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Costco’s CEO becomes a progressive hero, Internet meme

By | November 28, 2012, 8:14 PM PST

Activists are celebrating worker compensation at CostCo.
Activists are celebrating worker compensation at CostCo.

A CEO is an unlikely hero for progressive activists, but the left has canonized Costco’s James Sinegal with an Internet meme celebrating his reputed fairness with his workers’ wages and benefits. A new ‘celebrity CEO‘ was born from demands for social justice.

The Sinegal meme touts Costco employees being paid US$17 per hour on average along with benefits while Sinegal earns less than $500,000 annually, resisting shareholder pressure to nickel and dime Costco employees. That’s not exactly right - in 2011 he earned a base salary of $350,000, and with all additional compensation, his income totaled $2,191,159, according to a company proxy statement.

Regardless, the ratio of Sinegal’s pay to worker pay is far less than data showing CEOs in the U.S. earning 209.4 times more compensation than their employees. That means there’s less income inequality at Costco, and workers take home a living wage. In contrast, Walmart’s CEO brings home $35M annually, which some allege is more per hour than most Walmart workers will ever make in a year. It has been fined by the Department of Labor for violations including denying workers overtime pay and has been accused of gender discrimination.

Make no bones that the meme’s intention is to draw a comparison between Sinegal and Costco against Walmart. Walmart was embroiled in “black Friday” demonstrations by labor unions and a few striking employees that followed suit. There is even more action on the Web - it’s another labor battlefield. This meme is an example of that. It’s ammo, even if it’s intended to give some acclamation to Costco.

You can easily find articles and blogs where activists allege that Walmart is a significant driver behind the growth of Americans who receive food stamps, and there’s a Berkeley study that found that the average worker at Walmart receives $730 in Medicaid and $1,222 in other government assistance to meet basic household needs. Low wages and prices have hidden costs, Walmart’s critics say.

Henry Ford was famous for wanting his workers to be able to afford to buy the cars that they built and believing in innovation - instead of obsessing over narrow profit margins. Is Costco in the right and WalMart in the wrong, or is Walmart actually making market driven choices? We’d like to hear from you.

Update: NBC political reporter Tony Tull has snapped a picture of Vice President Biden shopping at the grand opening of a Costco in Washington, D.C.

(Image credit: The Other 98%, David Worthington)

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David Worthington

About David Worthington

David Worthington is a contributing editor for SmartPlanet.

David Worthington

David Worthington

Contributing Editor

David Worthington has written for BetaNews, eWeek, PC World, Technologizer and ZDNet. Formerly, he was a senior editor at SD Times. He holds a degree from Temple University. He is based in New York.

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David Worthington

David Worthington

David does not have financial holdings that would influence how or what he covers. Occasionally he consults for other companies; should David cover a topic in which a client is involved, he will disclose this fact in his writing. His views do not represent those of his employers.

He writes for SmartPlanet and is not an employee of CBS.

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-6
Yeah, Progressive hero
Posted by jtdavies  |  Below your threshold
+1 Vote
+ -
Yeah, Progressive hero
Your point?
Posted by MaryU@...
29th Nov
0 Votes
+ -
Yeah, Progressive hero
Yours?
Posted by RHambeau
27th Feb
+2 Votes
+ -
Dividends
Since the Capital Gains Tax is surely to increase in 2013, many corporations are paying their dividends early. This is for the benefit of the shareholders, who are not just "the rich" but almost anyone who has a mutual fund, IRA, 401K, etc.

They're not avoiding taxes, they're merely paying taxes at the current rate, not the increased Obama rate.
Posted by bb_apptix
29th Nov
+3 Votes
+ -
Taxes
By "the increased Obama rate," I suppose then you mean tax rates still below those in place under Clinton, during whose presidency the economy grew vigoriously and the deficit was eliminated?
Posted by ARzondzinska
Updated - 15th Dec
-4 Votes
+ -
Correlation vs Causation
You've found a correlation, but not a causation. High taxes certainly don't help the economy.
Posted by Patrick Aupperle
13th Feb
+1 Vote
+ -
Causation???
We all know the causation.. Mostly it was the failed Dubyah years that put the economy in the cr@pper. Obama has been doing nothing but triage since day one... And with all the Republicants c0ck-blocking every recovery attempt Obama makes is the rest of the causation. All ARzondzinska was pointing out is that the tax rates with Obama are still below those that were in place during the golden years of Clinton.
Posted by i8thecat4
19th Feb
0 Votes
+ -
Here's a thought...
During the Clinton years, the internet was just starting to come "online" (bad pun)...the result was an increase in the VELOCITY of money. In addition, lending standards were loosened, increasing the number of loans, which multiplied the money supply...

