Treating Employees With Respect, Costco Creates Alternative To Wal-Mart Way

By @MMichaelsMPN |
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    In this March 5, 2013, photo, shopping carts sit outside the Costco store in Nashua, N.H.  Costco's fiscal second-quarter net income climbed 39 percent as it pulled in more money from membership fees, sales improved and it recorded a large tax benefit. The wholesale club operator earned $547 million, or $1.24 per share, for the period ended Feb. 17. That compares with $394 million, or 90 cents per share, a year earlier. (AP Photo/Charles Krupa)

    In this March 5, 2013, photo, shopping carts sit outside the Costco store in Nashua, N.H. Costco’s fiscal second-quarter net income climbed 39 percent as it pulled in more money from membership fees, sales improved and it recorded a large tax benefit. The wholesale club operator earned $547 million, or $1.24 per share, for the period ended Feb. 17. That compares with $394 million, or 90 cents per share, a year earlier. (AP Photo/Charles Krupa)


    (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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      • Ryan Fuller

        The idea that raising the cost of labor will make employers want to hire more people is insane. Think Progress is as partisan as it gets; shame on you for pretending they are anything but shills.

        • sirnyson

          Don’t you think low-wage workers would spend their salaries? Higher demand on retail is a pretty good way of increasing the amount of jobs.

          • Ryan Fuller

            It doesn’t work that way. Minimum wage workers account for less than 5% of all hourly paid workers. They are an insignificant fraction of retail customers. Even if every single person made minimum wage and spent every last cent of their increased salaries, it would *still* be a net loss for companies due to taxes. When you then consider that more than 95% of us make more than the minimum wage, and that we don’t spend all of our money on retail, the case for minimum wage as a means of boosting the profits of companies that employ minimum wage workers gets even weaker.

            Raising the minimum wage kicks the bottom rungs out of the career ladder for low income workers. People with no skills or experience don’t produce a lot of revenue for an employer, and if the minimum wage is higher than what they are likely to produce, they won’t ever be hired, and will never get an opportunity to build skills and experience to move on to better jobs in the future.

            You could take a look at the characteristics of minimum wage earners, the unemployment rate among those groups who are most likely to earn minimum wage, and draw conclusions from there: http://paxempyrean.blogspot.com/2013/02/on-minimum-wage.html