>> There are many jobs that you would consider <$40k jobs, that pay considerably more, and somehow the companies muddle through. Why can Costco pay their folks so much more than Walmart, and give them benefits?
The CostCo argument actually makes my point for me, in multiple ways.
First, and most important, if CostCo or anyone else paying higher wages they are totally free to do so. There may be situations where a given employer decides it is better off to pay higher wages. That's their call, it is their business, and if that's what they think is best for them, they ought to do it. Nothing prevents them from doing so, nor should it. If they want to pay everyone from the CEO down to the floor sweepers the same pay, I cannot think of any reason government ought to have a say in it.
Now, why does CostCo feel it can pay these higher wages? It may come as a shock to you, but CostCo paying higher wages is ordinary supply-and-demand at work. Not the act of generosity many would have you believe.
The technical answer, from a business perspective, is that CostCo needs a much smaller number of employees in a store (about half per s/f) because, while CostCo handles about 5,000 SKUs, Walmart handles more than 100K. The business models are totally different; CostCo is selling a small number of items to an upscale clientele that expects better customer service and is willing to pay an annual fee to get it. Walmart is selling a large number of items to a low-end clientele who cares about one thing: Cost. They don't want customer service, they don't want hand-holding, they want to buy their shit at the cheapest possible prices. That has been Walmart's model from the earliest days of its existence.
CostCo's revenue per employee is 3x what Walmart's is. It isn't because they have "better" employees; it is because they carefully restrict the items they sell. Walmart can't do that because their model is that if you need it, Walmart has it.
And finally, CostCo's profits are totally in the membership fees; they don't make any money on the products they sell. Walmart doesn't have that option.
They are two totally different businesses and it is easy to see why Walmart should not and cannot pay the higher wages CostCo pays. |
