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Old 03-13-2013, 06:34 AM   #1
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Costco Profit Soars To $537 Million Just Days After CEO Endorses Min. Wage Increase

http://www.huffingtonpost.com/2013/0...n_2859250.html

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Less than a week after Costco CEO Craig Jelinek spoke out in favor of raising the minimum wage, the big-box retailer’s earnings showed that paying workers a living wage doesn’t always hurt business.

Costco reported a profit of $537 million last quarter, up from $394 million during the same period last year, according to the Wall Street Journal. The healthy earnings report comes just six days after Jelinik urged lawmakers to raise the minimum wage to $10.10 an hour.

“At Costco, we know that paying employees good wages makes good sense for business,” Jelinik said in a statement last week. “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.”

Costco is known for paying its workers wages that are generally above average for the retail industry. An average Costco worker made about $45,000 in 2011, according to Fortune. That’s compared to an average of about $17,486 per year for a worker at comparable Walmart-owned Sam’s Club.

And apparently the extra pay pays off. Costco makes more than $10,000 in profits per employee, while Walmart takes home about $7,400 per worker, according to the Daily Beast (Walmart and Costco aren’t exactly the same type of business, however).

In addition to offering its workers high pay and the opportunity to unionize, Costco also provides a benefit many of its competitors don’t: health insurance for part- and full-time employees.

Some analysts have complained in the past that Costco’s worker-friendly policies aren’t so friendly to shareholders. If Tuesday’s results are any indication, those concerns may be exaggerated.
A job creator that actually gets it.
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Old 03-13-2013, 07:13 AM   #2
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I love Costco.
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Old 03-13-2013, 07:14 AM   #3
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Gr8 customer service too.
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Old 03-13-2013, 07:28 AM   #4
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Costco pays well already, so min wage probably does not affect them.

I am for it too.

The problem with this country is that gap between welfare and minimum wage is so small that their is no incentive for the unethical to work.
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Old 03-13-2013, 07:34 AM   #5
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the Costco CEO is a pretty straight up guy from what I hear, if more companies would be run like Costco the world would be a much better place.
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Old 03-13-2013, 07:41 AM   #6
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Today most CEOs take home an average of 380 times more that their employees. In 1973 the average CEO received 20 times their average worker's pay. In 1980, when the middle-class had peaked, the average CEO received 42 times their average worker's pay. Today Costco's CEO only earns about 28 times his average employee. -- Source
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Old 03-13-2013, 12:50 PM   #7
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Originally Posted by phrozen06 View Post
http://www.huffingtonpost.com/2013/0...n_2859250.html

A job creator that actually gets it.
I don't like the term "job creator". Businesses are in the business of making money. And that means getting the most done with the least amount possible.

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the Costco CEO is a pretty straight up guy from what I hear, if more companies would be run like Costco the world would be a much better place.
A company is not run for the benefit of the employees. It's run for the benefit of its owners.

I'm in no position to question Costco's employee compensation policy, but at the same time, you can't just make the implicit case that if every company paid its employees more the world would be a better place. The most likely scenario is that there would just be less employees.

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Costco pays well already, so min wage probably does not affect them.

I am for it too.

The problem with this country is that gap between welfare and minimum wage is so small that their is no incentive for the unethical to work.
I'd rather eliminate welfare than raise the minimum wage.
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Old 03-13-2013, 03:51 PM   #8
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I don't like the term "job creator". Businesses are in the business of making money. And that means getting the most done with the least amount possible.
Only one entity is in the business of making money, the U.S. Mint. Everyone else is making either products or services for which, if successful, they might receive money in exchange for their products. I think far too many business people get this exactly backwards and simply try to extract money out of business and the economy as their primary focus rather than developing quality products to exchange for money. I think this distortion/corruption underlies much of what ails American business.

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A company is not run for the benefit of the employees. It's run for the benefit of its owners.
To be successful, long-term, a company should first be run to benefit its customers, then its employees at all levels to best assure the quality and high-value services and products to those customers. Only then will the owners benefit, not as a goal in itself but as a consequence and result of the putting the other two beneficiaries ahead.

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I'm in no position to question Costco's employee compensation policy, but at the same time, you can't just make the implicit case that if every company paid its employees more the world would be a better place. The most likely scenario is that there would just be less employees.
While that is a simplistic assertion on the Right -- makes for simple and easy basic equations to demagogue on -- I highly doubt that's true in the complexities of the real world where employees are far more than abstract units of production or business assets to be treated with the same regard, respect and manner as a copier or milling machine.

Higher pay is not, in and of itself, the primary concern but rather, treating them with higher regard, respect and simple human dignity of which higher pay would be just a consequence. I think Costco's example indicates that this isn't the either/or dilemma it is often portrayed to be.


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I'd rather eliminate welfare than raise the minimum wage.
Perhaps you've got this a bit backwards, you could help eliminate welfare BY raising the minimum and average wages of workers at the lower end of the economic scales to make reliance on Welfare far less necessary, likely or common.

