Paying workers more is better for everyone

[Irbis]

It takes a lot more than just unhappy workers to make a revolution, otherwise there would have been more than a few during the last hundred years in the US alone.

Well, to be fair, last time there was serious worker revolt in USA it was bombed by US Army bombers and artillery, making it pretty serious disincentive to try again.

[Spoonist]

Actually the vast majority of revolutionary movements in the US has been conservative&/religious&/right wing. This is heavily linked with terrorism in the USA, which is also dominated by a vast majority of conservative&/religious&/right wing motivations. In europe you can add separatists to the list.
A left wing/workers revolutionary movement in the USA is infeasable. It would not only face opposition from governement but also a huge one from their fellow citizens of the conservative persuation.

Just look at the occupy crack down, it was not only on the occupy sites themselves but also on the surrounding democracy movements supporting occupy. Plus you had a very strong anti movements and confrontation from conservatives. That wasn't even a revolutionary movement but a pretty standard democratic one.

So suggesting that a workers revolutionary movement would gain any traction in the US is completely missing the cultural context.

[Darth Wong]

Not to mention the flow on benefits of millions of people having more money to put into the economy (especially the local economy), reducing the REAL AND GENUINE MENTAL AND PHYSICAL ILLNESS RISKS associated with poverty and also reducing the likelihood of long term dependence on welfare and intergenerational poverty factors.

It's almost as if a genuine living wage is something that every sane nation had legislated for.

Money is a meaningless metric, rather allocating more resources towards workers makes them more productive. Regardless, these workers are receiving more resources then their ancestors have. Maybe they should try consuming less. I don't own an I-Pod.

Money is how you quantify resources. It is hardly meaningless. And those resources are far more necessary in a modern high-tech economy than a primitive agrarian one, so your comparison of modern workers to primitive ones is nonsensical. A modern worker needs training and experience in order to negotiate with an employer. Training costs money, and experience requires prior employment. Farmers didn't have to worry that they were handicapped by a lack of certified credentials 200 years ago.

It's not about toys and consumption; it is about a system where you know that if you fall below a certain level, you have no status in the eyes of society and everything (even your lifespan and the lives of your children) will be harshly impacted as a result. People in wealthy civilized societies should not have to fear falling off a cliff.

Besides, these companies will get what's coming to them. Low worker morale = higher theft, lower productivity, eventual socialist revolution

Don't be an idiot. Violent revolution is a horrible solution to social problems.

[Starglider]

So suggesting that a workers revolutionary movement would gain any traction in the US is completely missing the cultural context.

In addtion to the 'cultural context', the US just doesn't have the demographics for it. A 'workers revolution' requires a proportionately large number of discontent young male (the classic revolution fodder) who see better pay/conditions for their labor as their main means of advancement. The US has a vast and growing army of obese baby boomers on pensions / medicare / social security / disability who care much more about Low Low Prices at WalMart than about the scrappy degenerate youth of today being able to make a living wage, plus the world's largest fraction of young males incarcerated (with many others looking to criminal gangs rather than labor unions as their best hope for getting ahead).

[Slacker]

How Costco Became the Anti-Walmart

Relevant to the OP. Also reaffirms why I like shopping at Costco. That, and the cheese selection. Mmm. Cheese.

*edit* Screwed up link dressing.

[Guardsman Bass]

I shop there, too, but because of the prices. That said, Costco's core market may be somewhat different from Wal-Mart's. Take a look at this paragraph in that article:

In the United States, its stores average $121 million in sales annually, far more than the $70 million for Sam's Clubs. And the average household income of Costco customers is $74,000 - with 31 percent earning over $100,000.

[Lord Zentei]

Crap, Slacker beat me to mentioning Costco. Serves me right for not posting it right away.

Oh well, here's another article:

What's the secret behind building a multibillion-dollar business empire that has instant name recognition? You might think it depends on a CEO who's ruthlessly competitive and drives company workers relentlessly. Well, Jim Sinegal isn't your typical CEO, and Costco, the business he founded, is not your typical store.

