Liza
> From: "Nathan Newman" <nathanne at nathannewman.org>
> Reply-To: lbo-talk at lbo-talk.org
> Date: Wed, 4 May 2005 09:31:33 -0500
> To: <lbo-talk at lbo-talk.org>
> Subject: Re: [lbo-talk] Walmart and Costco
>
> CostCo is unionized in some areas-- which may be why it developed a model
> that could accomodate higher wages.
>
> ----- Original Message -----
> From: "Marvin Gandall" <marvgandall at rogers.com>
> To: "LBO-Talk" <lbo-talk at lbo-talk.org>
> Sent: Wednesday, May 04, 2005 7:10 AM
> Subject: [lbo-talk] Walmart and Costco
>
>
> An interesting article in today's NYT on Walmart's peonage pay system, and
> the building union-led public campaign against it. Walmart pays an average
> $9.68 an hour, compared to an average $12.28 for the retail sector as a
> whole. The average hourly wage in the US is close to $16, which is what
> workers at Costco make on average. A large percentage of Costco workers
> (82%) also have a company health plan, compared to only 48% at Walmart. The
> comparison is buried in the article, which doesn't inquire into the
> discrepancy.
>
> Is Costco unionized? If it isn't, you wouldn't expect pay/benefits to
> (voluntarily) be so much higher than at its chief rival. It competes in the
> same markets, doesn't it? What about the relative earnings and market share
> of the two companies? How does Costco withstand the inevitable pressure from
> its investors - I assume it's publicly traded - to bring its labour costs
> more into line with Walmart? Does anyone know?
>
> MG
> ------------------------------------
> May 4, 2005
> Can't Wal-Mart, a Retail Behemoth, Pay More?
> By STEVEN GREENHOUSE
> New York Times
>
> BENTONVILLE, Ark. - With most of Wal-Mart's workers earning less than
> $19,000 a year, a number of community groups and lawmakers have recently
> teamed up with labor unions in mounting an intensive campaign aimed at
> prodding Wal-Mart into paying its 1.3 million employees higher wages.
>
> A new group of Wal-Mart critics ran a full-page advertisement on April 20
> contending that the company's low pay had forced tens of thousands of its
> workers to resort to food stamps and Medicaid, costing taxpayers billions of
> dollars. On April 26, as part of a campaign called "Love Mom, Not Wal-Mart,"
> five members of Congress joined women's advocates and labor leaders to
> assail the company for not paying its female employees more.
>
> And in a book to be published this fall, a group of scholars will argue that
> Wal-Mart Stores, having replaced General Motors as the nation's largest
> company, has an obligation to treat its employees better.
>
> Among workers at Wal-Mart's 3,700 stores across the United States, the
> debate is also heating up.
>
> (snip)
>
> Labor groups and their allies are focusing on Wal-Mart because they say that
> the campaign will not just benefit its workers but also reduce the existing
> pressure on unionized competitors to reduce their own wages and benefits.
>
> "Wal-Mart should pay people at a minimum enough to go above the U.S. poverty
> line," said Andrew Grossman, executive director of Wal-Mart Watch, the
> coalition of community, environmental and labor groups running the series of
> ads criticizing Wal-Mart. "A company this big and this wealthy has the
> ability to pay higher wages."
>
> H. Lee Scott Jr., Wal-Mart's chief executive, vigorously defends his
> company, arguing that wages are primarily determined by market forces and
> that Wal-Mart pays more than most retailers and provides better
> opportunities for advancement.
>
> "If people tell you that Wal-Mart is leading the so-called 'race to the
> bottom' in terms of job quality or pay, they're not only wrong, they're dead
> wrong," he said to journalists at a company-sponsored conference here in
> April, the first time Wal-Mart has gone out of its way to invite a number of
> reporters to its headquarters to hear its views. "We are instead creating a
> better workplace with more opportunity and more benefits than have been
> available in retail."
>
> Mr. Scott contends that the critics, including competitors, are defenders of
> an outdated status quo, intent on upholding a retailing system full of
> inefficiency and inflated prices.
>
> (snip)
>
> Wal-Mart says its full-time workers average $9.68 an hour, and with many of
> them working 35 hours a week, their annual pay comes to around $17,600. That
> is below the $19,157 poverty line for a family of four, but above the
> $15,219 line for a family of three.
>
> Wal-Mart critics often note that corporations like Ford and G.M. led a race
> to the top, providing high wages and generous benefits that other companies
> emulated. They ask why Wal-Mart, with some $10 billion in profit on about
> $288 billion in revenue last year, cannot act similarly.
>
> "Henry Ford made sure he paid his workers enough so that they could afford
> to buy his cars," said William McDonough, executive vice president of the
> United Food and Commercial Workers union. "Wal-Mart is doing the polar
> opposite of Henry Ford. Wal-Mart brags about how its low prices help poor
> Americans, but its low wages are helping increase the number of Americans in
> poverty."
>
> Mr. Scott argues that retailers, with narrow profit margins, face a
> different competitive situation and cannot afford to be as generous to their
> workers as automakers and other capital-intensive companies.
>
> "Some well-meaning critics," he said, "believe that Wal-Mart, because of our
> size, should play the role that General Motors played after World War II,
> and that is to establish the post-world-war middle class that the country is
> so proud of. The facts are that retailing doesn't perform that role in the
> economy as G.M. does or did. Retailing doesn't perform that role in any
> country in the world."
>
> Many of those assailing Wal-Mart argue that the company can, and should, pay
> its workers at least $2 more an hour and add $1 or $2 an hour beyond that to
> improve its health benefits. A Harvard Business School study found that
> Wal-Mart paid $3,500 a year for each employee for health care, while the
> typical American corporation paid $5,600.
>
> If Wal-Mart spent $3.50 an hour more for wages and benefits of its full-time
> employees, that would cost the company about $6.5 billion a year. At less
> than 3 percent of its sales in the United States, critics say, Wal-Mart
> could absorb these costs by slightly raising its prices or accepting
> somewhat lower profits.
>
> But company executives dismiss such proposals, saying they would largely
> wipe out Wal-Mart's profit or its price advantage over competitors. Wal-Mart
> had a profit margin on sales last year around 3.5 percent. If "we raised
> prices substantially to fund above-market wages, as some critics urge," the
> company argued in a recent two-page ad in The New York Review of Books,
> "we'd betray our commitment to tens of millions of customers, many of whom
> struggle to make ends meet."
>
> Full: http://www.nytimes.com/2005/05/04/business/04wages.html?th&emc=th
>
>
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