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Costco plans for Forsyth location cause fervor, Walmart – not so much

January 13, 2014
With Costco Wholesale moving forward with a Cumming location, social media lit up with enthusiasm.

Local realtors, loyal shoppers and those looking for a place to work rejoiced with hundreds of shares and comments.

In my years covering community news, I have never seen a retail store cause so much excitement.

On the other hand, when plans for a third Walmart location in south Forsyth County were announced last year, the joy was not as fervent.

What makes a Costco so much more desired than a Walmart?

Even though both retailers offer customers low prices on merchandise, I think there’s a lot to be said about employee satisfaction (and free samples).

While Costco is the second-largest retailer in the U.S. behind Walmart, workplace happiness at Costco remains high; while Walmart keeps making national headlines with workers asking for better pay and more benefits.

Costco’s hourly workers average $21 an hour, and starting pay is about $11.50 per hour.

Walmart has said the average wage for its full-time employees in the U.S. is $12.67 per hour, with starting pay at about $8.50. The state’s minimum wage is $7.25 an hour.

Some Wall Street analysts have said Costco is overly generous, not only to customers but to its workers as well. But in the last five years, Costco has grown 39 percent and its stock price has doubled since 2009.

Craig Jelinek, Costco’s chief executive officer, told Bloomberg News last summer that people need to make a living wage with health benefits.

“It also puts more money back into the economy and creates a healthier country,” Jelinek said. “It’s really that simple.”

I don’t think Jelinek is saying minimum wage should be $18 per hour, but paying a higher wage can be a good business model, history has shown.

In 1914, Henry Ford, founder of Ford Motor Company, started an industrial revolution by more than doubling wages to $5 from about $2.38.

A mere $5 in 1914 had the buying power equal to $116 in today’s market, according to the Bureau of Labor Statistics inflation calculator. The first cars Ford had built in number, the 1903 Model N, cost about $3,000, or $70,000 in today’s money.

Henry Ford saw the advantages of paying a high wage for productivity, and yes, sales.

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Tags: Community & Outreach, Government & News & Crime

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    Comparing WMT to Costco is pointless
    January 21, 2014 | 12:46 PM

    Costco has about 4,000 SKUS. Walmart has well over 100,000. Walmart is a far more labor-intensive operation, which means that more low-wage jobs are needed.

    Costco, Trader Joes, etc serve a population with average incomes well over $80k/household. They aren't serving the same population. A LOT of people depend on Walmart to be able to afford things they need. They aren't going to pay $55/year dues, which authors tend to overlook when gushing about Costco.

    Hey, I shop at Costco, but let's not kid ourselves. Walmart's scale is massive and employs over a million people. Any one of them has the chance to improve their situation, but it's up to the employee.

    Do you really think Costco and Walmart "floor level" employees are hired from the same talent pool? Costco employees are typically college-educated. So what if you compared Costco wages to Microsoft, or Proctor & Gamble? How do they fare?

    Starting wages aren't that far apart. At Walmart, you'd make almost $9/hr, at Costco you'd make $11/hr. Costco's numbers are inflated due to lower headcount and averaging in all employees, including managers making in excess of six figures. Fuzzy math.

    Social media. Yeah...I am sure a lot of families that take the bus to Walmart to save money on bread have time to post on Facebook about store openings. What would you expect?

    Bottom line, you can't compare the two.

    A. Reader
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