While it may be unorthodox, nobody could say Sinegal's business strategy isn't working. About 45 million shoppers visit Costco, and for some of them the experience borders on the spiritual. Shopper Jose Davila put it this way: "This is the best place in the world. It's like going to church on Sunday. You can't get anything better than this. This is a religious experience."

And Sinegal isn't just interested in taking care of his customers. He wants to take good care of his employees.

"It's a good place to work; they take care of us," said one Costco employee who spoke with "20/20" correspondent Bill Ritter.

And when Sinegal walks into one of his stores, he's treated like a celebrity. His employees seem to genuinely like him. And the feeling's mutual.

"The employees know that I want to say hello to them, because I like them," he said.

Just Jim

Unlike the stereotypical CEO, Sinegal doesn't try to distance himself from his employees. He even wears a name tag -- but not one that says "Jim, the CEO" or "Jim, Costco Founder." It just says Jim. He easily could be mistaken for a stock clerk.

His philosophy is simple, he said. "We have said from the very beginning: 'We're going to be a company that's on a first-name basis with everyone,'" he said.

That also includes answering his own phone. "If a customer's calling and they have a gripe, don't you think they kind of enjoy the fact that I picked up the phone and talked to them?" he said.

The son of a steelworker, Sinegal began in the warehouse business, loading mattresses. Sinegal's working-class values are ingrained in Costco's corporate culture. That may in fact be the key to the company's success

"Our code of ethics says we have to obey the law. We have to take care of our customers, take care of our people. And if we do those things, we think that we'll reward our shareholders," Sinegal said.

He certainly has rewarded them. This year's sales total more than $52 billion from 462 stores in 37 states and eight countries. Costco is now the nation's fourth-largest retailer, selling everything from crab legs to flat-screen TVs to caskets -- and even a Picasso painting.

Part of Costco's genius is its simplicity. A typical Wal-Mart stocks more than 100,000 items, Costco stocks only 4,000. Stocking only high-quality goods, Costco attracts the most affluent customers in discount retailing -- with an average income of $74,000.

Ray Dinari, a criminal defense lawyer and loyal Costco shopper, said: "I think I spend over $20,000 -- $25,000 a year buying all my products here from food to clothing -- except my suits. I have to buy them at the Armani stores."

The secret to Costco's profit is simple, too. Its margin on each item isn't very high -- but Sinegal says they make it up on volume. To give you an idea of the incredible volume, Costco sold 90,000 karats of diamonds and 26 million rotisserie chickens in 2004.

Costco is also the largest seller of fine wines in the world. And during this holiday season, it will sell $16 million worth of pumpkin pies.

Rewarding Loyalty

Perhaps part of Sinegal's success is how much he enjoys his work. "This is almost like show business. I mean, every day you're opening up and it's show time," he said.

And Sinegal is the tireless show producer, managing from the road, hopping on the corporate jet, and visiting up to a dozen Costco stores a day.

"No manager and no staff in any business feels very good if the boss is not interested enough to come and see them," he said.

Sinegal's relentless attention to detail is legendary. Nothing misses his eye, and by the way they rave, you'd think the customers were paying for the privilege to shop there.

Actually, they are. Costco shoppers pay at least $45 a year for store membership and shopping privileges. Multiply that by almost 25 million members, and that's more than $1 billion.

"With that membership fee, you in essence lock them into shopping with you. You build that loyalty," Sinegal said.

And Sinegal says he's also built a loyal work force. In fact, Costco has the lowest employee turnover rate in retailing. Its turnover is five times lower than its chief rival, Wal-Mart. And Costco pays higher than average wages -- $17 an hour -- 40 percent more than Sam's Club, the warehouse chain owned by Wal-Mart. And it offers better-than-average benefits, including health care coverage to more than 90 percent of its work force.

Costco doesn't have a P.R. department and it doesn't spend a dime on advertising. There's a real business advantage to treating employees well, Sinegal said. "Imagine that you have 120,000 loyal ambassadors out there who are constantly saying good things about Costco. It has to be a significant advantage for you," he explained.

