Posts Tagged ‘Sam’s Club’

Low wages mean low productivity

source: Wikimedia Commons

source: Wikimedia Commons

source: Wikimedia Commons

source: Wikimedia Commons

[L]abor is most productive where its wages are largest. Poorly paid labor is inefficient labor, the world over…. The efficiency of labor always increases with the habitual wages of labor—for high wages mean increased self-respect, intelligence, hope, and energy.

–Henry George (Progress & Poverty, Book IX, Chapter 2)

George gives plenty of examples from his time, but modern examples abound too.  I happened on a 2006 article (pdf) by Wayne Cascio comparing how Sam’s Club and Costco treat their labor.  The short answer is: Costco treats their workers much better, including higher wages, better benefits, and more job security. And, the article continues, the results are consistent with Henry George. Based on 2005 data,

 Costco’s hourly labor rates are more than 40 percent higher than those at Sam’s Club ($17 versus $10.11), but when employee productivity is considered (sales per employee), Costco’s labor costs are lower than those at Sam’s Club (5.55 percent at Costco versus 6.25 percent at Sam’s Club).

Similar differences are cited in sales per square foot, and operating profit per employee.  Obviously, the figures nearly a decade later would be different, but I suspect the comparison would be similar.