Illegal but Very Cheap

Here's another for the innumeracy files.
I heard on the radio today news that the Feds had "slapped" Wal-Mart with a fine of $11 Million to settle claims that Wal-Mart had illegally hired undocumented aliens. The spokesman for the Feds was deliriously happy with this result, evidently because it was the largest fine in the history of such things, and would, therefore, show Wal-Mart a thing or two.
Alas, he doesn't understand the magnitudes of numbers. Wal-Mart's yearly revenues are in the neighborhood of $160 Billion, a number over 14 thousand times larger than $11 Million. Thus, this fine is only o.oo7% of Wal-Mart's yearly revenues. Even supposing that their profit margin is only 5%, this fine would still only be a miniscule 0.14% of their yearly profit.
Now, I'm not going to wade into the Wal-Mart good / Wal-Mart evil controversy, but I think most people should be able to see that a fine of 0.007% (that is, 1,000 times smaller than a typical sales tax), is pretty far from a serious punative fine. In fact, I'd say it's a pretty cheap price to pay for doing business any way one wants.

Posted on March 18, 2005 at 17.00 by jns · Permalink
In: All, It's Only Rocket Science

2 Responses

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  1. Written by S.W. Anderson
    on Friday, 18 March 2005 at 20.23
    Permalink

    Actually, Wal-Mart's doing quite a bit better than you indicate. This is from an AP story:

    "Bentonville, Arkansas-based Wal-Mart has annual sales of $256 billion, equivalent to the gross domestic product of Austria. In February alone, its total sales were $22.37 billion."

  2. Written by jns
    on Friday, 18 March 2005 at 23.13
    Permalink

    Much worse, but it gives us another interesting way to look at the magnitude of this fine "slapped" on them. Wal-Mart is approaching revenues of $1 Billion/day (or about $42 Million/hour = about 5 times the cost of the Iraq war), so the $11-Million fine will divert about 15 minutes of revenue.

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