Many Costco workers have been with the company since it was founded in 1983. Once hired, they rarely leave.

Susan MaConnaha, a Costco vice president and head baker, said working for Costco is a family affair. "My whole family works for Costco, my husband does, my daughter does, my new son-in-law does," she said.

And Sinegal rewards that loyalty. "We promote almost 100 percent from within our company. We have guys who started pushing shopping carts out on the parking lot for us who are now vice presidents of our company," he said.

In an era when many CEOs are seen as greedy and sometimes corrupt, Sinegal is proving that good guys can finish first -- and without all the corporate frills. Sinegal even sends out his own faxes from his bare-bones office-without-walls at company headquarters near Seattle. But the most remarkable thing about Sinegal is his salary -- $350,000 a year, a fraction of the millions most large corporate CEOs make.

"I figured that if I was making something like 12 times more than the typical person working on the floor, that that was a fair salary," he said.

Of course, as a co-founder of the company, Sinegal owns a lot of Costco's stock -- more than $150 million worth. He's rich, but only on paper.

Nell Minow, editor and founder of the Corporate Library and an expert on corporate governance, said she was shocked to discover that Sinegal's employment contract is only a page long. "I would love to clone him," she said.

"Of the 2,000 companies in our database, he has the single shortest CEO employment contract. And the only one, which specifically says, he can be -- believe it or not -- 'terminated for cause.' If he doesn't do his job, he is out the door," Minow said.

Sinegal admits that "paying high wages [to his employees] is contrary to conventional wisdom."

And conventional wisdom in this case comes from Wall Street. Analysts seem to be the only critics of Costco and Sinegal. They think the company could make even more money if it paid its workers less -- like Wal-Mart does.

Sinegal is unfazed by his critics. "Wall Street is in the business of making money between now and next Tuesday," he said. "We're in the business of building an organization, an institution that we hope will be here 50 years from now. And paying good wages and keeping your people working with you is very good business."

What Sinegal has proven is that a company doesn't have to be ruthless. Being humane and ethical can also make you money.

[Darth Wong]

It's too bad that we've reached the point where we have to argue that humane treatment of employees is justified by profit.

[Lord Zentei]

The point is more that it's made feasible in spite of people in power seeking profit. If the motives of profit on the one hand and of good treatment of employees on the other hand are at odds, then there's a lot less chance for us to create a prosperous society, after all.

[Guardsman Bass]

More interesting is that the Costco is doing it despite wafer-thin profit margins (it's something like 2% a year), in the face of competition from Wal-Mart, and while being a publicly held company where the share-holders endlessly bitch about it despite the stock continuing to rise. Companies are usually more generous when the margins are more generous, or the competition not so hot.

All of which makes me worried that if the stock price eventually does stagnate, the share-holders will fire the CEO in question and hire someone who will come in and piss away all the goodwill for the share of jacking up the stock price for a short period of time by cutting costs.

[Sea Skimmer]

Walmart is one word, and it aims for about 3% profit margin itself. But Costco succeeds in large part because it deliberately limits its business by limiting choice so it needs fewer workers for handling the product, while cutting out some extra costs like no bags, and even more warehouse like conditions then a Walmart. They also limit paying with credit cards, which is normally a 3-4% loss for the seller. It remains to be seen is Costco can keep growing with restrictions like that. already we've started to see the limits of Walmart growth which is why the stock price has gone down, a lot of the new stores aren't performing like the old ones because its not like Walmart was dumb when choosing locations for its earlier stores. Best spots are not just taken, the regions are saturated. They've also begun to have publicized issues with understaffed stores wasting products they can't stock. That isn't an issue at Costco, but that's why Costco is trying to tell you pallets of ramen and not bananas.

[Slacker]

Erm, you can buy bananas in Costco. The key to Costco isn't that they have a limited array of items so much as they have only a handful of brands of those items-say, for example, two or three brands of toothpaste as opposed to 15. Cuts down on costs dramatically.

And Mike, it is a damn frigging shame, but unfortunately it seems like we have to talk in these terms to get any headway.

