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.

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4 Responses to Costco CEO support living wages, good benefits for employees as a good business practice

  1. Duane12 says:

    I applaud Costco for its “living wage” compared to that of similar retailers, but would rather call it a “barely getting by wage.” I believe it would be difficult to raise a family of two children, own a home, go on annual vacations, and buy a new car every three/four years at that wage level.

    The following “Living Wage Calculator” is one reference to consult. It makes the point that a “living wage” is not a “middle class” wage.

    Interesting topic, Zach.

    • Duane, you have a point, but you might want to check this out. MIT’s Living Wage Calculator is fascinating.

      And I’ll just note that gone are the days when families could have a comfortable middle class life on a single income. In fact, if not for my wife’s income, we wouldn’t have been able to buy a house, whereas when my grandfather worked for the City of Milwaukee he was able to build a modest house and raise three kids – all on his income alone.

  2. Mike Schmidt says:

    Do you know there are many younger folk that don’t have a clue what a living wage means. You cannot even explain the concept to them let alone that teddy said it back in 1903 ! Very sad.

  3. Ed Heinzelman says:

    Maybe the proprietors of the Innovation Hotel should pay attention.

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