[grundle]

Take a look at the part of the chart in the article that says "Revenue per employee." It says that Costco has three times as much revenue per employee as Wal-Mart. This means that the average Costco employee is three times as productive as the average Wal-Mart employee. If Wal-Mart were to pay the same wages as Costco, it would require that Wal-Mart fire 2/3 of its employees, and that each of the remaining employees do 3 times as much work as what they are doing now. This is why wal-Mart will never pay as much as Costco.

[Paladin2]

Costco has a very limited inventory.

[supercat]

The fundamental effect of a minimum wage is to remove from the marketplace people whom it would force to charge more for their labor than it was worth. This will force those who would have hired the people who have been removed from the marketplace to instead hire some people whose labor is worth more (likely hiring a smaller number of more-productive people). The labor of people who are still be worth hiring will be in greater demand, and such people will be able to charge more for it. On the other hand, given that more welfare dollars will be required to support those who have been made unemployable, and given that those dollars will have to come from somewhere, it’s doubtful that even those who are nominally helped by the minimum wage laws will actually benefit.

[nascarnation]

A far better comparison would be Sam’s Club vs Costco.

[DuncanWaring]

A better comparison would be sales-per-employee between Costco and the Sam’s Club division of Wal-Mart.

The nature of those two operations drives a larger revenue-per-employee-action than the “Wal-mart” stores, even the “Super WalMart” stores.

In the latter two, shelf-stockers can spend a lot of time putting inexpensive stuff on shelves, and cashiers spend a lot of time checking-out a lot of inexpensive stuff; at a Wal-mart store, a cashier may have to handle a dozen individual cans of soup; at Costco/Sam’s Club the cashier handles a single case of six or eight cans.

[max americana]

Costco is owned by a lib Dem.

[Jeff Chandler]

They have entirely different business models.

[afraidfortherepublic]

This means that the average Costco employee is three times as productive as the average Wal-Mart employee.

No it doesn't. It means that Costco is selling higher end goods.

FWIW, I am a member of bth Costco and Sam's Club (Walmart's equivalent). I shop both stores.

Costco is closer and in a better neighborhood; but I prefer Sam's because it carries the goods I need for the office, and the help and other customers are so much nicer. Sam's hours are better too.

Seriously.

[Second Amendment First]

Thanks for posting. I find Megan McArtle to be a very thoughtful and prolific writer.

As others have noted, Costco is a membership club that carries higher end products and limited inventory. They are located close to, and cater to, higher income areas. Their customers buy only certain items there.

One additional benefit to Costco is that being a warehouse club, they have a much smaller shrinkage due to theft, because of the membership required to enter the store, and the limited number of small higher priced goods that are typically targeted by shoplifters such as cosmetics.

The whole argument is a fraud by the usual leftists looking desperately to justify their arguments.

[WVKayaker]

... It says that Costco has three times as much revenue per employee as Wal-Mart. This means that the average Costco employee is three times as productive as the average Wal-Mart employee. ...

Revenue is only gross sales number. It does not reflect the reason for business---PROFITS! Also, which company contributes more to the economy? I would suggest that it is the one that rewards more back to it's investors, and employees more people! Which company has more customers because of their commitment to low prices?

From Ask.com- What is the annual profit at Walmart? 15.6 billion. (2.2 million employees.)

From Money.cnn.com- Costco Annual profit (last year), $1.7B. (160,292 full and part-time employees)

[SeminoleCounty]

Costco sells so much in bulk that it can have such per-employee output

Fact is that there are companies who are quite successful and can compensate employees well for it. A company that invests in their people get a nice return

Another company that compensates employees well is Publix, the grocery store chain in the SE. Publix is employee-owned and has some sweet retirement plans that keep their employees long term

WalMart can only base their success on low prices based on bad Free Trade deals. The WalMart formula will eventually blow up as there will not be enough well paid folks to continue shopping at WalMart. In many areas WalMart survives solely on folks on some sort of government assistance

[dfwgator]

[CdMGuy]

We (wife and myself) shop at Costco, TJs, WalMart and Ralphs Supermarket, the California division of Kroger.

There is no comparison among these four stores except between Ralphs and WalMart.

We have a limited number of recurring items which we purchase in Costco. We purchase specialty items at TJs which are not available at the other stores. Plus, TJs has attractive prices and numerous unique food items.

We split main grocery shopping between Ralphs and Costco. Even with a Ralphs club card, WalMart usually is less expensive. Plus, the WalMart branded food products are of a high quality. Just the same, there are many items available at Ralphs that are not at WalMart. Produce and meats at Ralphs are a higher grade.

As to worker quality, Costco and TJs definitely have a higher quality, frequently better educated and more motivated staff. They appear to work harder and faster. Service is a high priority at these two stores. On the other hand, low prices seem to be the high priority at WalMart. Their workers seem to be less educated and mostly minority (Hispanic in California). Fast service is far less of an issue. For WalMart to pay more, they would have to either raise prices or likely lose money. If they raise prices, they likely would have fewer customers, and the customers would be looking for a much higher level of service from the employees. WalMart would have to stop hiring using their current criteria. In other words, the lower educated WalMart workers presently employed would no longer be hired by the “new” WalMart.

[blue state conservative]

If Costco has three times the sales per employee maybe it is because they have far fewer employees per store. I can never find anyone to help me in that store, except the guys selling cell phones, and I don’t think they work for Costco.

[Sgt_Schultze]

Costco caters to a wealthier client than Walmart. There are ten times as many Walmart stores than there are Costcos making Walmart's service area per store smaller. Here is a link to an article that describes many of the differences between the two businesses.

[milkncookies]

“The membership concept is very important to us. First,membership provides a way for us to pre-select the demographics of our customer base without having to do all the extensive research that would otherwise be required.
Business owners and managers,licensed professionals, and people who work for governments, utilities, hospitals or
banks tend to be more stable than many others. We take less risk in accepting their checks. Second, dealing exclusively
with selected groups makes it possible to communicate with your customers effectively. Instead of communicating with the whole world, you communicate one-on-one with the people you want to reach. Finally, someone who pays for a membership in an organization makes a form of commitment. They have a built-in reason to come back.”
Sol Price, Founder, Price Club

“The Costco concept is aimed at college educated households, with $70,000 to $80,000 per year household in
come, and with two cars. It’s a completely different business model than Wal-Mart.”
Mark Husson, analyst,Merrill Lynch

“There’s an old story they tell at Costco Wholesale Corp.: A Costco customer goes into one of the Issaquah based chain’s warehouses and sees Polo Ralph Lauren shirts that go for $60 retail selling for $37. The customer says, “I’ll take four in white and one in blue.“A customer of rival Sam’s Club sees the same display and says, “I don’t care how good a shirt it is, I’m not spending that much.”
Puget Sound Business Journal

http://www.coriolisresearch.com/pdfs/coriolis_understanding_Costco.pdf

[IamConservative]

I work in a “large” enterprise which generally means >$1 market cap. We staff to $250K of revenue per employee - full time w/ benefits. Your mileage will vary of course.