In a recent interview with Businessweek, Costco’s Chief Financial Officer, Richard Galanti, explained that making money is not more important than treating his company’s employees well. After being asked whether paying workers less would result in a fatter bottom line, Galanti replied,
“Could Costco make more money if the average wage was $2 or $3 lower? The answer is yes. But we’re not going to do that.”
One of the most astonishing things about the Costco business model, which is made up of practices like this one which put employees before profits, is that despite treating its workers fairly by paying some of the highest wages in the industry, they’re wildly successful.
Costco pays its hourly workers an average of $20.89 an hour vs. Walmart’s $12.67. The company’s CEO, Craig Jenlick, has a refreshing philosophy.
“I just think people need to make a living wage with health benefits. It also puts more money back into the economy and creates a healthier country. It’s really that simple.”
Jelinek even supported a minimum wage increase to $10.10 p/hr, making this brilliant statement,
“At Costco, we know that paying employees good wages makes good sense for business. 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. 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.”
Watch a report from The Ed Show about Costco CEO Craig Jelinek’s support of a higher minimum wage here:
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