[ryacko]

Regardless, these workers are receiving more resources then their ancestors have. Maybe they should try consuming less. I don't own an I-Pod.

Well, there I stood minding my business and there was this, like, this tingling sensation that some idiot would once again begin screaming about how it is all the fault of the workers. And then ryacko jumped up and shouted, proud as fuck: "A hundred years ago, working class families could expect to have six kids and lose three of them to malnutrition or illness. Now they no longer die like flies, so any problems are their fault." And I was, like, "WTF dude? There are things between starving to death and being satisfied with your life. My oven is literally smarter than you because he (I call it Jerry) can work in more than two settings."

Workers don't just want the golden egg they receive, which improves in quantity and quality each day, they want to kill the goddamn goose.

[Darth Wong]

Workers don't just want the golden egg they receive, which improves in quantity and quality each day, they want to kill the goddamn goose.

Utter nonsense. Even if you think unions are bad, it is ridiculous to think that they actually want to destroy their own source of income.

This is just mindless tribal fight rhetoric, since you must realize that it cannot be literally correct (unless, of course, your cognitive limitations are so severe that you actually do think it is literally correct).

[ryacko]

Workers don't just want the golden egg they receive, which improves in quantity and quality each day, they want to kill the goddamn goose.

Utter nonsense. Even if you think unions are bad, it is ridiculous to think that they actually want to destroy their own source of income.

This is just mindless tribal fight rhetoric, since you must realize that it cannot be literally correct (unless, of course, your cognitive limitations are so severe that you actually do think it is literally correct).

Did you just literally interpret my analogy?

Unions want to maximize their share of surplus value from the means of production, I think many could agree on that. But by maximizing their share through wages and pensions, they are reducing the profitability of the company, the viability of the company, and are increasing future liabilities, which may not be able to be covered.

[Esquire]

So how else would you like them to do it? A union that doesn't act to improve conditions for its members doesn't have much of a point ,after all. Companies are not as important as people.

[ryacko]

So how else would you like them to do it? A union that doesn't act to improve conditions for its members doesn't have much of a point ,after all. Companies are not as important as people.

Neither are chickens.


I would agree that unions are important.
If we didn't have fire codes, OHSA, building codes, where the homeless weren't as wealthy as poor Bangladeshis (who have to pay for second-hand food).

[Darth Wong]

Workers don't just want the golden egg they receive, which improves in quantity and quality each day, they want to kill the goddamn goose.

Utter nonsense. Even if you think unions are bad, it is ridiculous to think that they actually want to destroy their own source of income.

This is just mindless tribal fight rhetoric, since you must realize that it cannot be literally correct (unless, of course, your cognitive limitations are so severe that you actually do think it is literally correct).

Did you just literally interpret my analogy?

No, I did not. If I literally interpreted your analogy, I would have concluded that you were referring to a real, physical golden goose.

Learn English, retard. Do you even know what "literal" means?

[Darth Wong]

As for the other argument ...

Unions want to maximize their share of surplus value from the means of production, I think many could agree on that. But by maximizing their share through wages and pensions, they are reducing the profitability of the company, the viability of the company, and are increasing future liabilities, which may not be able to be covered.

You're incorrect. Unions want to optimize their share of surplus value from the means of production, not maximize it to the point of destroying it. Nobody wants to render his own employer unviable; you still insist on interpreting their motives in a bizarre and childish way, as if they are actively intent on destruction. They are often foolish, and they are certainly selfish (although you could say that about all parties in a market trading system), but that does not mean they actually want to destroy their own source of income.

The problem is that they don't believe executives when they say that they cannot afford to pay more, because executives have a long history of lying about precisely that. Also, they can face internal political pressures which might cause people to make bad decisions.

[ryacko]

Utter nonsense. Even if you think unions are bad, it is ridiculous to think that they actually want to destroy their own source of income.

This is just mindless tribal fight rhetoric, since you must realize that it cannot be literally correct (unless, of course, your cognitive limitations are so severe that you actually do think it is literally correct).

Did you just literally interpret my analogy?

