Thoughts Caught
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AmeriKa Korporate Kulture Offshoring Walmart Hurricane Katrina Misc.

...a radical idea:
Treating customers and employees right i
s good business

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Costco vs. Wal-Mart

- Statistics
Comparing some workplace statistics, as reported by the companies.

 Employees covered by company health insurance
  Costco - 82%
Wal-Mart - 48%
Insurance-enrollment waiting periods (for part-time workers)
  Costco - 6 months
Wal-Mart - 2 years
Portion of health-care premium paid by company
  Costco - 92%
Wal-Mart - 66%
Annual worker turnover rate
  Costco - 24%
Wal-Mart - 50%
Company Size 
  Costco - fourth-largest U.S. retailer
Wal-Mart - world's largest retailer
Fulltime employee's average hourly wage
  Costco - $17
Wal-Mart - s $9.68.
CEO's total 2004 pay
  Costco - James Sinegal [Issaquah, Washington-based] $2.7 million
Wal-Mart - H. Lee Scott [Bentonville, Arkansas] $17.9 million

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Why don't other companies (including Wal-Mart) see the logic?

By compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity [than Walmart] duh!

Costco's average hourly wage of $15.97 is 38% higher than Wal-Mart's Sam's Club pays its workers. Costco's annual health cost per worker is almost 65% higher than Wal-Mart's (and Costco covers 82% of its workers, versus only 47% of WalMart workers who are covered). And Costco's retirement costs per worker are almost double Wal-Mart's.

Why don't other companies (including Wal-Mart) see the logic in Costco's strategy? What is it about corporate culture that leads senior executives to think they can get away with treating employees as chattel and simply pay as little as possible?


Now, imagine if Wal-Mart followed the example of Costco. What would be the effect on the economy if Wal-Mart raised their wages for their employees? would be a major overall positive impact on the economy, especially on the workers at Wal-Mart. More at I Shopped At Costco >

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The Wal-Mart Effect

-A model on the march

As the world's largest corporation and the nation's leading retailer rapidly expands into core urban areas from its original base in small Southern and Midwestern towns, Wal-Mart stores (especially its huge Supercenters with grocery departments) face many objections. Their size destroys community character (the National Trust for Historic Preservation recently said superstores threatened the entire state of Vermont); they create traffic problems and urban sprawl, and they leave behind ugly, unused hulks as business strategies shift (371 Wal-Marts currently stand empty).

Wal-Mart's low-road labor strategy drives countless other companies to cut wages and benefits of both retail and manufacturing workers and to buy more products from lowest-wage producers overseas, leading to what critics call the "Walmartization" of America.

While Wal-Mart competition does lower prices, it also depresses wages and eliminates jobs. One 1999 study reported that 1.5 jobs had been lost for every job that Wal-Mart createD.
But "Walmartization of America has a broader impact than just retail workers," says Greg Denier, spokesman for the United Food and Commercial Workers, which represents grocery workers. "Wal-Mart probably has had more negative impact on manufacturing than on other jobs in the United States.

Wal-Mart also squeezes American consumer goods producers, forcing them to cut labor costs, move overseas or be replaced by foreign suppliers. Accounting for 10 percent of all U.S. imports from China in 2002, the corporation even pressures wages downward in poor countries, from El Salvador to Bangladesh. It also drives competitors to import more, pushing the True Value hardware store cooperative to boost imports from less than 1 percent of its products to 18 percent.

Wal-Mart also shifts many of its costs to taxpayers (or other businesses that indirectly pay costs of Wal-Mart's underinsured employees). A recent study by Good Jobs First, an organization that monitors economic development policies, found that state and local governments had given at least $1 billion in subsidies to stores and distribution centers.

Wal-Mart also pays so little that many of its workers rely on state healthcare subsidies, food stamps, housing vouchers and other public aid. According to a recent study by the University of California at Berkeley Center for Labor Research and Education, California alone spends $10 billion annually to subsidize Wal-Mart and similar low-wage employers. Congressional Democratic staff calculates that federal taxpayers pay $2,103 per year in subsidies for the average Wal-Mart worker

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Health Insurance Issues

Read It and Cry!

Endgame Profile of Wal-Mart

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The Company [Costco] is proving Wall Street wrong...

If Wal-Mart represents red-state America's ruthless race to the bottom line, then Issaquah-based retailer Costco offers a blue-state alternative. The company is proving Wall Street wrong by adhering to a radical idea: Treating customers and employees right is good business. More >

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