Last weekend we made our bi-monthly pilgrimage to Costco. As usual, we ended up buying much more stuff than we anticipated. It is all needed, just not planned!
Costco has much more to offer than just products to buy. First of all, if you need to take an edge off your hunger, you can snag all sorts of food samples, most of which are quite tasty. Secondly, watching and listening to the people at Costco is great. Talk about a diverse group – Americans and immigrants from all over the world, speaking a whole bunch of languages and dressing in many different garbs, all part of the greater middle class, and all stopping in to get the good deals at Costco.
The third interesting thing about Costco is the workers – they know what they’re doing, they work hard, and they make good wages and have good benefits, like health care. Costco raised its wages back in March. Now a new cashier starts at $11.50 an hour, and a cashier’s assistant, the lowest rung on the Costco ladder, starts at $11 an hour. After three months, full-time employees get health coverage, dental care, discounted drugs, short- and long-term disability insurance, and a company match for retirement savings.
Wall Street didn’t like the wage increase and took it out on the price of Costco stock. But with revenues climbing steadily, Wall Street got back on the Costco bus. Its stock price has gone up 4 percent since March. The lesson: You can treat your workers well and still make a lot of money.
The other side of the comparison are CEO salaries. Costco has a very unassuming leader – Jim Sinegal – who doesn’t think that being a CEO entitles him to the privileges, income and power that other CEOs assume. Compare Sinegal’s compensation of $454,629 in 2006 to that of Larry Johnston, CEO of Costco’s former rival, Albertson’s. Johnston pulled in more than $16 million in 2005 and $13 million in 2004. Now Albertson’s has been cut up and sold off. Johnston made off with a bundle, while killing off jobs in our state.
Or we could look over to Costco’s national rival, Wal-Mart. Wal-Mart’s CEO, Lee Scott, pulled in almost $30 million last year in salary, bonuses, stock awards, incentives and other financial goodies. Scott “earned” about 1,800 times the annual wages of Wal-Mart’s lowest-paid worker. In Arkansas, Wal-Mart’s home base, more than one out of every six people live in poverty. The median earnings for men in Arkansas total $33,000. In Washington, the median is $47,000. For women, the median earnings in Arkansas are $26,000, in Washington $35,000. Think there’s a connection?
Costco’s board of directors includes both Republicans and Democrats from the good old days when both parties believed in protecting the environment and the great American middle class. Former Gov. Dan Evans, Jill Ruckelshaus and Bill Gates are all on the Costco board. These leaders understand that doing good business can and should be based on treating workers with respect. They understand that prosperity is based on a strong middle class and a strong middle class is only possible if workers are appropriately well-paid.
This idea of treating workers with respect is threatened by globalization. Whenever politicians or businesses want to justify the next lay-off or drop in wages or cut in benefits, they always talk about global competition from Asia. The weird thing is, if they looked in the other direction, that is, to Europe, they would see a continent that is also faced with globalization, but which is figuring it out without stranding its workers without jobs, income or purpose.
We don’t need to look east or west. We just have to look at those companies in our own state that are prospering and doing so because they treat their workers with respect and because they produce and supply high quality products. Their CEOs do not treat the company as a private piggybank. They are committed to the long haul in Washington.
When we talk about getting more teachers into the classroom (and paying for that), supporting family leave, expanding health coverage or investing in mass transit, these are the corporate leaders who should be at the table. We don’t need the businesses that are interested only in making a buck. We need those businesses that understand the responsibilities of corporate citizenry. We need more Costcos and fewer Wal-Marts.
Think before you shop!
John Burbank, executive director of the Economic Opportunity Institute (www.eoionline.org), writes every other Wednesday. Write to him in care of the institute at 1900 Northlake Way, Suite 237, Seattle, WA 98103. His e-mail address is john@eoionline.org.
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