The future of hourly wages for many workers seem to be moving up. T-mobile recently announced that it would raise minimum wage to $20/hour. Earlier in the year, Bank of America, Costco, and recently Hobby Lobby all announced wage increases.
We wanted to know if there were any correlation of wages to size/market cap of the organization so we built a small table with data we could gather.
Big Corporation Hourly Wages
| Corporation | Employees | Wage/hr | Market Cap (2021) |
| Hobby Lobby | 43,000 | $18.50 | Private ($5 billion in annual sales |
| T-Mobile | 75,000 | $20 | $148 Billion |
| Costco | 288,000 | $17-$24 | $250 billion |
| Bank of America | 209,000 | $21 | $359 billion |
| State of Missouri | 35,500 | < $15 | $30 billion (state budget) |
We also added the State of Missouri in our table for some context to this post because Governor Parson recently asked for the State to raise minimum wage to $15/hour because they have nearly 100 percent turnover in jobs.
Our key thesis for some time now has been that the upcoming mega tsunami of demographics changes to America will lead to inflationary wage chaos as 70 million boomers reach the age of 65+ in 2030. Because of Covid, there has already been an increase in the rate of boomers simply leaving the work force with no intention of ever returning.
The long term effect of all of this is increasing competition for the remaining resources. Inevitably one group that requires a great deal of education, training and skill such as nursing will complain that some other group can just do trivial tasks (stock shelves) and get paid as much.
Our investment thesis is predicated on assuming that well run deep pocket, large, profitable businesses (T-Rex) will devour labor first while secondary and tertiary businesses and governments pick the bones of the remaining left overs. The State of Missouri’s mini-panic is an early clue that our thesis is likely correct but we will build our case over time by closely monitoring wage changes and reactions accordingly.
Anecdotally, we saw this posting on Reddit.com nursing subgroup where nurses were complaining that Hobby Lobby’s new $18.50/hr wage was going to make it difficult to retain nursing aides at hospitals. I would presume that a nursing aide will ask themselves why spend all the time and effort training and dealing with sick people when they can just work at a retail store stocking shelves and checking customers out and get paid more money to do it. Many nurses in the thread think it outrageous that Hobby Lobby employees are getting paid closer to what nurses make without all the study and training. We encourage you to read the thread because this will become a recurring theme across America.
We recently wrote about the Amazon effect of that one large deep pocket “T-Rex” corporation coming into communities and disrupting the labor market and it will be no different with Costco, Hobby Lobby and others. We are just getting started with this new labor paradigm, Bank of America stated back in May that it plans on $25/hr by 2025.
We will dive deeper into this subject at a future date as it will be a core tenant of which firms will survive long term and which won’t.
Stay tuned and stay solvent.
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