MV=PQ

More money exchanging hands faster = higher levels of production. Unfortunately, now those loans are being called in, and any new money is being invested OUTSIDE the United States...the resulting unemployment creates a decreasing supply of money to consumers, causing them to spend less. Less money, exchanging hands less often=lower levels of production.
Posted by wbaltzley
20th Mar
+13 Votes
+ -
Peter Principle
The Peter Principle goes like this, an individual will rise to the level of his incompentence and stay there. The basis for this isea is that the reward for a good employee is a promotion and there will be a promotion to a job that the employee is not compentent; the management is unable to admit a mistake and the employee is stuck.

Lawrence Peters had a cure for this problem, that is for the company to focus on their revenue and not on excess management. I saw a movie where he illustrates this, it starts with a man in a vehicle. The man is wearing a clean uniform and the view of the vehicle appears to be an airplane and the man is a pilot. People are coming up to his window and giving him weather information and route changes. The camera pulls back and we see that the vehicle is a garbage truck.

Corporations tend to have lots of parasitical managers, these are the managers who do not contribute anything to the corporate revenue stream. The worst sort of parasite is the one who creates policies that decrease corporate revenue and still get bonuses because of their talents.

Most good employees know how to make their jobs work and bring in more revenue than their pay and benefits cost. The differences between Costco and Walmart are dramatic and hard to explain why it is OK for Walmart to have a large pool of extremely poor paying jobs compare to Costco.
Posted by sboverie
29th Nov
+19 Votes
+ -
We Wonder Why the Middle Class is Disappearing
Walmart is a stark symbol of the pure greed and dehumanization that a corporation can become. They play the game with part-time and contracted labor to treat their "associates" like gears and conveyor belts of the machine to deliver the booty. They control their supply chain and suppliers with the crushing grandeur of their purchasing power. They use the soundbite, corporate media to lie about both their intentions and actions and use every marketing gimmick they can find to make them look less evil. They succumb to the machine mentality of Wall Street, the epitome of what's bad about capitalism. If the above story is true, Costco's idea of a living wage for its workers is at least a step in the right direction, using a more humane business model to serve both its employees and its customers, which will in turn provide a reasonable return to its owners.
Posted by quonexus
29th Nov
+15 Votes
+ -
Wal Mart Versus Costco
Wal Mart versus Costco plays out like this ....greedy scum bags versus fair play. But as in government, you get the employer you ask for. Wal Mart employees are going to have to bite the bullet at some point and walk off the job. And it's up to the rest of us to not shop there until Wal Mart execs get a morality transfusion and start paying their workers what they're worth.
Posted by prattden
29th Nov
+11 Votes
+ -
Wal Mart Versus Costco
prattden is correct. As long as we shop for the lowest price we play into their hand. We can stand and spout whatever but the last straw is... will you pay more to stop what goes on at Wal Mart? I especially like all the finery Wal Mart offers us from the Peoples Republic of China.
Posted by Jackoff johnson
29th Nov
+11 Votes
+ -
Prices may be cheaper at Wal Mart ...
... but it may cost you more in hidden costs to shop there.
Posted by riverat1
29th Nov
-5 Votes
+ -
What are those hidden costs?
You brought it up, so, please explain.
Posted by adornoe
29th Nov
+13 Votes
+ -
hidden costs
From the article: "average worker at Walmart receives $730 in Medicaid and $1,222 in other government assistance to meet basic household needs. Low wages and prices have hidden costs, Walmarts critics say."

Did you bother to read the article? Roughly 50% of all walmart employees are on Medicare and food stamps. This is a cost to us all. I don't begrudge it to these folks, but walmart is responsible.
Posted by mr_bandit
29th Nov
-6
Those are NOT hidden costs, and they are costs
Posted by adornoe  |  Below your threshold
+6 Votes
+ -
The government wouldn't have to pay them if Walmart payed more.
What part of "the average worker at Walmart receives $730 in Medicaid and $1,222 in other government assistance" did you miss? In effect that's a $2000 subsidy to Walmart per employee paid by all of us. Many of those Walmart employees (who often work part time) may be among the people who don't pay federal income taxes.
Posted by riverat1
30th Nov
-6
riverat1: Walmart, and all other companies, would be paying,
Posted by adornoe  |  Below your threshold
+5 Votes
+ -
re: Walmart and other companies would be paying.
As far as I'm concerned your access to health care should not be tied to your employment in any way. The US is the only major country in the world where employers have to worry about that and I'd like to see it change.

