CostCo vs. Wal-Mart

Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.


The Financial Times has a nice article on the classic CostCo vs. Wal-Mart head-to-head. Most notably, the vast differences in average wage—$17.41 per hour at Costco, $12 per hour at Wal-Mart’s Sam’s Club—don’t seem to be hurting the former any. And the resulting lower employee turnover—17 percent at Costco compared to 70 percent in the rest of the sector—has probably helped the company’s productivity. As anyone who’s worked at a large retail chain can attest, you don’t tend to put in much effort if you’re only sticking around for a few months. The other key factor here, as Nathan Newman points out, is that about a fifth of Costco’s workers are unionized, which in turn has had ripple effects for the rest of the chain’s employees. (Though I believe Costco paid decent wages, and treated its workers fairly, before it acquired the unionized Price Club in 1993.)

Anyway, this brings to mind an old-but-worthwhile Seattle Weekly article. In 2003, investors flipped out at Costco co-founder Jim Sinegal—he was treating his workers and customers much too well for Wall Street’s tastes, you see. Sinegal held on, but he seems like the great exception here; most CEOs obviously won’t rank “rewarding shareholders” as their fifth priority. The piece also quotes a number of experts squaring off on whether the CostCo model always makes good financial sense for companies to pursue on their own. Not every store can be like CostCo, after all, and consumers might be worse off if CostCo was all there was. The likely answer, then: it depends. If the federal minimum wage were raised, or if the country was running at full employment and wages started rising naturally, businesses like Wal-Mart might run into trouble, and companies such as CostCo would thrive. (Although, worth noting that Wal-Mart managed just fine during the tight labor market in the late ’90s.)

THE END...

of our fiscal year is Thursday, June 30, and we have a much larger fundraising gap than we can easily manage with only days left to go.

Right now is no time to come up short: If you value the hard-hitting, democracy-protecting, justice-advancing journalism you get from Mother Jones, please help us keep charging as hard as we possibly can with a much-needed and much-appreciated donation today.

payment methods

THE END...

of our fiscal year is Thursday, June 30, and we have a much larger fundraising gap than we can easily manage with only days left to go.

Right now is no time to come up short: If you value the hard-hitting, democracy-protecting, justice-advancing journalism you get from Mother Jones, please help us keep charging as hard as we possibly can with a much-needed and much-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate