My Kind of Town

I am so in love with Chicago right now.

Chief sponsor Ald. Joe Moore (49th) likened the living-wage campaign to President Franklin D. Roosevelt’s efforts 68 years ago to impose a 40-cent-an-hour minimum wage, outlaw child labor and mandate a 40-hour workweek.”Our job is not to safeguard profits for the world’s wealthiest corporations. Our job is to look out for our constituents,” he said.

Moore scoffed at threats by Wal-Mart and Target to cancel their ambitious expansion plans for Chicago. “There is a buck to be made. A lot of bucks. They’ve saturated the rural markets,” he said.

Beyond that, for all the talk of Wal-Mart and Target, I’ve seen very little mention of the fact that Costco doesn’t give a rat’s ass about the ordinance, because they already comply with it. With good reason:

Costco’s high-wage approach actually beats Wal-Mart at its own game on many measures. BusinessWeek ran through the numbers from each company to compare Costco and Sam’s Club, the Wal-Mart warehouse unit that competes directly with Costco. We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity. Combined with a smart business strategy that sells a mix of higher-margin products to more affluent customers, Costco actually keeps its labor costs lower than Wal-Mart’s as a percentage of sales, and its 68,000 hourly workers in the U.S. sell more per square foot. Put another way, the 102,000 Sam’s employees in the U.S. generated some $35 billion in sales last year, while Costco did $34 billion with one-third fewer employees.

Of course, Wal-Mart doesn’t have the existing base of more affluent customers or business model that allows for selling more expensive items, but Target does, let alone the other stores affected–poor widdle Bloomingdale’s, Field’s and Nordstrom, for instance. They could all easily mimic the Costco model and do just fine. The only real objection is right here:

“At Costco, it’s better to be an employee or a customer than a shareholder,” says Deutsche Bank analyst Bill Dreher.

Yeah. Bummer.