Other countries that mandate universal access to health care from England's NHS (socialized medicine) to Canada's single payer system to Switzerland's mandating insurance companies offer policies on a non-profit basis spend around one half as much per person on health care as the US with similar outcomes. There is no reason that can't work in the US too.
Posted by riverat1
3rd Dec
-6
Or...
Posted by JohnMcGrew@...  |  Below your threshold
+6 Votes
+ -
What mr_bandit said.
What mr_bandit said.
Posted by riverat1
29th Nov
+7 Votes
+ -
monopoly
In some parts of the country, Walmart looks an awful lot like a monopoly. Why isn't the FTC protecting us from this greedy influence that lays waste to community by putting all the locals out of business? I guess they can afford to lobby their way around it.
Posted by veetmeter
8th Dec
+2 Votes
+ -
What about the Home Despots?
Home Depot is another neighborhood destroyer.
When they open a new store, they bring in their best people until the store gets going. Then they move those workers to the next opening and stock the local store with the lowest paid workers they can find.
I live in a community of around 40,000 residents and over the past years, we have seen all but one small mom & pop hardware store go out of business.
These were thriving businesses that catered to the local population by stocking items that the local homeowner's needed for replacement purposes.
They were a little more expensive because the products were quality items, mainly made here in America. Losing a 40 or 50 year old institution in your community is almost like losing a relative.
Posted by fiosdave
27th Feb
+7 Votes
+ -
You have to be selective at WalMart
Many of their products are throw-away garbage - they don't last as long as they should.
In addition, WalMart prices aren't as low as competitors in many areas. If you go there for a low price on one product, chances are that additional products you buy while there ('impulse buys') are priced higher than the competition - food is one area where this is common.
Posted by Havokmon
11th Dec
+6 Votes
+ -
Wal Mart Versus Costco
Yes but Wal Mart is not the only employer that refuses to pay a living wage.
Many, many other companies do the same, the fast food industry comes first to mind, farm labor. With a significant percentage of workers with minimum wage, they have no choice with their restricted buying power to shop at Wal Mart. Sure raise the wages for Wal Mart workers so they can buy domestic cars. That would only raise the prices at Wal Mart as the costs are passed on down the line. But what about all the other unemployed, seniors, people that have been robed of their pensions, their homes by the 1% etc. The only answer really is to tax the multi million dollar bonus to the CEO's and off shore accounts (ie Mit Romney) Just have to make it to expensive to be rich. That will never happen as it's the rich and greedy that control the government. Bottom line as the Middle Class we are just SOL
Posted by csumbler
5th Dec
+14 Votes
+ -
Consumers and choices
Thanks for the info, now that I am informed, I will support the organization with the better social policies.
Posted by selinkle
29th Nov
-4 Votes
+ -
Costco is a very well-run company.
And their employees are motivated and energetic.

But I think a direct comparison to Walmart is fallacy. Simply paying people more money and benefits does not automatically create better employees or a better company. (If that was the case, Chrysler and GM would not have gone bankrupt) Paying Walmart employees the same as Costco would not make shopping at Walmart the same as shopping at Costco.

The unfortunate reality is that for many, Walmart is the employer of last resort. Walmart is not responsible the environment that made this so, but merely a reaction to it.
Posted by JohnMcGrew@...
Updated - 29th Nov
+2 Votes
+ -
Stop being nitpicky and retentive and grow a brain cell or two.
No one ever said that paying Wal-Mart employees more would automatically create better employees or a better company. Stop making up stupidity to try to support your feeble and failed arguments. Damn John, you really fail when it comes to common sense and reading comprehension...

Costco cares about employees and they show it with pay, benefits, work environment, culture, etc... Happy employees are a recipe for a successful business regardless of what business it applies to. Wal-Mart is the polar opposite, they do not care about employees and they show it.

We as consumers vote with our wallets. It is the one vote that matters more than any other votes we cast. As others have pointed out, Wal-Marts low pay causes tax payers to have to supplement their failed practices. It is a vote worth considering anytime you might have the inclination to go to Wal-Mart.

Comparing Costco and Wal-Mart is a perfect comparison as it shows the contrast between greed and evil versus good and responsible. And claiming that Wal-Mart is not responsible for the environment it created it total hogwash. That is like saying that criminals should not be convicted of any crimes because they are not responsible for their crimes (whine), they are merely reacting to the circumstances that led them to crime. Wal-Mart made that environment, they are not reacting to what they themselves created, and they are continuing to rape as much profit as possible, some at the expense of employees.

