Can a company pay its workers well and also make money?

[Karee 4,189]

Worker wages: Wendy's vs. Wal-Mart vs. Costco

By Emily Jane Fox @emilyjanefox August 6, 2013: 9:57 AM ET

The workers hold similar positions at these companies. Levels of experience vary but the wages are representative of the average worker we interviewed.

NEW YORK (CNNMoney)

Can a company pay its workers well and also make money?

Many aren't quite hitting the right balance. Hundreds of dissatisfied workers at major American companies like Wal-Mart (WMT, Fortune 500), McDonald's (MCD, Fortune 500) and Wendy's (WEN) have joined protests nationwide in the past year demanding higher wages and better benefits.

One company that hasn't had to deal with such strikes is Costco.

The no-frills warehouse chain pays its hourly workers an average of just over $20 an hour, compared to just under $13 at competitor Wal-Mart. Even President Obama praised Costco in a recent speech about helping the middle class.

Related: The real budget of McDonald's workers

The recession has been good for companies that targeted budget-minded customers. Sales at Costco (COST, Fortune 500) have grown an average of 13% annually since 2009, while profits have risen 15%. Its stock price has more than doubled since 2009.

During the same period, discount retailer Wal-Mart's sales grew an average of 4.5% each year, profits rose 7%, and its stock price increased 70%.

Costco seems to be investing some of those profits back into its employees.

Cesar Martinez, a 37-year-old fork lift operator, has worked at a Costco in North Carolina for 19 years. He makes $22.82 an hour, gets health benefits and a pension plan. He manages to save, and doesn't worry about hospital bills for his daughter, who suffers from asthma.

"That's the reason why I've been here for so long," he said. "The company gives you a decent wage and treats you with respect and takes care of you. That's why we all give 100%."

Some experts say companies aren't able to adopt the Costco model, because they can't charge its $55 annual membership fee.

Related: Wal-Mart's low wages cost taxpayers

However, research shows that it pays to pay employees well, because satisfied workers are more productive and motivated, according to MIT Sloan School of Management professor Zeynep Ton, who focuses on operations management.

"How many times have you gone to a store, and the shelves are empty or the checkout line is too long, or employees are rude?," she said. "At Costco, you see a huge line that disappears in minutes."

The productivity translates into sales, she said.

According to Ton's research, sales per employee at Costco were almost double those at Sam's Club, its direct warehouse competitor owned by Wal-Mart.

Workers who are dissatisfied with pay are joining picket lines. Last week, fast food workers in seven cities from chains like McDonald's, Wendy's and Yum Bran (YUM, Fortune 500)ds-owned KFC, protested for higher wages of $15 an hour. It's a demand they've been making since last November.

It's been spreading -- from hundreds of Amazon warehouse workers in Germany to Wal-Mart workers walking off work, all calling for better pay, fair schedules and affordable health care.

The median pay for fast food workers nationwide is $9.05 an hour, or about $18,800 a year.

"While the fast food and retail industry is making record profits, its workers are forced to rely on public assistance just to afford the basics," according to Fast Food Forward, a union- and community group-backed organization behind some of the protests.

Source:

http://money.cnn.com/2013/08/06/news/economy/costco-fast-food-strikes/index.html?iid=HP_LN

[GandD 5,966]

The greed has gotten out of control. You hear "how can we make money?" I wonder, "Why did you build your business model on f*ing your employees?" As a corporation with a hiring standard of part time only, you are telling the American people, well we'll kinda feed this person but you're on the hook for all of their healthcare. And people agree with them....... F***ers.

[Karee 4,189]

The Hispanic guy is getting $22.80, while the black guy is only getting $9.40. The black girl is getting even less. I think she has one of those black sounding names Marvin keeps talking about though, so that explains that. Racism is alive and well.

Edited August 6, 2013 by Karee

[Harsh_77 716]

I think companies can pay better wages to employees if they cut the outrageous salaries of the executives.

