The Motley FoolAs you well know, Costco has taken some heat on Wall Street for being overly generous to its employees. According to a recent New York Times story, Costco store workers earn an average of around $17 an hour, which is 42% more than employees at Sam’s Club, which is owned by Wal-Mart. You have said Costco’s pay structure makes for good business. Explain.

Costco co-founder & CEO Jim Sinegal: Well, first of all, we have a very low turnover in our company. Our turnover is something in the 20% range, and that is including a lot of seasonal hires that we have both in the summer and at Christmas. After employees have been with us for more than a year, that turnover rate goes below 6%, so we take great pride in the fact that people join us and they stay with us. Our attitude has always been that if you hire good people and provide good wages and good jobs and more than that — if you provide careers — that good things will happen to your company. I think we can say that that has been proved by the quality of people that we have and how they have built our organization.


Costco vs. Wal-Mart
Comparing some workplace statistics,
as reported by the companies.

  • Employees covered by company health insurance
    • Costco 82%
    • Wal-Mart 48%
  • Insurance-enrollment waiting periods (for part-time workers)
    • Costco 6 months
    • Wal-Mart 2 years
  • Portion of health-care premium paid by company
    • Costco 92%
    • Wal-Mart 66%
  • Annual worker turnover rate
    • Costco 24%
    • Wal-Mart 50%