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Can Civilization Survive Capitalism?

#1 Mar 14 2013 at 11:13 AM Rating: Excellent
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gbaji wrote:
If the employer could double his profits by paying his employees double their pay, he'd do it in a heart beat


Doubtful. Not when ideology is involved.

Quote:
The market's view of Costco speaks volumes about the so-called Wal-Martization of the U.S. economy. True, the Bentonville (Ark.) retailer has taken a public-relations pounding recently for paying poverty-level wages and shouldering health insurance for fewer than half of its 1.2 million U.S. workers. Still, it remains the darling of the Street, which, like Wal-Mart and many other companies, believes that shareholders are best served if employers do all they can to hold down costs, including the cost of labor.

Surprisingly, however, Costco's high-wage approach actually beats Wal-Mart at its own game on many measures. BusinessWeek ran through the numbers from each company to compare Costco and Sam's Club, the Wal-Mart warehouse unit that competes directly with Costco. We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity. Combined with a smart business strategy that sells a mix of higher-margin products to more affluent customers, Costco actually keeps its labor costs lower than Wal-Mart's as a percentage of sales, and its 68,000 hourly workers in the U.S. sell more per square foot. Put another way, the 102,000 Sam's employees in the U.S. generated some $35 billion in sales last year, while Costco did $34 billion with one-third fewer employees.

Bottom line: Costco pulled in $13,647 in U.S. operating profit per hourly employee last year, vs. $11,039 at Sam's. Over the past five years, Costco's operating income grew at an average of 10.1% annually, slightly besting Sam's 9.8%. Most of Wall Street doesn't see the broader picture, though, and only focuses on the up-front savings Costco would gain if it paid workers less. But a few analysts concede that Costco suffers from the Street's bias toward the low-wage model.

Source (a bit old, but proof that lower wages aren't necessarily a better business practice): http://www.businessweek.com/stories/2004-04-11/commentary-the-costco-way


Quote:
Costco generated $21,805 in U.S. operating profit per hourly employee, compared with $11,615 at Sam’s Club. Costco’s stable, productive workforce more than offsets its higher costs.

Source: http://hbr.org/2006/12/the-high-cost-of-low-wages/ar/1


Oh look, almost double the profit per employee at costco vs. walmart's "Sam's Club" - with 70% or so higher wages. Yet Walmart continues it's low-wage no-benefits part-time employee crap nonetheless

Why? Because wall st. loves it. Why? Ideology.



Edited, Mar 14th 2013 10:20am by Olorinus
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lolgaxe wrote:
When it comes to sitting around not doing anything for long periods of time, only being active for short windows, and marginal changes and sidegrades I'd say FFXI players were the perfect choice for politicians.

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