# Coporate Race to the bottom finally ending (aka Walmart sucks) **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [April 17, 2013, 3:58pm UTC](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943 "2013-04-17T15:58:17Z")\ **Posts on this page:** 6\ **Page:** 2
**Author:** ![Doctor\_Jackson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/doctor_jackson/32/32_2.png) [@Doctor\_Jackson](https://boards.straightdope.com/u/Doctor_Jackson)\ **Post date:** [April 22, 2013, 5:31pm UTC](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943/21 "2013-04-22T17:31:48Z")
> [@Voyager](#): > > Sigh. From the linked article (this is a quote from BusinessWeek) > Another article on this mentioned that Costco increased employment in line with the increase in stores. And of course one of the points of the article is that the decrease in staffing has meant that WalMart has not been able to keep its shelves stocked, which has hurt sales. > > By the way [here](http://pacific-human-capital.com/wal-mart-vs-costco-which-business-does-better-for-employees-and-customers/) is a table from last November, showing that Costco’s sales per square foot was over double that of WalMart back then also. Its employee turnover rate was 1/3 that of WalMart. > > If you search for Costco versus WalMart you’ll get lots of articles from lots of business publications with the same message. Sigh all you want. All I was saying was that the data given in the article, by itself, did not support the premise. You went and found other data that did. Good for you. I maintained from the beginning that I didn’t know if the premise was correct, only that the article in question stated it but gave data points that proved nothing. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 22, 2013, 7:55pm UTC](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943/22 "2013-04-22T19:55:28Z")
> [@adaher](#): > > “Labor” still loses with Costco because Costco uses substantially less of it. It’s a good way to look generous, but there’s no free lunch here. Costco hasn’t found some magic formula where they sell cheap goods, pay employees well, and still make money. They make money because they have 96,000 employees in 618 stores, which comes out to 155 employees per store. Wal-mart, by contrast, employs 2.2 million people in 10,773 stores, or 204 employees per store. Wal-mart generates $213,181 in revenue per employee. Costco generates over $1 MILLION per employee. > > I gleaned all this data from here: > > [http://finance.yahoo.com/q/ks?s=COST+Key+Statistics](http://finance.yahoo.com/q/ks?s=COST+Key+Statistics) > > [http://finance.yahoo.com/q/ks?s=WMT+Key+Statistics](http://finance.yahoo.com/q/ks?s=WMT+Key+Statistics) > > Now this high productivity/low employment model has a lot going for it aside from good PR. I’d rather have a few good employees than lots of poorly trained ones. The downside is that Costco isn’t going to be hiring the types of people who normally have trouble getting employment: high school kids, the elderly, homemakers looking to supplement household income, etc. In other words, the less productive people in the workforce who simply aren’t going to generate $1 million in productivity to justify their higher pay. I’d be interested in seeing the Sam’s Club/ Costco comparison, since the WalMart/Costco store layout is so different. Costco has fewer SKUs, the products are bigger and so easier to stock, and the food area where I hang out has simple metal shelving. The way it is supposed to work is that you and your employees improve productivity, and share the rewards. That often means fewer workers, but that is progress. I don’t think you have to be a rocket scientist to work at Costco, but paying more does get better people - and less turnover, as per what I already posted. That’s just common sense also, but a few years ago I read that Wall Street was giving them all sorts of grief for overpaying employees. Sometimes I think these big name analysts have never managed anyone and don’t get it. If you pay crap you will get less productive and motivated people. If you pay decently, and know how to hire, as Costco seems to, you will get people productive enough to generate that $1 million. It is not just retail. A long time ago Barry Boehm measured a decimal order of magnitude difference in programmer productivity and quality, and suggested that it is worth paying a bit more to get the best people. (Since there is never a decimal order of magnitude difference in pay.) ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 22, 2013, 8:00pm UTC](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943/23 "2013-04-22T20:00:13Z")
> [@adaher](#): > > Costco doesn’t put much money into its workforce though. Less than Wal-mart does. I think the real issue is that despite spending only 1/4th what Wal-mart does on labor, they make lower profit margins. There’s just no excuse for that. > > And if the Costco model was extended to the entire retail economy, the unemployment rate would be 20%. Profit margins depend on lots of other things. WalMart is excellent at logistics. They have also done a good job at exploiting manufacturing labor. Dollars per worker is the important metric in this case, since that is more under the control of labor. As for your last comment, such things have been said whenever there has been automation or efficiencies through better processes. When I started work, there was one secretary/admin for about 20 people, now there is one for over 100 people, and she is not terribly busy. The world has not ended. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 22, 2013, 8:01pm UTC](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943/24 "2013-04-22T20:01:59Z")
> [@OttoDaFe](#): > > Not conservatives in general but Wall Street seems to have its knickers in a perpetual knot over the fact that Costco puts so much money into its workforce — money that, in its NSHO, should be going to the investors in the form of dividends. If Costco could just get the same performance while paying minimum (or below) with no benefits, they reason, the world would be an ever so much better place. True a couple of years ago, but they seem to be the darlings of Wall Street now based on their stock price. They were smart enough not to listen to the analysts. ---
**Author:** ![Enkel](https://avatars.discourse-cdn.com/v4/letter/e/df705f/32.png) [@Enkel](https://boards.straightdope.com/u/Enkel)\ **Post date:** [April 22, 2013, 11:55pm UTC](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943/25 "2013-04-22T23:55:57Z")
Wal-Mart CEO’s pay jumps 14.1 percent to $20.7 million Read more: [http://www.foxbusiness.com/news/2013/04/22/wal-mart-ceo-pay-jumps-141-percent-to-207-million/#ixzz2REv9NQ8z](http://www.foxbusiness.com/news/2013/04/22/wal-mart-ceo-pay-jumps-141-percent-to-207-million/#ixzz2REv9NQ8z) ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [April 23, 2013, 4:55am UTC](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943/26 "2013-04-23T04:55:43Z")
> [@Voyager](#): > > Profit margins depend on lots of other things. WalMart is excellent at logistics. They have also done a good job at exploiting manufacturing labor. Dollars per worker is the important metric in this case, since that is more under the control of labor. > As for your last comment, such things have been said whenever there has been automation or efficiencies through better processes. When I started work, there was one secretary/admin for about 20 people, now there is one for over 100 people, and she is not terribly busy. The world has not ended. True, automation need not produce high unemployment, but that will only last so long as there remains an abundant need for low skill labor. We seem to be heading to an economy where there will be plenty of jobs for the skilled, but not too much for the unskilled. I prefer Costco’s model to Wal-mart’s, but somebody has to employ the otherwise unemployable. Plus I’m not sure you can expand Costco’s model because well-trained workforces don’t just grow on trees. Costco probably works hard to develop their people, which means they can’t just open stores willy-nilly the way Wal-mart does and then staff it with 150 warm bodies. [Previous page](https://boards.straightdope.com/t/coporate-race-to-the-bottom-finally-ending-aka-walmart-sucks/655943.md?page=1)