Last edited by Rhumb; 03-13-2013 at 03:54 PM.
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Old 03-13-2013, 04:38 PM   #9
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The whole reason Minimum wage and welfare exist is because of business exploitation of labor.
No, I'm pretty sure the minimum wage exists because white labor union workers in the early 20th century didn't want blacks taking their jobs.

As to the broader point about "exploitation", would you prefer to go back to the farm and work 70 hour weeks scrabbling at subsistence level work?

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Only one entity is in the business of making money, the U.S. Mint. Everyone else is making either products or services for which, if successful, they might receive money in exchange for their products. I think far too many business people get this exactly backwards and simply try to extract money out of business and the economy as their primary focus rather than developing quality products to exchange for money. I think this distortion/corruption underlies much of what ails American business.
Trying to counter an argument by twisting the semantics is weak and petty.

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To be successful, long-term, a company should first be run to benefit its customers, then its employees at all levels to best assure the quality and high-value services and products to those customers. Only then will the owners benefit, not as a goal in itself but as a consequence and result of the putting the other two beneficiaries ahead.
PC fluff. Business owners will do what is in their perceived best interest. Just like every other human being on the planet. Or are the 3 hours per day you spend browsing the internet on the company's dime meant to improve the bottom line?

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While that is a simplistic assertion on the Right -- makes for simple and easy basic equations to demagogue on -- I highly doubt that's true in the complexities of the real world where employees are far more than abstract units of production or business assets to be treated with the same regard, respect and manner as a copier or milling machine.

Higher pay is not, in and of itself, the primary concern but rather, treating them with higher regard, respect and simple human dignity of which higher pay would be just a consequence. I think Costco's example indicates that this isn't the either/or dilemma it is often portrayed to be.
What works for Costco just barely works for that company. They are operating on extremely thin margins (2.7%). Sam's Club is owned by Wal-Mart. The parent company employs a lot of people at or near minimum wage. Its operating margin? 5.9%. Over double.

Now, I'm not saying what Costco is wrong or misguided. It works for Costco. But you can't just take one aspect of Costco's policies (above average employee compensation), apply it to entire industries or market sectors, and expect everything to come up roses. Every company is the way they are through hard earned trial and error.


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Perhaps you've got this a bit backwards, you could help eliminate welfare BY raising the minimum and average wages of workers at the lower end of the economic scales to make reliance on Welfare far less necessary, likely or common.
Uh, no. Unless you're also going to use the apparatus of government to force employers to hire people, employers are simply going to pare back the amount of people on their payrolls.
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Old 03-13-2013, 05:01 PM   #10
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Trying to counter an argument by twisting the semantics is weak and petty.
I don't think my point is just a cute twist of semantics but rather, something I've observed and felt for a long time, that too many companies are run by MBAs who are great at manipulating org charts and spread sheets but may know, understand or care little about the actually products or services the companies they head produce.

GM was a prime example of this. For years, there was a strong product/engineering representation in their top tiers and they made innovative, quality and desirable products; reaping the benefits of this in terms of growth and profits shared broadly across the corporation. Then, starting in the later '60s, there was a growing infestation of MBA, marketers and beancounters taking control who's primary focus became not to make excellent cars but to make money. Well, look at just about any 1970's on GM product to see what happened there. All the fancy ad campaigns, rebates, and corporate shuffling and acquisitions could only forestall the inevitable rot and eventual collapse. Former GM top gun Bob Lutz has a good book out detailing just this.

So while it might seem like a clever semantical flourish, in reality, I deeply feel this has been a critical corrosion on our industrial/business world. More and more companies I think are starting to realize this and refocus back on to product/service excellence rather than financial and organizational chicanery.

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PC fluff. Business owners will do what is in their perceived best interest. Just like every other human being on the planet.
Presumably, but not necessarily, and even if so, with perhaps a too narrow perspective of self-interest -- self-perception are often the worst perceptions.


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Uh, no. Unless you're also going to use the apparatus of government to force employers to hire people, employers are simply going to pare back the amount of people on their payrolls.
So instead, we'll just settle for paying people impoverishing wages and forcing them of necessity (for survival) onto Welfare? Not sure that's the better option from either a human or even economic point of view.

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Old 03-13-2013, 05:53 PM   #11
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No, I'm pretty sure the minimum wage exists because white labor union workers in the early 20th century didn't want blacks taking their jobs.

