Kudos to Costco

GREEDY GIANT VERSUS GENEROUS GIANT

Wal-Mart is famous for the stingy pay and benefits it offers its employees. But another giant chain store, Costco, takes a different approach. Full-time workers there average $15.97 per hour, which is almost 40 percent higher than their Wal-Mart counterparts, who earn $11.52. After four years, a Costco cashier's yearly salary can rise to $44,000. The company also covers 92 percent of most of its workers' health care costs. While the industry-wide turnover rate averages 66 percent, Costco's is just 23 percent.

Costco is so unusual in its benevolence that some business gurus disapprove. "From the perspective of investors, Costco's benefits are overly generous," says retail analyst Bill Dreher, quoted in The Wall Street Journal. He thinks that the company's largesse depresses its stock value because investors are afraid its profit margins aren't as high as they could be.

But the fact is that Costco is very successful. Its five-year growth rate has been 10.1 percent annually, better than Wal-Mart's 9.8 percent. Its annual earnings were expected to rise from $41.7 billion in 2003 to $47.2 billion in 2004.

From Rob Brezsny's column