And before you go to stoopidviille, no John, profits are good for business. But employee abuse and a lack of decency is very bad. There is a reason we have unions and that reason is to fight against employer abuses like the ones happening to Wal-Mart employees. Greedy corporate bastards will ignore common decency and trample human rights in order to squeeze more profit, and that is a historical fact that will never change. Free enterprise is not always the answer, free enterprise tends to fail when it comes to decency and greed. This is one of many reasons healthcare/insurance should NOT be in the hands of the greedy. This is one of the reasons we need an EPA to prevent free enterprise from completely trashing the planet for a fast buck.

Costco is one of the few retail companies that have always believed that treating employees right makes for better business. For me, that means a lot and it is one of the main reasons I shop there. The abuses of Wal-Mart are the reason I dont shop at Wal-Mart. In the end, Wal-Mart is counting on one thing to keep them going, stupid greedy people who dont mind selling their souls to save .89 cents on a rollback.
Posted by i8thecat4
3rd Dec
-4 Votes
+ -
Long on hate, short on facts.
As usual.

Answer me one question: If Walmart is so awful, then why does anyone work there at all?
Posted by JohnMcGrew@...
Updated - 3rd Dec
+1 Vote
+ -
Reading comprehension John...
You were supposed to grow the brain cells before you went on to asking stupid questions and making pathetic arguments. Why does anyone work at McDonalds? Why does anyone take a job as a Janitor? Why does anyone take any crappy job John? Do you ever bother to think?

Seriously John??? You think that you playing stupid (as usual) proves anything... People work at Wal-mart because they are desperate and need a job, any job. At least McDonalds cares enough to provide a career development path for those who work hard. If something happened to me and I had to work at Wal-Mart I would... I would work 3 or 4 jobs if needed to keep a roof over my family. It would be better than being homeless.

Are you so clueless that you think people have choices??? Do you think homeless people are homeless because they prefer the lifestyle? Seriously John, I have read plenty of your clueless comments to feel comfortable in asking the following... What color is the sky in your world and why do you keep confusing it with the real one?
Posted by i8thecat4
3rd Dec
-3 Votes
+ -
People, I present the modern Progressive...
...lots of hate, little reason.

If @i8thecat4 had bothered to read my comments, he'd/she'd see that I already called Walmart the "employer of last resort". They get to do what they do because Progressives have created the environment that they operate under. Of course, he/she'd be happy to outlaw Walmart, but then where would those people work?

And do note that McDonalds got a waiver from ObamaCare, so I am quite sure their employees are a bit more secure than Walmart's.
Posted by JohnMcGrew@...
4th Dec
0 Votes
+ -
People, I present the modern Republicant.
...clueless, out of touch, greedy, self-important imbecile.

Progressives? ObamaCare? You sound like a loser Republicant Johnny. Do you regurgitate everything Rush and Hanity tell you too?

There you go again spewing more of your special little stupidity... So now "progressives" are to blame for the environment Wal-Mart created? Do you work for Wal-Mart Johnny? Why is it that you think Wal-Mart is not responsibile for the envornment they created? Why is the Wal-Mart environment the "magical fault" of "others" in your glazed over eyes?

Seriously dude... Are you paid to troll Smart Planet? Why do you bother coming here?
Posted by i8thecat4
Updated - 4th Dec
-3 Votes
+ -
I think I've made my argument pretty clearly.
I cannot help if you cannot comprehend. Your hate clearly clouds your vision.

No, I don't work for Walmart. However, at the moment, I am a shareholder. So you might say Walmart works for me.

It would be nice to be paid to be here. Why do you come here?
Posted by JohnMcGrew@...
4th Dec
+2 Votes
+ -
Conversation
Everyone here is entitled to their opinion. Whether you like it or not. Personal attacks for those opinions are not welcomed.
Posted by dcr100@...
5th Dec
-3 Votes
+ -
Actually, what to know the real reason I am here?
It's to tee off people like you to make them rant and spew nonsensical hate, rage and conspiracy theories.

You are my hate puppet.
Posted by JohnMcGrew@...
Updated - 5th Dec
+2 Votes
+ -
If you want conspiracy theories, go listen to Rush and Hannity...
But I do believe you when you say that you are here to irritate intelligent people. But we don't rant and rage, we tend to put you right back in the corner where you belong, under the dunce cap.