As to the broader point about "exploitation", would you prefer to go back to the farm and work 70 hour weeks scrabbling at subsistence level work?
So all minimum wage laws in all countries were enacted because those countries were trying to protect unions? Go on.
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Old 03-13-2013, 08:00 AM   #12
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wow, you mean the CEO of Costco that gave a speech at the DNC supports Obama? No way.

http://abcnews.go.com/blogs/politics...a-on-business/

http://patriotfire76.blogspot.com/20...s-liberal.html

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Costco CEO Jeff Sinegal spoke at the Democratic Convention this summer in favor of tax increases. Friday Costco announced a special dividend payout of $7 a share purposely being distributed in an effort to dodge potential tax increases coming in January.
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Old 03-13-2013, 08:05 AM   #13
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wow, you mean the CEO of Costco that gave a speech at the DNC supports Obama? No way.

http://abcnews.go.com/blogs/politics...a-on-business/

http://patriotfire76.blogspot.com/20...s-liberal.html
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Old 03-13-2013, 08:15 AM   #14
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wow, you mean the CEO of Costco that gave a speech at the DNC supports Obama? No way.

http://abcnews.go.com/blogs/politics...a-on-business/

http://patriotfire76.blogspot.com/20...s-liberal.html
He still runs a very successful business, what's the issue?
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Old 03-13-2013, 08:14 AM   #15
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Just pointing out the facts, sir. Also should point out the blatant hypocrisy of liberals who turn a blind eye to CEO's that have views that align with their own. This guy and Steve Jobs are prime examples of people that can act one say, vote and support another and become folk heroes.
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Old 03-13-2013, 09:43 AM   #16
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Their lean thinking makes them competitive and able to pay well which should be the example for others. They show its possible and hopefully other retailers learn from them. But, other sectors may not be able to operate under the same model because of the nature of their business.

Costco may be able to afford to pay $45k a year for a non-skilled position but others can not... Read: small Businesses. What's good for the golden goose of retail isn't good for the gander.
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Old 03-13-2013, 09:50 AM   #17
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http://www.huffingtonpost.com/2013/0...n_2859250.html



A job creator that actually gets it.
Explain this to me then...if he thinks paying his employees more money (for whatever reason) is such a good idea, why doesn't he do it on his own? Why does he need the government to force him to do it?

Thought so.
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Old 03-13-2013, 10:28 AM   #18
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Explain this to me then...if he thinks paying his employees more money (for whatever reason) is such a good idea, why doesn't he do it on his own? Why does he need the government to force him to do it?

Thought so.
He does do it on his own, paying his employees -- who he obviously values as more than cold business assets to be squeezed however possible -- very good and fair wages for their work. Result, happy and highly motivated staff > excellent service and productivity > highly satisfied customers > great sales > great profits > everyone benefits. These seem like excellent reasons for paying a good wage and treating one's employees with respect, fairness and decency, concepts that seem lost on far too many of today's managers and business leaders.

As mentioned, I don't think he's supporting a higher minimum wage so much for his own workers, who he already treats very well, but for workers in general. The great success of his company shows that decent pay is not necessarily the ruination of a well-run company nor that highly bloated wages and pay packages are necessary for excellent management and leadership of said company. To repeat casino is no lie stats:
"Today most CEOs take home an average of 380 times more that their employees. In 1973 the average CEO received 20 times their average worker's pay. In 1980, when the middle-class had peaked, the average CEO received 42 times their average worker's pay. Today Costco's CEO only earns about 28 times his average employee."
I think today's CEO/Board of Directors relationships has become far too insular, incestuous and basically corrupt in that they are more interested in protecting their own shared interests (absurdly high pay packages for each other) than the long term health, success and viability of either their own companies, much less the overall American economy, and far much less that of most Americans.

I find it hard to believe that the average CEO is now, somehow, 19Xs more productive/valuable/smart/whatever than one from 1973. That they get paid, relatively speaking, 19X's more is, I think, a clear indication of the corruption, whether legal or simply moral, of the upper echelons of today's business community. Jelinik I think is one of the few who actually is earns and is worth what he is paid, underpaid even but he doesn't seem quite so relentlessly driven by self-enrichment above all else as are so many of his peers.

Personally, I think corporate pay scales should be far more tied to average and overall earnings from top to bottom, with perhaps some set base wage, a base profit incentive added above that, and then all wages set to some X-amount of that, with perhaps the new hire getting 1X that base package and the CEO getting maybe 20-30X, max, of whatever that is, tying everyone's own success and fates together to the overall success of the company.
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Old 03-13-2013, 09:54 AM   #19
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Explain this to me then...if he thinks paying his employees more money (for whatever reason) is such a good idea, why doesn't he do it on his own? Why does he need the government to force him to do it?

Thought so.


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Originally Posted by The Article You Didn't Read

"At Costco, we know that paying employees good wages makes good sense for business," Jelinik said in a statement last week. "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."

Costco is known for paying its workers wages that are generally above average for the retail industry. An average Costco worker made about $45,000 in 2011, according to Fortune. That's compared to an average of about $17,486 per year for a worker at comparable Walmart-owned Sam's Club.
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Old 03-13-2013, 10:02 AM   #20
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I didn't disagree. I completely understand his logic, and agree 100% with it. Employee turnover costs money. My point was to the OP, who supports the government mandate for it, which REMOVES THE ENTIRE POINT the CEO is making. If everyone gets a raise, then the effect is removed.

Furthermore, if you agree with the CEO, then you will see that free market works. Costco employees are paid more, are happier, and thus, more efficient...result? Profit. This is not a secret and companies should all do this, as it makes perfect sense. However, the government forcing the raise would negate this entire principle.
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