I’ve loved Costco ever since my days in California where my late husband and I entertained a lot, so loved to buy bulk, and also loved the discounts on gas in the land of never-ending freeways. Still, I never thought much about why Costco was so successful. Now I’m finding from recent articles in Fortune (3/18/2013) and Bloomberg Business Week (BBW, 6/10/2013) that while the economy has many large retailers under-performing and also slashing wages, Costco has apparently found a secret to not only weathering the storms, but thriving: It insists on still paying its employees a fair wage. The BBW article made Costco its cover story with the headline “The Cheapest, Happiest, Company in the World.”
At a time when small businesses understandably are struggling with wages, even retail tigers like Wal-Mart Stores have kept wages low during the slow recovery. Costco, on the other hand, is forging ahead by only keeping prices low, while paying its hourly workers an average of $20.89 an hour, not including overtime, according to BBW. Costco’s CEO Craig Jelinek even put his company’s convictions in ink by urging Congress to increase the federal minimum wage. “As long as you continue to take care of the customer, take care of employees, and keep your expenses in line, good things are going to happen to you,” he told BBW.
The Bloomberg Business Week article also notes that several other “conscientious companies” are faring well financially, including Nordstrom, the Container Store, Sephora, REI and Whole Foods Market, all known for treating employees well. Meanwhile Fortune’s annual spring list of Industry Stars, ranking companies by reputation, showed Costco, Whole Foods and Nordstrom ranked high in their categories and overall. BBW notes that only time will tell if Costco’s success will affect the behavior of other companies. Still, now that my love of entertaining is in full summer gear and I’m at Costco regularly, I feel great knowing that the employees waiting on me are getting a good wage for making me happy – and also boosting the bottom line! What a wonderful concept.