[Vision2020] Costco Preferred Over Wal-Mart

[Joe Campbell]

Gary,

Notice that your story turns out exactly the same regardless of how much money Wal-Mart pays its employees. Eventually it does translate into a bad thing. Let me try to illustrate the point.

Suppose Costco pays its employees a minimum of $10 an hour and Wal-Mart pays its employees a minimum of $9, in an effort to keep competitive. Sounds like a win-win situation here. Suppose instead Wal-Mart pays its employees $8. This doesn't sound so bad either and it represents your second option: Wal-Mart employs "the lesser skilled members of the workforce that Costco rejected." Still a win-win situation.

But once we notice that Wal-Mart is selecting folks who have no other work option we realize that they have no motivation at all to stop at $8. Why not go to $6, or $4, or $2, or $1? In an entirely "free market," there is no incentive for Wal-Mart to stop at any particular point. For any dollar amount that it might stop, your point still holds: they are employing "lesser skilled members of the workforce" who can't get a job anywhere else. Hey, $1 is better than nothing, right?

Thankfully the market is not entirely free and there are minimum wage laws. In Idaho the minimum wage is $5.15 an hour, so Wal-Mart is prevented by law from going any lower than that. At this point the numbers start to matter, so here is an interesting quote from the web (I can't recall the website but you can google to quote to find out if you'd like):

"Costco wouldn't have to raise salaries with Kerry's proposal to increase the minimum wage to $7 an hour, from $5.15 now. It already pays hot-dog vendors as much as $16 an hour, and the lowest wage it pays is $10 an hour."

The difference between $10 and $5.15 per hour is significant. If these workers are doing more or less the same work, then it seems as if Wal-Mart is not paying its fair share. Until the minimum wage is raised to correct the problem I think it is wise to discourage companies that are motivated purely by profit considerations from locating in our fine state.

--
Joe Campbell

---- "g. crabtree" <jampot at adelphia.net> wrote: 

=============
Why don't we all impose an enormous strain on our imaginations and presume 
that everything Mr. Reed presented in his letter is correct. I'll give you 
all a moment to bring that imposing struggle under control. Now the question 
that needs to be asked is so what? The fact of the matter is that Wal-Mart 
has expressed a desire to build in the area and Costco hasn't. Now lets say 
that Costco was interested in expanding into the Moscow/Pullman area and 
that they did indeed provide a workplace that was twice as wonderful as 
Wal-Mart. Since the management of WM can't round up employees at gun point 
it would seem that they would have to be competitive to attract warm bodies 
or, they would employ the lesser skilled members of the workforce that 
Costco rejected. Either way there would be greater employment opportunities 
in the area, not to mention increased economic vitality. How, exactly does 
that translate into a bad thing?

Perplexed,
gc
----- Original Message ----- 
From: "Tom Hansen" <thansen at moscow.com>
To: "Joan Opyr" <joanopyr at moscow.com>; "'Moscow Vision 2020'" 
<vision2020 at moscow.com>
Sent: Tuesday, August 29, 2006 6:23 PM
Subject: [Vision2020] Costco Preferred Over Wal-Mart


> >From today's (August 29, 2006) Moscow-Pullman Daily News with a special
> thanks to T.V. Reed of Pullman.
>
> -------------------------------------------------------
>
> Costco preferred over Wal-Mart
>
> Two of the handful of fanatical Wal-Mart advocates in town have recently
> written that Costco would never come to Pullman because our per capita
> income is lower than places like Clarkston where the store has located. 
> But
> anyone with basic economic understanding knows the per capita income for
> Pullman (and Moscow) is skewed downward by the presence of so many 
> students
> whose actual spending power, thanks to parents, is far beyond what income
> would indicate.
>
> The median income for folks 25 and over in Pullman is $50,416. That figure
> represents more than 9,000 people - more than the entire population of
> Clarkston with its per capita income of $29,100. There is no reason why
> Costco and many other stores won't find this area attractive. Attempts to
> convince us that only Wal-Mart would be interested in Pullman are 
> misleading
> and denigrate our considerable attractiveness as a community.
>
> What Costco has proven definitively is that Wal-Mart's elitist model of 
> low
> wages, meager, expensive benefits, and vicious anti-union activity is not
> necessary to big-box success. One local Wal-Mart booster traveled to
> Arkansas to get the "facts" about the corporation, and was apparently 
> wowed
> to talk to big boss Lee Scott himself who told him what a wonderful 
> company
> he runs.
>
> As any competent journalist or researcher for government, business or
> academia knows, you never take at face value the self-reporting of the
> research subject. Digging for the facts beneath Wal-Mart's claims and
> comparing them to rival Costco reveals a clear, objective contrast. Costco
> has twice as many employees enjoying health benefits, and the company pays
> for 90 percent of those benefits as opposed to 60 percent for Wal-Mart.
> Starting salaries at Costco average $3-$6 per hour higher than at 
> Wal-Mart.
> Not surprisingly, Wal-Mart has twice the employee turnover rate of Costco.
>
> These differences belie Wal-Mart's claims, and prove their elitist model,
> where wealth supposedly trickles down from the Waltons (five of America's 
> 10
> richest individuals), can be replaced by one where workers are paid fairly
> and let their money trickle up into the economy.
>
> T.V. Reed, Pullman
>
> -------------------------------------------------------
>
> Seeya round town, Moscow.
>
> Tom Hansen
> Moscow, Idaho
>
> "If I wanted to overhear every tedious scrap of brain static rattling 
> around
> in your head, I'd read your blog."
>
> - Bill Maher
>
>
> =======================================================
> List services made available by First Step Internet,
> serving the communities of the Palouse since 1994.
>               http://www.fsr.net
>          mailto:Vision2020 at moscow.com
> =======================================================
> 


=======================================================
 List services made available by First Step Internet, 
 serving the communities of the Palouse since 1994.   
               http://www.fsr.net                       
          mailto:Vision2020 at moscow.com
=======================================================