This Company Pays High Wages Plus Benefits And Just CRUSHED Wal-Mart In Profitability


I quit going into Walmart in 1999, because of how badly they treated their employees. A woman who worked there with my niece was very sick, but the store wouldn’t even let her take a break. The woman literally fainted on the spot. It wasn’t easy to stay away, because their prices are oh-so-low. But I figured that if I couldn’t find an item at another business, then I didn’t really need it.

Then, too, I knew they exported a large number of our factories to China, because I worked in international business, at the time. Get this, China Labor Watch investigated five Walmart supplier factories and found a total of 10,000 workers suffered serious rights abuses.

China’s Labor Watch Executive Director Li Qiang said:

‘This is not about a single factory, but about Wal-Mart’s [sic] inability to implement its standards.’

Walmart and Amazon pinch pennies and squeeze people, but they are not the only games in town. My daughter and I have a monthly mother/daughter tradition at Costco. We can each do our shopping, while visiting and indulging in interesting food and beverage samples, along the way. I like Costco, because they take care of their people, while still offering good deals.

Costco pays its employees a living wage, starting at $11.50 per hour and averaging $21 per hour, plus overtime and company-sponsored health insurance. Costco’s CEO and president Craig Jelinek says:

‘It also puts more money back into the economy and creates a healthier country. It’s really that simple.’

Walmart has classes for their employees to learn how to access local food pantries and welfare benefits, but they are not alone on their mistreatment of employees.

The New York Times calls Amazon a “bruising workplace:”

‘…workers are encouraged to tear apart one another’s ideas in meetings, toil long and late, and held to standards that the company boasts are “unreasonably high.”

‘The internal phone directory instructs colleagues on how to send secret feedback to one another’s bosses. Employees say it is frequently used to sabotage others.’

At Costco, I sometimes ask the door greeters how they like working there, and they always are enthusiastic. It shouldn’t come as a surprise that Costco is big on respect and equality. Costco also hires from within the ranks, where 70 plus percent of warehouse managers started either working the register or on the floor.

During the Great Recession, Costco’s CEO gave many of its hourly employees a $1.50 per hour wage increase over a period of three years. Other retailers laid off their employees. Costco scored extremely well (90/100) on the Human Rights Campaign’s Corporate Equality Index, which measures LGBT policies in the workplace.

Costco employees even get Thanksgiving off, while Walmart started their Black Friday at 6 pm last Thanksgiving Day. So, is it any wonder that Costco’s employees are loyal? The annual turnover rate is under six percent for employees with a year’s employment, and less than one percent for executives. You would think Walmart and Amazon would learn from Costco, because turnover is such an expensive cost.

The Walmart’s systemic employee abuses extend far beyond financial suffering. According to

‘Workers at two factories are denied gloves on the grounds that it will slow production. Dormitory conditions are so poor that at one factory, there is no running water in the bathrooms.’

‘Canteen meals are extremely poor and workers often complain of hunger pangs, and one factory forbids workers from leaving the factory to eat. Worst of all, two of the factories have rules forcing workers to lie to Wal-Mart auditors, forcing workers into silence as Wal-Mart turns a blind eye to sweatshop conditions.’

Amazon is no dance in the dasies, either. Bo Olson worked at Amazon two years:

‘You walk out of a conference room and you’ll see a grown man covering his face. Nearly every person I worked with, I saw cry at their desk.’

No surprise there. Bezos made his own grandmother cry when he was only 10-years-old.

Costco’s pays its CEO a relatively low salary with a compensation package totaling approximately $4.83 million in 2012. Walmart CEO Mike Duke made about $19.3 million at the same time. Members of the Walton family still own Walmart, and Alice Walton is the richest woman on earth. Other Waltons are 9th, 13th, and 14th on America’s richest list. Amazon’s Bezos is the world’s 5th richest person.

In its favor, Costco doesn’t advertise, and it doesn’t hire a public relations staff. Walmart spent $1.81 billion on ads in 2012, and Amazon paid $578 in 2011. Costco only marks up their products 15 percent and passes on competitive costs to customers. The other aspect of Costco’s business that has helped it compete against retail rivals is its membership model:

‘The underlying health and loyalty of Costco’s consumer and the profitability of the model remain intact. Membership trends are healthy and Costco is not seeing signs of higher-end spending slowing.’

Experts say Costco’s business model makes it “unstoppable.” Morgan Stanley analysts wrote in their research notes:

‘[Costco] operates one of the best business models in our space.’

I think it is simple. Walmart and Amazon are about greed, while Costco’s success lies in its common decency and compassion.

Featured Image: Mike Mozart via Flickr, Creative Commons

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