The Warehouse That Paid More

Abstract

Walk into either building and the first thing you notice is the same: concrete floor, steel racking to the ceiling, pallets of paper towels and tinned tomatoes, a forklift beeping somewhere out of sight. Costco and Sam's Club, the warehouse chain owned by Walmart, sell much the same goods to much the same kind of customer at much the same low margin. In the middle of the last decade they were the two largest firms in their category in the United States. On the shop floor, an untrained eye could not tell them apart. The difference was in the payroll. In December 2006 the management scholar Wayne Cascio set the two side by side in the Harvard Business Review , in an article called "The High Cost of Low Wages", the short form of a longer comparison he had published that August in the Academy of Management Perspectives . His figures are the case this chapter works through, and every number below is his, given as he gave it, with his own caveats attached.