Costco Shows You Can Have Low Prices and Decent Pay

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Costco and Walmart (and Walmart-owned Sam’s Club) are longstanding, big-box discount stores with very different philosophies.

Bloomberg Businessweek calls Costco “the cheapest, happiest company in the world,” and lays out some effects of those philosophical differences:

On May 29, Wal-Mart Stores employees in Miami, Boston, and the San Francisco Bay Area began a weeklong strike. (A Walmart spokesman told MSNBC the strike was a “publicity stunt.”) In its 30-year history, Costco has never had significant labor troubles.

Costco strongly believes in investing in its employees. The average pay at Costco is $20.89 an hour, compared with $12.67 an hour at Walmart, Businessweek says.

At Costco, 88 percent of employees have company-sponsored health insurance, Businessweek adds. Walmart says “more than half” of its do.

Then there’s how much their CEOs make. Last year, Costco’s CEO got:

  • a $650,000 salary.
  • A $200,000 bonus.
  • $4 million in stock options.

In contrast, Walmart’s CEO got:

  • a $1.3 million salary.
  • a $4.4 million bonus.
  • $13.6 million in stock options.

Since 2009, Costco’s stock price has doubled and its sales have grown 39 percent. While some chains are being undercut by Amazon, Costco isn’t. During the recession, while retail rivals were cutting jobs, the company gave its employees a $1.50 raise that cost nearly $20 million, Businessweek says.

Meanwhile, Walmart is struggling to keep its shelves stocked and is implementing some weird green dot strategy, which current and former employees say isn’t working.

Costco membership costs $10 more a year than a membership at Sam’s Club, but 80 percent of its gross profit comes from those fees because almost all its products are marked up less than 15 percent, Businessweek says.

What can you take away from this? Costco has clearly shown that a store can offer both low prices to customers and decent pay for the workers.

Is that something you support with your pocketbook? Are you more inclined to shop at Costco because of its reputation for treating workers well? Let us know on Facebook.

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Comments & discussion

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  • Baileywick

    At membership renewal time I debate on whether it’s worth the cost to belong to Costco. Many items are only available in large sizes or twin packs. I recently dumped out a large unopened bottle of Heinz Ketchup that expired over a year ago. Since it is a longer drive to their warehouse store, I don’t go as often as I might. The other thing that bugs me is the snotty attitude of some of their employees, which I don’t get at Walmart, and now I find out the Costco employees are making twice as much.

    • j-ro

      I have the exact opposite experience repeatedly. I will NEVER walk into another Wal-Mart again. But I do as much of my shopping as possible at Costco. Best customer service. Happy employees. Awesome samples. Fantastic prices. Now, I think I would like to apply for a job there.

      • usaajr

        Same here!!

  • mrkfiv@aol.com

    Costco may pay well but only locates stores in high density population centers where the cost of living is higher. Where does this help the employees? I live in a rural area of upstate NY and would have to travel to Canada to visit a Costco store, Nope it’s BJ’s for me.

  • laevans

    I notice at my local stores, that workers who have been there for years, and dont get promoted, were no longer there when I asked about them. I was told they did not retire. After 50, people rarely leave a reliable job. Is it up or out due to the compensation policies. ? Many workers at my local stores, dont look past 50. I also do go to other stores that sometimes have better sales.