This is a terrific article describing Costco's business practices. A few salient figures:
Costco on average pays it's employees $17 an hour, 42% higher than it's competitor, Sam's Club. Costco's employees pay only 8% of their health care benefits while the retail average is 25%. Lastly, the CEO of Costco, Jim Senegal, receives an annual salary of $350,000 which is less than 10% of what most CEO's make despite Costco ranking 29th in revenue amongst American companies.
To quote the article,
"I've been very well rewarded," said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. "I just think that if you're going to try to run an organization that's very cost-conscious, then you can't have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong."
"One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco 'it's better to be an employee or a customer than a shareholder.' . . .
. . . it seems perfectly fair to me.
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Love the article! Most US CEO's (Healthsouth's Richard Scrushy, Enron's Kenny Lay etc.) personify this enormous greed among the upper class today. Shareholder rights, BUNK! Viva la proletariat!
My question is still how can customers get so much for so cheap? Yes, prices are cheap because of minimal advertising, simple store space, CEO salaries at 350,000 a year, etc. I commend these efforts, especially paying employees a living wage and providing health benefits. However, I was curious as to the labor conditions of Costco’s supply-chain and the outsourcing to produce this Kirkland Signature brand, apparel, etc. Where are these items produced and at what cost to workers abroad and to workers in the US, as well as to the US deficit? Although Mr. Senegal claims that “low prices do not come at workers expense,” he also claims that “suppliers still feel pressure to keep prices low.” I tried to Google “Costco AND Kirkland Signature” to do a little more research on suppliers, but all that popped up was cashmere sweaters at Costco for $19.99. I am all for fair customer prices and anti-Wal-Mart employment practices, but I continue to remain skeptical of these super-sized retailers. Without joint employment laws and consumer pressure for fair trade and just labor practices, retailers distance themselves from accountability to their supply chain and consumers continue to super-size their lifestyle.
I think your questions and concerns are great Callie, and this is not just because I think you're really cool. Some of this may just be smoke and mirrors that distract us from exploitating taking place outside of Costco's walls. It might even be true that Costco is complicit in this exploitation. That said, and I don't think anyone disagrees with this point, I think the way one treats his/her own workers is indicative of a certain social consciousness. I think this is especially true at a company like Costco that has a huge and diverse employee base.
That said, giving employees sweet benefits with money saved by employing 11 year old girls in Vietnam at 10 cents an hour would not be cool . . . if anyone has had better luck than Callie determining the origin of Costco's products I'd love to know. thanks for reading guys.
Calliek, you have made a good point. The only realistic way Costco can offer products to the general public at competitive prices is to utilize imports produced by Third World countries. We must assume that these products are produced cheaply at workers expense. Consumer spending presently is remaining robust as a result of low mortgage rates and cheap importation from Third World countries. This will come to an end when the Chinese currency is floated import prices will rise, inflation will ensue eroding the purchasing power of the middle and lower classes resulting in recession. The economy presently is relying heavily on the consumer and when that ends so will the present economic trend.
The FMOC will be forced to raise short-term interest rates thus crushing the middle and lower class American's ability to spend. These classes are living off of home-equity loans and credit cards. Indebtedness is at an all-time record high the American worker class has only one thing to fear and that is the poor and working-class. By trading with China et al. we are awakening a monster. As this agrarian culture enters the industrial age it selectively removes prime manufacturing jobs at an ever-increasing rate leaving only service oriented jobs in the United States. Our present trade imbalance is over $60 billion per month and we have now become the greatest debtor nation in the world.
Although these things may not happen overnight, they are inevitable. The Third World worker being paid pennies per hour will soon see the light. They will naturally want to lead a better life and by replicating our lifestyle will reduce our standard of living.
What more can be said. Our greed for more materialism has created our ultimate demise.
Agreed, our culture of consumption is not sustainable for ourselves and the stability of our economy. China will become the new super power, as the United States continues to go into credit card debt with this lender and US textile supply chains reside in China. Ironic that the Bush Administration encouraged Americans to pull our economy out of a recession by going shopping at Wal-marts and Costcos using the tax cuts that increased the US deficit by billions. At the same time the Bush Administration put a high amount of pressure on China to de-peg the Yuan from the dollar. So now as interest rates rise and the purchasing power of retail shoppers erodes, it will be interesting to see if US consumers can wean themselves off of their addiction to materialism, or if US consumer habits will continue to make our economy dependent on China’s financing.
Calliek
Americans cannot and will not reduce their standard of living without driving themselves into retrievable indebtedness. The working class American, dependent on low interest rates and excessive credit, will slowly crawl on their bellies into a new socioeconomic class somewhere between unrecognizability and oblivion. This new class will make up the vast majority of Americans. The United States consumes vast amounts of natural resources. Far more than all other countries combined. The nauseating drive for prestige and self adornment at any cost has removed all reason and accountability from the population. Advertisements for ridiculously expensive luxury SUV’s and foreign automobiles smacks of gluttony and false pride. All of the past great civilizations have collapsed as a result of corruption from within. How can the American people continue to consume vast amounts of petroleum while their sons and daughters die on the Arabian Peninsula? Have you noticed those hideous yellow magnet ribbons on the back of gas guzzling vehicles? Support our troops! Pathetic! Make a statement by driving more conservative vehicles and show OPEC that we don't need all that oil. That's how we should support our troops. Maybe we should establish a federal Energy policy. Until the federal government establishes guidelines for consumption nothing will curtail our gluttony.
That's a mighty grim (albeit likely true) analysis guys. Is there hope?
Sorry for the bloviatorial rant Callie but I feel strongly about this issue.
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