chapter 17
....................................................................................................................................................REMUNERATION:
PAY EFFECTS
AT WO R K
....................................................................................................................................james p. guthrie
17.1 Introduction
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Costco Wholesale Corporation is a ‘warehouse retailer’ with over 60 , 000
employees working in stores spread across the USA, Canada, Taiwan, Japan,
Mexico, and the UK Costco is the market leader in the US warehouse retailer
segment, but they have aWerce rival in Sam’s Club, a division of Wal-Mart Stores.
While Costco and Sam’s Club share a number of similarities, their approach to
employee compensation is strikingly diVerent. The average hourly wage of
Costco’s full-time employees is 42 percent higher than the average hourly
wage of Sam’s Club employees. In addition, Costco’s health care, retirement,
and other beneWts are also markedly superior. Although the data speciWcto
Sam’s Club is not available, Wal-Mart covers 66. 6 percent of employee health
care premiums while Costco pays 92 percent. Jim Sinegal, Costco’s CEO,
maintains, ‘This is not altruistic. This is good business.’ Costco’s CFO agrees,
saying, ‘Paying higher wages translates into more eYciency.’ Deutsche Bank
Wnancial analyst Bill Dreher disagrees with these sentiments: ‘At Costco, it’s
better to be an employee or a customer than a shareholder.’ Emme KozloV,an