Costco vs. Wal-Mart: Higher Wages Mean Superior Returns for Investors (The Motley Fool, 3/12/14)
However, there could be some important lessons to be learned from the competition between Costco and Wal-Mart when it comes to employee compensation and its relationship to business profitability. While many people tend to think that higher costs in segments such as salaries and benefits are necessarily detrimental for shareholders’ returns, this interpretation may be far too shortsighted. Over a period of years, attracting a more talented workforce and keeping employees incentivized has undeniable benefits for productivity and customer service, among many other business aspects, and this is probably one reason why Costco shareholders are receiving superior returns than investors in Wal-Mart.
Yet, Wal-Mart last year admitted that more than half of its workers are paid less than $25,000 a year. That’s up to 825,000 Americans getting those poverty wages, while many other Wal-Mart workers aren’t paid much more. Those poverty-level wages are a big reason that the company enjoys $17 billion a year in profits. The majority shareholders of the company are members of the Walton family who inherited the stock and have a combined wealth of nearly $145 billion – more than the combined wealth of 42 percent of American families. Four of the Walton heirs are among Forbes magazine’s richest 10 Americans….If Wal-Mart set an example to be followed by other big retailers of paying at least $25,000 a year, a million and a half workers would be lifted out of poverty. That would mean more money staying in communities to support local businesses, helping to create at least 100,000 new jobs.
Walmart CEO Acknowledges Lack of Opportunities for Workers (Retail Justice Alliance, 3/13/14)
As the largest retail employer in the country, Walmart can and should lead the way in making sure that retail jobs are good jobs—the kind that come with good benefits and wages for all workers. If Walmart would listen to—and respect—its workers, it could help to rebuild our country’s economy and strengthen America’s middle class.