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Saturday, September 3, 2011

Consider Costco

Posted By on Sat, Sep 3, 2011 at 7:23 AM

COSTCO: Low prices, enlightened leadership.
  • COSTCO: Low prices, enlightened leadership.

COSTCO: Low prices, enlightened leadership.
  • COSTCO: Low prices, enlightened leadership.

I've often sung the praises of Costco, the warehouse store chain that, regrettably, doesn't operate in Arkansas. Here's a Washington Post tribute written on the occasion of the announcement of the coming retirement of CEO Jim Sinegal.

He's paid about a third of what your average bigshot CEO makes. He avoided layoffs in a recession. He's shared health insurance cost savings with employees. He's friendly to unions. He answers his own phone. He's rigorously held company markup to 14 or 15 percent.

That disciplined approach to pricing hasn’t won many praises from Wall Street analysts. Neither has Costco’s wage and benefit policies, which are so generous that one analyst complained that "it's better to be an employee or a customer than a shareholder” at Costco. (It’s not now: Net income rose 10 percent in 2010 from the year prior, admittedly an off year during the recession, while Costco’s stock is up 40 percent over the last year.)

Suffice it to say that generous wages and benefits and an open door to unions is not the model propounded by the likes of the Little Rock Regional Chamber of Commerce, which is pushing a 200 percent city sales tax increase that it touts as a job creator. What kind of jobs, you have to wonder? More low-wage, sometimes dangerous industry, that draws workers who leave only tire treadmarks as an imprint on Little Rock before heading home to suburbs that didn't pay for corporate welfare from Little Rock taxpayers?

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