Tuesday, March 12, 2013

Costco is proving Republicans and the Wal-Mart wrong by paying workers a living wage while also earning record profits.

Finally, some good news from the private sector dispelling the middle class killing myth that higher wages kill growth.

From PoliticusUSA:  While Wal-Mart experienced February sales that were considered, “total disaster,” Costco’s earnings for the second quarter of the year climbed 39%. The New York Times reported, “Costco Wholesale’s net income for its second quarter climbed 39 percent as it pulled in more money from membership fees, sales improved and it recorded a large tax benefit.”
Costco CEO Craig Jelinek openly supports raising the minimum wage to $11.50 an hour, “At Costco, we know that paying employees good wages makes good sense for business. 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. An important reason for the success of Costco’s business model is the attraction and retention of great employees. 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.”

I agree wholeheartedly. supply-siders and trickle-down tools have been proven wrong time and time again that higher wages stunt economic growth. Simply not true. Even the known fascist Henry Ford wanted his employees to make enough money to afford the cars that they built.

From "Daily Finance" (not exactly a liberal magazine) : In 1914, a business executive named Henry Ford did a startling thing: He announced that he was going to more than double the wages he was paying his employees, from $2.34 to $5 a day -- the equivalent of $120 a day in today's money.


More: The story you hear frequently about why Henry Ford made this decision was that he wanted to allow his workers to be able to afford to buy his cars. The wage increase certainly made the cars (and many other products) more affordable for Ford employees, but the historical consensus is that Ford actually made this decision for a different reason: To reduce employee turnover--and, in so doing, reduce recruiting and replacement cost. Regardless, it worked.

I highly recommend reading the whole article - very informative.

I hope Wal-Mart Management is reading the same articles but I doubt it. 

From PBS: Wal-Mart is the largest employer in the United States after the Federal government with over 925,000 employees. Each year, the company hires 550,000 more employees - three times the number of people the U.S. military recruits every year - replacing those lost to rapid turnover and replenishing its workforce.

Imagine if all those people made a living wage. It's easy if you try.

A worker at Costco makes $19.50 after four and a half years, according to Slate Magazine. It’s about $7 an hour more than employees with the same seniority at Costco’s competitor, Sam’s Club.
Some Wall Street analysts haven’t been happy about that or about the company’s generous health plan. No doubt, Costco could be making a higher profit. And yet, the company does just fine. The value of Costco stock has more than doubled since 2009, and the company’s founder, James Sinegal, said those wages buy the company a low rate of employee turnover and theft.
Costco’s generosity saw renewed publicity recently when Wal-Mart became mired in strikes over low pay and bad labor relations. Although Wal-Mart is admittedly a much bigger company, the Costco model proves you don’t have to squeeze employees to be successful.
'Nuff said. 

1 comment:

  1. They don't read anything that would change their policy for the better treatment of their workers.

    Only that which worsens it.

    Thanks for the reporting!

    I love shopping at Costco.

    When shopping is required.

    Love ya,