[GandD 5,966]

The Hispanic guy is getting $22.80, while the black guy is only getting $9.40. The black girl is getting even less. I think she has one of those black sounding names Marvin keeps talking about though, so that explains that. Racism is alive and well.

Don't you talk bad about Cinnamon!

[GandD 5,966]

I think companies can pay better wages to employees if they cut the outrageous salaries of the executives.

That would prob help a little. I think the real problem is building everything on top of the salaries they are paying now. If they paid better salaries, they would be forced to find different ways to make money. They would figure it out but it prob wouldn't be as easy/much as they have been making. But they were wrong to plan everything around minimum wage workers. I'd pay another $1 a burger to ensure all employees were not going to be on medicaid. This is the most likely outcome as the corporations would just pass off any burden to the consumer. No one wants angry stockholders!

[Harsh_77 716]

That would prob help a little. I think the real problem is building everything on top of the salaries they are paying now. If they paid better salaries, they would be forced to find different ways to make money. They would figure it out but it prob wouldn't be as easy/much as they have been making. But they were wrong to plan everything around minimum wage workers. I'd pay another $1 a burger to ensure all employees were not going to be on medicaid. This is the most likely outcome as the corporations would just pass off any burden to the consumer. No one wants angry stockholders!

The problem with most corporations is even if you paid the additional $1 on a burger they would still keep the employees on Medicaid and absorb the $1 as profit.

Executives would show that dollars as the revenue increase coz of their leadership skill and now they deserve a few million dollar bonus.

[GandD 5,966]

The problem with most corporations is even if you paid the additional $1 on a burger they would still keep the employees on Medicaid and absorb the $1 as profit.

Executives would show that dollars as the revenue increase coz of their leadership skill and now they deserve a few million dollar bonus.

Oh I agree.

[spookyturtle 9,465]

Costco is a good company and pays its workers well. Apple is a company that could easily afford to pay excellent wages to it's hourly employees but does not.

[Darnell 8,478]

The Hispanic guy is getting $22.80, while the black guy is only getting $9.40. The black girl is getting even less. I think she has one of those black sounding names Marvin keeps talking about though, so that explains that. Racism is alive and well.

It's not about race with this example.

What's it about, you ask?

It's about the decision-making process of these 3 humans.

See, each one made a decision about where to work.

Costco is a good company and pays its workers well. Apple is a company that could easily afford to pay excellent wages to it's hourly employees but does not.

you reference employees in CHINA,

and those are not direct employees of Apple - they are direct employees of the factory (that Apple does not own) where the Apple Gear is made.

Not a decent comparison, sorry.

[spookyturtle 9,465]

It's not about race with this example.

What's it about, you ask?

It's about the decision-making process of these 3 humans.

See, each one made a decision about where to work.

you reference employees in CHINA,

and those are not direct employees of Apple - they are direct employees of the factory (that Apple does not own) where the Apple Gear is made.

Not a decent comparison, sorry.

Apple has several hundred retail stores right here in the USA, and that is what I was referring too. Most of the Chinese employees work for Foxconn.

[Darnell 8,478]

ah - most of those fellas and geekettes are diehard apple fans and don't care about the money - they just need to be in a room surrounded by Apple Gear.

Check it out, the next time yer in an Apple Store..

[The Nature Boy 4,224]

Costco is a good company and pays its workers well. Apple is a company that could easily afford to pay excellent wages to it's hourly employees but does not.

But oddly enough Steve Jobs is a god to so many libtards

[Jacque67 7,328]

ah - most of those fellas and geekettes are diehard apple fans and don't care about the money - they just need to be in a room surrounded by Apple Gear.

Check it out, the next time yer in an Apple Store..

Happens on the fashion biz too. People get a discount on clothes and invites to hip parties in exchange for ####### wages.

[Karee 4,189]

Happens on the fashion biz too. People get a discount on clothes and invites to hip parties in exchange for ####### wages.

Flight attendants as well. Low wages but free travel.