Treating Employees With Respect, Costco Creates Alternative To Wal-Mart Way
(MintPress) – National discount retailer Costco raked in a record $537 million last quarter while providing employees with an average starting salary of $11.50 and health benefits. Supporters believe that Costco CEO Craig Jelinek is forging a new model of corporate responsibility to counter the “Wal-Mart model” where 80 percent of employees require food stamps and thousands of non-unionized Wal-mart workers live below the poverty line.
“At Costco, we know that paying employees good wages makes good sense for business,” said Costco CEO Craig Jelinek in a recent statement. “We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low.”
These policies differ drastically from other discount retailers, like Walmart. The average employee at Sam’s Club, a Wal-Mart-owned business, earned just $17,486 per year in 2011, compared with a $45,000 average at Costco.
“Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage,” Jelinek said.
Employee disdain for Walmart boiled over November 2012 when thousands of workers at more than 100 locations walked out on Black Friday, the busiest shopping day of the year. Many workers called for pay increases and union representation.
“They pay low wages, then the taxpayers pick up the tab for food stamps and Medicaid,” said Walmart employee Vanessa Ferreira, during the strike. “They need to take care of their people. They need to be responsible to their workers.”
Labor unions, including the Teamsters, are praising Costco and others forging a more humane business philosophy that stresses the importance of fair wages. According to the annual ranking of best companies to work for, Forbes magazine included IKEA, a furniture and home goods store, on its list.
A Hicksville, N.Y.-based IKEA worker who reviewed the company anonymously during an online survey, said IKEA “respects its employees,” while touting fair pay, 401-K and free gifts. “If you make a mistake, it’s OK,” the employee added.
IKEA earned a score of 3.8 on a 5.0 scale on Glassdoor.com, a website where employees can anonymously give feedback on their company. IKEA CEO Mikael Ohlsson received a 93 percent approval rating.
Outdoor and sporting goods store, REI, took the top spot in the annual Glassdoor survey with a score of 4.0. A majority of the respondents were “very satisfied,” according to reviews.
REI Chief executive, Sally Jewell, earned a 90 percent approval rating.
Many CEOs, including Jelinek, are pushing Washington lawmakers to support the Fair Minimum Wage Act of 2013 that would increase the minimum wage from $7.25 to $9. Recent studies show that an increase of this kind would create jobs and help millions of low-wage workers.
According to a 2013 study by Think Progress, a think tank based in Washington, D.C., raising the minimum wage from $7.25 per hour to $9.80 per hour by July 2014 would “increase the earnings [for] low-wage workers by about $40 billion over the period” and create some 100,000 jobs.
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