There's been a lot in the news recently about how well Costco employees are paid, particularly when compared to competitive chains - Wal-Mart in particular.
In this article, Megan McArdle points out that Wal-mart is really in a different industry, and their labor structure shouldn't be compared to Costco.
Some thoughts:
I just posted this because I have also wondered why Wal-Mart couldn't be like Costco. This article at least shows that, as Wal-Mart is currently structured, it is financially impossible. The profits per employee are too small.
The author is a bit snarky, but it's the numbers I'm looking at (pay rates from the paragraph right after the chart in the article):
Wal-Mart: 10/hr * 160 hrs = 1600/mo = 19200/yr
Costco: 19/hr * 160 hrs = 3040/mo = 36480/yr
So, even if Wal-Mart gave all their profits to employees in higher pay (7428/emp.) they can't match Costco wages, let alone benefits.
This doesn't mean they couldn't pay a bit more, but their industry is so labor intensive that their costs won't let them match Costco (operating in a different industry - another point the author makes)
Wal-Mart has many employees who are necessary but who do not generate much revenue. Whether they could restructure and match Costco is another question. It would be interesting to compare Wal-Mart and Target. Or Costco and Sam's club.
I also think that Wal-Mart has optimized about as much as possible. If they could make as much with fewer employees (more profit per employee) they would. If they could increase revenue by raising prices, they would. After all, they are a greedy, soulless corporation out to maximize profits and minimize costs.
I say that half in jest, but I do think they would do either if they could make more money that way.
