Monday, February 16, 2004

Costco is NOT like Wal-Mart

In a time when anti-union corporations like Wal-Mart are changing the dynamics of the American economy with extremely controversial methods, it’s a breath of fresh air to learn that Costco is able to offer low prices for the consumers, and fair labor practices for their employees. In a February 15th issue of the Los Angeles, an article states:

The chief executive of Costco Wholesale Corp., a warehouse club retailer with 430 stores, likes to boast of his company's relatively high pay and benefits for its 92,000 employees.

"We pay better than the supermarkets, and we pay much better than Wal-Mart," Sinegal says. "That's not altruism," he continues. "It's good business."

The numbers seem to back him up. Costco's labor costs amount to 7% of its $42 billion in annual sales, a key industry yardstick. By comparison, Wal-Mart Stores Inc.'s cost of labor stands at about 12% of its $244 billion in revenue, while the same figure for the supermarket firms comes in at about 16%.

The article goes on to mention:

Unlike the supermarket workers, Costco employees have always paid a portion of their health insurance. The co-payment is now 4.5%, or $500 to $1,000 a year. That will rise to 8% in the next four years, to keep up with soaring insurance costs.

But the benefit package that Costco employees get in return is particularly rich. The company chips in $12,000 to $19,000 per employee (depending on whether they are full- or part-time). In the end, Costco's contribution is at least a third higher than that made by supermarket employers to their workers' health benefit plan.

Nor is Costco about to embrace another fad sweeping corporate America: offshoring. "We have a call-center operation here," Sinegal says, gesturing across the firm's Issaquah, Wash., headquarters complex. "We could move it to Bangladesh or somewhere. But what kind of a message would that send to our employees? Not a good one, I think."

This is an American business story worth repeating.

Read the rest of the article at:,1,4234478.column?coll=la-headlines-business
E.P. Monday, February 16, 2004