Tag Archives: walmart and costco

The Costco Difference

As noted previously in this space, Walmart doesn’t pay its employees very well. Last spring it raised its minimum pay to $9 an hour and announced its intention to raise its minimum pay to $10 an hour in February of 2016. That $10 figure, though, comes with an asterisk: new employees in 2016 will receive $9 an hour to start and only see their pay rise to $10 an hour after they complete a six-month training program. Walmart also raised the minimum it pays its managers from $13 an hour to $15 an hour this year.

Contrast this with Costco, as Fortune magazine explains:

With starting hourly pay at about $11.50 and a company average of $22 per hour, Costco’s compensation trounces the competition. CEO Craig Jelinek says it can be more profitable in the long run by keeping turnover low and capitalizing on employee productivity.

Turnover stands at about 10%, compared with the industry norm of 55%. For employees who have been there for more than one year, turnover drops to just 6%.

The folks at Walmart would have us believe that their way is the only way – the only way they can remain profitable and the only way they can fulfill the fictitious “fiduciary responsibility” to their shareholders to squeeze every penny they can out of their business. But there’s another way: the Costco way. They pay their employees better, while they’re a much smaller company they remain highly profitable, their customers have a much better experience in their stores, and they don’t have full-time employees who need food stamps and Medicaid to get by.