Costco and Wal-mart have completely different business models! Why didn't they do a direct comparision of Sam's Club and Costco? The two are only directly compared once in the article.

Anyhow, assuming by "Wal-mart" they mean Sam's Club too, there a few problems with his argument. Firstly, at least until recently, Costco catered to a more upper-class clientele. Not everyone could join. This meant higher higher check-out tickets than their competitors saw. Secondly, Costco may pay a higher wage, but their workers are more skilled as well. You don't see the ranks of acne scarred, burned-out teenagers working at Costco like you do at Wal-Mart.

Now, the conventional description of efficiency wages for effort monitoring being an explanation for premium wages being paid for similar jobs by different employers is improbable, at best. Despite this, let's assume Wal-Mart wanted to push more in the direction of CostCo. Wal-Mart would have to lay-off/fire a large chunk of it's staff in order to raise wages. I hear the salary of your typical unemployed person is not all that great... although the benefit of being able to watch "The View" and "Maury" every morning is quite tempting.

The truth is that in modern complex companies, variations in productivity are largely the result of differences in the products and the organization of the company itself, and are little affected by the simple productivity of the employees.

I'm sorry. I get all giddy when I start talking economics. Okay, back to "The Ellen Degeneres Show."

Gomez 14 Jul 2005

Ok, the short short version of a much longer comment that got borked:

Yes, Costco vs. Sam's Club would be the better comparison. Perhaps Target vs Wal-Mart? In any case, they are all "Big Box Retailers" dealing with a lot of the same issues.

I would argue Wal-Mart requires MORE skilled labor than Costco, because they have specific departments requiring specific product knowledge. (Well, at least if you want to become Regional Assistant Jewelry Manager after 14 years like that woman in the commercial.) It seems like to work at Costco you have to do one of three things: 1) Drive a forklift 2) have a strong back or 3) run a cash register.

Costco gets my business because they continue to compensate their workers equitably in the face of Wall St. and investor pressure. If you've invested in Costco, why would you want to screw a good thing up? Just seems really short-sighted and petty to me.

andrew 14 Jul 2005

Costco gets my business because Wal-mart (by me at least) doesn't sell produce or meat and Costco is much cheaper and higher quality than Jewel or Dominick's (a fully unionized shop by-the-way). I shop at Wal-Mart because of their immense variety (Try buying a small baby-pool at Costco or an hand crank egg beater) and unbeatable prices (they are usually cheaper than Costco, Target, etc even when you take bulk unit price into account... and that includes the stuff like DVDs and household supplies and not just sweat shop clothes and Left Behind novels).

In the end, it's a chicken or egg thing. Are the workers at Costco better/more productive just because they are paid more/have better benefits, or does Costco pay them more and give them better benefits because they are more skilled/productive people in general? I'd argue the latter.

Now, that doesn't help the Wal-Mart employee that thinks they are being treated like crap. But they can always go work somewhere else. And if they feel they have aquired the proper skill and training, they could even try to go work at Costco. Wal Mart's niche seems to be rock-bottom prices at the expense of employee loyalty. If they change their model too much that could mean higher prices for Wat-Mart and the triumphant return of K-Mart!

Gomez 14 Jul 2005

Now that my acne scars have cleared slightly, and I'm not a teenager any more, do you really think I could get a job at Costco?

cletus 15 Jul 2005