Wednesday, January 12, 2005

I love living in Ferguson, but here's a drawback: if I want a bargain department store, I can choose from Wal-Mart (As If!), Target, or K-Mart. All three are big Republican donors. What I want in North County is a Costco. Jim Hightower explains that company's virtues:
Costco is different... and that really POs Wall Street.
The nationwide retailer treats its 100,000 clerks, forklift operators, and other workers as valued assets to be invested in and nurtured – unlike the Wal-Mart model of paying the least you can to rank &file employees, squeezing the last ounce of toil out of each of them, busting any whisper of unionization, and causing a workforce turnover like employees are nothing but disposable coffee cups.
How different is Costco? Starting pay is $10 an hour, workers typically earn $40,000-a-year after three years on the job, the company covers 92 percent of employees' health care costs, and the Teamsters union provides strong bargaining representation for the workers. Also, while CEOs at other major corporations average 531 times the pay of their lowest-paid employees, Costco's top boss takes only 10 times the pay of his typical rank &filer. His annual salary $350,000 – compared to some $5 million a year hauled off by Wal-Mart's honcho.
"From day one," says the chief financial officer at Costco, "we've run the company with the philosophy that if we pay better than average, provide a salary people can live on, have a positive environment and good benefits, we'll be able to hire better people, they'll stay longer and be more efficient." It works. Costco's turnover is minimal, its profits are consistently strong, and its stock price has quadrupled in 10 years.
But Wall Street analysts are sourpusses when it comes to this remarkable corporate maverick, which is defying the contrived wisdom that worker exploitation is the only way to succeed. "Costco's benefits are overly generous," sniffs one Wall-Streeter, asserting that stockholders could do even better if only Costco would conform to the Wal-Mart model.
Come on! Costco is richly profitiable for stockholders, while also providing middle-class possibilities for our communities. Isn't that the best model of all?
"Costco's Dilemma: Be Kind to Its Workers, or Wall Street?" Wall Street Journal, March 26, 2004.
"Two Different Pay Packages, Two Different Galaxies," New York Times, April 4. 2004.

Costco's philosophy reminds me of Henry Ford, who outraged the automobile industry back in the day by paying his workers $5 a day, which was double the existing pay. He wanted his workers to be able to buy the cars they were making. His wage scale influenced the wages all factory workers were paid in this country at that time. In other words, he understood that the economy works best when the money doesn't all stagnate at the top. Costco understands the same lesson.


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