This is one CEO who gets it…
Here’s what Costco CEO Craig Jelinek said about paying employees a living wage.
“At Costco, we know that paying employees good wages makes good sense for business,” Jelinek said in a statement. “We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low.”
“An important reason for the success of Costco’s business model is the attraction and retention of great employees,” Jelinek added. “Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage.”
It’s worth noting that the average Costco employee earned around $45,000 in 2011, according to Fortune, while Walmart-owned Sam’s Club, in contrast, pays its sales associates an average of $17,486 per year.
And here’s what the Harvard Business Review noted when comparing benefits offered to Costco employees versus benefits offered to Sam’s CLub employees.
On the benefits side, 82% of Costco employees have health-insurance coverage, compared with less than half at Wal-Mart. And Costco workers pay just 8% of their health premiums, whereas Wal-Mart workers pay 33% of theirs. Ninety-one percent of Costco’s employees are covered by retirement plans, with the company contributing an annual average of $1,330 per employee, while 64 percent of employees at Sam’s Club are covered, with the company contributing an annual average of $747 per employee.
Clearly it’s possible for businesses to be very successful (Costco’s market share is approximately 50%) while making sure their employees are paid living wages with decent benefits.