You are everyone's stupidity puppet Johnny.
Posted by i8thecat4
5th Dec
-4 Votes
+ -
I'm not the one spewing childish insults and conspiracy here.
And I doubt I irritate the more intelligent people here. I only irritate the insecure ideologues who are frustrated that they can't make an honest argument, as I clearly have irritated you.
Posted by JohnMcGrew@...
Updated - 5th Dec
0 Votes
+ -
Bad behavior won't get you there
I8thecat, your name calling and rudeness is out of line. Who would want to be associated with you? How does this inflammatory behavior help the Progressive cause?
Posted by GemSkater
9th Apr
+8 Votes
+ -
Long on hate, short on facts.
Answer me one question: If Walmart is so awful, then why does anyone work there at all?

Easy, when there are millions unemployed (look at the stats in the news)
A minimum wage job by a terrible employer is still better then no job at all.
Local Toyota plant advertised for 50 openings, 10's of thousands of people applied, Obviously all that applied didn't get jobs,
Posted by csumbler
5th Dec
+5 Votes
+ -
The only game in town
John, in some places, they're the only game in town.
Posted by veetmeter
8th Dec
-6
That is true...
Posted by JohnMcGrew@...  |  Below your threshold
0 Votes
+ -
Why?
Because there are those people who feel that food stamps and government aid is demeaning.
Posted by fiosdave
27th Feb
+1 Vote
+ -
Pay
Employers pay workers what they have to in order to stop them leaving for better pay. Some employers pay over the rate to attract more applicants than they need then choose people who could apply elsewhere for a more demanding job and hope they will stay and add value to the business. For example, employers do not need well educated people to stack shelves but better educated people will do the job without so much supervision and can more easily be trained to move up the ladder. Maybe this is Costco's method and maybe Walmart expects no more than what they pay for.
Posted by Edddyie
29th Nov
+16 Votes
+ -
happy employee
Shortly before the election I was at Costco picking up eyeglasses. I asked the employee who helped me if she would be voting (she and her husband had already voted early.) As we talked she said she had worked there 21 years and said most people have been there a long time because the jobs are good. Besides the wages, employees have a retirement plan to which Costco contributes. I'd heard the jobs were good but I didn't know they were that good.
She also told me that you can tell how long an employee has been at Costco by looking at their badges - it says how long they've been working there. So jobs don't have to be as unhealthy and bad like the ones at Walmart.
I want jobs in my community that pay a living wage. I don't want businesses that prey on workers and make it impossible for workers to support themselves or their families.
Posted by pancheetah
Updated - 29th Nov
0 Votes
+ -
Thanks for the info
Thanks for the informative post pancheetah . I'll look for the years on the badges next time. I always buy my laptops at Costco because I can rely on their service. Bought our lovely patio set there too and very happy with it.

Costco sets all their pricing very fairly for the consumer, never more than 14% profit.
Posted by GemSkater
Updated - 9th Apr
+2 Votes
+ -
Yes, good. But not the whole story.
The better comparison would Costco and Sam's Club. Costco and Walmart are different kinds of stores serving different market segments.

After retiring with over 35 years in management I certainly agree that paying less than a living wage is counterproductive. However, saying that Costco pays more tells only part of the story. What are the comparable ratios of employees per sales dollar? Does Costco have fewer, better paid employees? The article does not tell us that. One would hope that higher pay equals better new hires, less turnover, lower training expense, better customer service, more innovation, etc. Is this the case? Does the added cost add proportional value to the Costco bottom line? I hope it does, but need to see the numbers.

I would love to see a more complete analysis on Costco Vs. Sam's Club. Give us the numbers, please.
Posted by njwhite2
29th Nov
+5 Votes
+ -
So the Bottom Line is all that matters?
If the numbers came back to show that WalMart has a higher profit margin than Costco, then it would be ok that they treat their employees like garbage? Please tell me I misunderstood your post.
Posted by ohbrandi
8th Dec
0 Votes
+ -
Good point
Exactly. This point seems to escape a great many. This is why Capitalism can never function without regulation, and maybe why Capitalism shouldn't be such a Sacred Cow in the first place. I'd like to see more worker owned cooperatives
Posted by GemSkater
9th Apr
0 Votes
+ -
Agree, but given the info we have...
I agree Sams Club is the better Costco comparison point. While we do not have the detail, it seems both are doing well enough in the market. If we assume Sams policies mimic Walmarts with respect to employee pay and benefits, then surly Costco is the better model. Because Costcos employees are made whole and don't need taxpayer supported supplements to make up for pitifully insufficient wages as is the case at Walmart and presumably, Sams ( same parent company). I suppose some would argue that if Sams returns more shareholder gains they are the better, but that could just mean Sams model is less sustainable, and surely the workers needs for basic necessities must - or should - trump shareholders desires to engorge themselves in what is effectively the skin off the workers' backs.
Posted by GemSkater
9th Apr
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