Costco values or Wal-Mart values? This is more than just a question about “Blue vs Red” political donations, or even about how one company treats its employees.

This story about Costco in today’s NYTis an absolute must-read because it shows what we truly value in this country.  

Doing well by being fair does not just make moral sense but also makes good business sense. Some businesses and market watchers, however, must be faith-based operations, because no matter the evidence, they engage in mind-numbing machinations to continue a status quo that is unsustainable and inefficient–not to mention immoral.

I really have to question market analysts who are troubled by a business model that is profitable AND treats its employees with dignity. Just how is this problematic? And yet some on Wall Street definitely see a problem:

But not everyone is happy with Costco’s business strategy. Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco’s customers but to its workers as well.

Costco’s average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam’s Club. (Oh my God! The horror!) And Costco’s health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco “it’s better to be an employee or a customer than a shareholder.”

So what do you call the CEO who was paid $32 million after 3 months on the job? This is rational? On what basis? More to the point, though, is this: What kind of society are we that we can justify starvation wages for the many and windfalls for the few–and pretend it is respectable?

ANYWAY… It’s not as if Costco isn’t making money. They are:

Costco was founded with a single store in Seattle in 1983; it now has 457 stores, mostly in the United States, but also in Canada, Britain, South Korea, Taiwan and Japan. Wal-Mart, by contrast, had 642 Sam’s Clubs in the United States and abroad as of Jan. 31. Costco’s profit rose 22 percent last year, to $882 million, on sales of $47.1 billion. In the United States, its stores average $121 million in sales annually, far more than the $70 million for Sam’s Clubs. And the average household income of Costco customers is $74,000 – with 31 percent earning over $100,000.

So there goes the canard about greedy employees breaking the backs of those poor CEOs because they have the temerity to want to see a doctor regularly and look forward to catfood-free cuisine when they retire.

But I suppose investing in your workforce has real drawbacks–for CEOs:

Despite Costco’s impressive record, Mr. Sinegal’s salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies.

Sinegal doesn’t seem to mind:

“I’ve been very well rewarded,” said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. “I just think that if you’re going to try to run an organization that’s very cost-conscious, then you can’t have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong.”

Imagine! How positively communist of him. (Hey–that was snark!! Laugh, dammit!!)

For the macho among us, he ain’t no punk, just in case you were wondering:

Mr. Sinegal’s elbows can be sharp as well. As most suppliers well know, his gruff charm is not what lets him sell goods at rock-bottom prices – it’s his fearsome toughness, which he rarely shows in public. He often warns suppliers not to offer other retailers lower prices than Costco gets.

But perhaps the dirtiest secret exposed (or confirmed) is that businesses CAN treat their employees well and not go broke in the process. So there MUST be other factors at hand that stop them and not the “invisible hand”, right? While pondering that, consider this:  

Besides paying considerably more than competitors, for example, Costco contributes generously to its workers’ 401(k) plans, starting with 3 percent of salary the second year and rising to 9 percent after 25 years.

ITS insurance plans absorb most dental expenses, and part-time workers are eligible for health insurance after just six months on the job, compared with two years at Wal-Mart. Eighty-five percent of Costco’s workers have health insurance, compared with less than half at Wal-Mart and Target.

Costco also has not shut out unions, as some of its rivals have. The Teamsters union, for example, represents 14,000 of Costco’s 113,000 employees. “They gave us the best agreement of any retailer in the country,” said Rome Aloise, the union’s chief negotiator with Costco.

So again, I ask: What are our values–Costco values or Wal-Mart values? If there are no real economic reason to ignore Costco values, then what else is stopping us?

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