No, I did not. If I literally interpreted your analogy, I would have concluded that you were referring to a real, physical golden goose.

Learn English, retard. Do you even know what "literal" means?

No need to lose your cool over an online debate, but I do hope we are both speaking English, English being the language we both comprehend as the name of the language we are using. The question of how you are interpreting my words is quite pertinent.

Evidently I didn't mean it literally, as if I did mean it literally, it would be exactly as you have said. I can't see how you would think that insulting someone while you go purposefully misinterpret my own words (I would hope you are capable of properly interpreting my words and I assume that you decided not to interpret my words). It is not tribal fight rhetoric. It is a statement of the obvious, unions represent workers interests. Workers are interested in themselves, not the long term growth of a company.

Workers in general want a higher purchasing power. The economy is limited, either other workers have a reduced purchasing power (from higher prices), and/or there is less investment (from less profits). If there is less investment, you have less future growth. Causing a potentially reduced future purchasing power or less investment.

[Darth Wong]

No need to lose your cool over an online debate ...

No need to bullshit in an on-line debate either, yet you keep doing it.

Evidently I didn't mean it literally, as if I did mean it literally, it would be exactly as you have said. I can't see how you would think that insulting someone while you go purposefully misinterpret my own words (I would hope you are capable of properly interpreting my words and I assume that you decided not to interpret my words). It is not tribal fight rhetoric. It is a statement of the obvious, unions represent workers interests. Workers are interested in themselves, not the long term growth of a company.

You can complain that I am misinterpreting your intent, but I am not misinterpreting your words. The word "want" has a very well-known meaning, and you accused unions of wanting an outcome which would be harmful to everyone including themselves. Moreover, you keep using this language over and over, despite being called on its obvious falsehood.

[ryacko]

Odd. Those two posts were both posted within a minute of each other.

You can complain that I am misinterpreting your intent, but I am not misinterpreting your words. The word "want" has a very well-known meaning, and you accused unions of wanting an outcome which would be harmful to everyone including themselves. Moreover, you keep using this language over and over, despite being called on its obvious falsehood.

So you admit to at least glossing over my meaning?

Let me rephrase this. The workers desires through cause and effect will ultimately result in a undesirable result.
Better?

[Esquire]

So how else would you like them to do it? A union that doesn't act to improve conditions for its members doesn't have much of a point ,after all. Companies are not as important as people.

Neither are chickens.


I would agree that unions are important.
If we didn't have fire codes, OHSA, building codes, where the homeless weren't as wealthy as poor Bangladeshis (who have to pay for second-hand food).

Ah, I see. You can of course provide evidence that companies will not, in the absence of unions (and often with them), immediately screw over employees in the name of a quick profit. Naturally, you can demonstrate that the government agencies dedicated to policing companies are adequately staffed, funded, and non-corrupt, and that the regulations they enforce are up to date and sufficient to guarantee not just a vaguely non-lethal working environment, but one that is in line with the prosperity and values of the country as a whole.

We (assuming you're American) don't live in Bangladesh. We have different living costs and different expectations of quality of life, and pointing out that things can always be worse is stupid both rhetorically and logically.

[Darth Wong]

Odd. Those two posts were both posted within a minute of each other.

You can complain that I am misinterpreting your intent, but I am not misinterpreting your words. The word "want" has a very well-known meaning, and you accused unions of wanting an outcome which would be harmful to everyone including themselves. Moreover, you keep using this language over and over, despite being called on its obvious falsehood.

So you admit to at least glossing over my meaning?

I didn't gloss over anything. The fact that your words meant something other than what you say you intended is entirely YOUR fault.

Let me rephrase this. The workers desires through cause and effect will ultimately result in a undesirable result.Better?

Better. Of course, it's also a pointless statement: allowing any party's desires to triumph in an unfettered fashion will always lead to an undesirable result.

[ryacko]

I didn't gloss over anything. The fact that your words meant something other than what you say you intended is entirely YOUR fault.

The point is moot when you make an argument based upon an incorrect interpretation.
It is up to you to ask for clarification before making an ass out of yourself.