0 on 2018-08-02)

Looking over the information in the tour I'm aware this might be too opinion based or require too long answers, so I apologies in advance if this is off topic.

In an attempt to keep the question tightly focused I'll restrict it to one specific example.

Recently Bernie Sanders has been taking aim at large corporations that make significant profits while leaving employees struggling to buy food and healthcare. One of the more prominent examples is the Disney Corporation.

According to online information in 2017 Disney made a net profit of [9.8bn USD](https://www.statista.com/statistics/273556/net-income-of-the-walt-disney-company/) and employed approx 200,000 people. If we assumed that 80% of these employees were the low wage earners referred to by Bernie Sanders, taking approximately 10% of this net profit and redistributing it as wages would allow for a pay rise for each individual of over $2 an hour.

A net profit of $8bn would still seem to indicate a very healthy company that would presumably be attractive to shareholders and investors. What other economic impacts would be expected if Disney reduced it's net profit margin by 10% purely by increasing low wage employee remuneration? Or what is wrong with the publicly available numbers/my understanding that means these figures are inaccurate?

**Tags:** microeconomics
> **Comments:**
> **username_1**: Profitability by % might be a better measure. A profit of $9.8bn for me would be pretty good, but for one of the largest companies in the world, might be more business as usual.  

---

## 1 answers

### Answer by username_2 on 2018-08-02. Score: 2

> What other economic impacts would be expected if Disney reduced it's
> net profit margin by 10% purely by increasing low wage employee
> remuneration?

The reduction of net profit margin might exceed the percentage of wage increase if benefits, insurance premiums, and any [Disney's] other obligations are tied to wages.

Likewise, a reduction of net profit margins might prompt shareholders to dump Disney stocks and invest in other companies they consider more profitable and/or unlikelier to act to the detriment of shareholders.

Companies with significant levels of debt might experience an increase in financial costs (higher interest rates) if --for instance-- the reduction of profit margin prompts a rating agency to lower the company's grade a notch.

This answer is neither an exhaustive list of possible impacts nor an assessment of whether or not wages at large corporations currently are at fair levels.


---

