Posts tagged with: Costco

wmartIn light of the ongoing discussion over fast-food wages, I recently wrote that prices are not play things, urging that we reach beyond the type of minimum mindedness that orients our imaginations around artificial tweaking at the bottom instead of authentic value creation toward the top. Prices don’t equip us the whole story, but they do tell us something valuable about the needs of others and how we might maximize our service to society.

But though I have a hearty appreciation for the role that low-wage employers like McDonald’s play — due in large part to my 5-year stint working for The Ronald — I’m also grateful that other companies like Costco are able to provide higher wages to many low-skilled workers.

When we observe such differences — one prosperous company paying $7 per hour while another pays $12 — it can be easy to get worked up, pointing our fingers at greedy executives, idols of efficiency, unwise allocation of company funds, etc. Yet while any assortment of these drivers may indeed contribute to how wages are set, and though executives bear heavy moral responsibility on such matters, it’s helpful to remember that (1) we’re greatly limited in understanding the books of the companies we critique, and (2) executives aren’t the only ones influencing prices.

Over at Bloomberg, Megan McCardle does a marvelous deep-dive on this very sort of thing, starting with a comparison of Costco and Walmart wherein she ponders why the former offers higher wages than the latter.

A summary:

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There’s a real business advantage to treating employees well, says Jim Sinegal, CEO of Costco Corporation, an international membership warehouse club. Boasting the lowest employee turnover rate in retailing, Costco pays 40 percent more than its closest rival, Sam’s Club, and provides health insurance to more than 90 percent of its employees.

“Wall Street is in the business of making money between now and next Tuesday,” Sinegal says. “We’re in the business of building an organization, an institution that we hope will be here 50 years from now. And paying good wages and keeping your people working with you is very good business.”

Chris Horst, Matthew Horst, Costco

For Matthew Horst, Costco has become much more than an employer.

And the advantages don’t stop at profit margins and good wages.

In an open letter to Sinegal and president Craig Jelinek, Chris Horst of HOPE International shares a beautiful story about how Costco gave his brother a career, a community, and much, much more: (more…)