>Also all the large tech players have done this to a large degree
Didn't all the big tech players recently get sued in a class action for colluding to stifle worker's wages specifically by agreeing not to poach each others employees?
Yes, but the fact that they were found guilty of suppressing wages does mean without question that they weren't attempting to consciously pay above market wages to gain some Ford-like benefit as with efficiency wages.
Don't forget: Facebook capitalized on the scheme by offering above-market wagesa and refusing to participate. They poached a lot of good engineers that way.
Then compare Walmart to Kroger and Publix. Publix charges around 10% more than Walmart per Walmart's ads in exchange for more variety, fast checkout, and high service. Kroger charges a mix of that and Walmart prices on things to attract basically every demographic with similar benefits offered to customers. Both pay workers well with benefits with Publix treating them well. The result is the two collectively sucked $135 billion a year out of Walmart's potential revenue.
So, the highest profit and customer satisfaction companies in Walmart's model & market get there by providing decent pay, benefits, and job security to workers plus treating them better in Publix case. Same pattern emerges in lots of other industries. Probably better than what Walmart was doing. That Walmart keeps copying Kroger and Aldi, but not Publix which is employee-focused ;), shows they know those methods are better. Their management greed and control-freak nature makes them adopt more selectively and slowly.
Kroger and Publix both seem to offer ~50,000 items in their larger stores.
They don't have a full department store and will thus likely have a greater variety of groceries than the Walmart, but they don't have greater variety overall. I would argue that they are a 3rd variety of big box (along with mega stores and club stores), not the same as Walmart.
Grester variety in food. I should've specified that. Also a lot of higher-quality stuff or at least branded as such.
Edit: It should be noted that Kroger is moving that direction with its Fred Meyer-style stores. They're more like Walmarts and Targets. Walmart even converted a failed store into a Walmart once although Im not sure the size of that one. Kroger is opening a Fred-style store close to me with descriptions that sounded like a Walmart. Will be interesting to see if these work and what effect they'll have on profit.
If you want Walmart to match Costco on pay, it has to fire between 1/3 and 1/2 its employee base and replace them with robotics or other automating technology.
Sales per employee
Costco: $550,000
Walmart: $200,000
So now you need to find low skill jobs for a million people, at a time when automation technology is aggressively seeking to (and increasingly able to) wipe out those types of jobs. Oh yeah, and Walmart is very likely in permanent contraction mode already, in which its business will perpetually shrink on a year over year basis ala Sears and other past giants of retail, as Amazon + its far greater automation eats them. Good luck.
That's what Costco says, but I'd be willing to bet that Costco and Walmart employees are quite different. I would bet that Costco employees had more years of education, and more successful (i.e. years not fired for cause) work experience.
When you are willing to pay more, you can purchase higher quality; this is as true for labor as software or electronics.
" I would bet that Costco employees had more years of education, and more successful (i.e. years not fired for cause) work experience."
You'd loose money. I've met many Costco employees. Most were either high-school students or older people without degrees who simply applied for the job or were referred then got through an interview. They care more about whether you'll work hard than anything else. Then they tend to stick around longer since they get paid and treated really well so long as they work hard. Lots of retail workers would like a job at Costco or a similar place but there's just few openings since people don't quit often.
Neither Costco nor Walmart will have anything near the average level of education of the average HN commenter, but I maintain that there is almost certainly a difference
They pull people out of high schools, retail jobs, etc. They wont hire outright idiots but there's no IQ test or anything. Think about it another way: these people are going to Costco because they lack what's needed to get higher-paying jobs requiring degrees or trade schools.
Costco reps themselves already explained the extra pay was just incentive and that they believe in living wages. They also cancelled the ad bugdet specifically to give that money ("6% of revenue") to workers instead thinking good workers are better than advertising for customer retention. So, they consistently believe paying & motivating workers has highest benefits. They also pull from barely-educated sources who probably have above-average intelligence or character but still the common, low-rung pool of labor.
I don't know that they need to, but I can see where it would be beneficial to pay more if it led to better service of the more affluent customers that frequent the stores.
The point about the large packages and much smaller number of items was more that they need less labor to keep the shelves full.
There's a difference between efficiency wages and paying market rate for a group with specialized skills. Efficiency wages means paying more than market rate in order to get some other benefit such as reduced turnover.
In my opinion, tech companies pay market wages for a rare skill (being good at programming). Some will say this is arrogant, but it's just my honest opinion given my knowledge.
But Costco is a bit radical. I recall several times in the past decade+ reading on Forbes or Bloomberg about their 'less-than favorable'(according to Wall Street) employee compensation practices. This is a big reason why I shop there, my money is my vote.
*I have tried tipping the guys in the garage for tire services & have yet to get anyone to accept, they tell me they are paid well enough and it's against policy, etc... they say that even out at the smoking area, away from the cameras, too.
> Not revolutionary but definitely radical in today's environment.
not even. There are many companies that pay higher-than-category wages just because they want to get the best employees possible. Look at what's happening in the Valley for the more popular companies. They pay more than average and give you tons of benefits on top.
Facebook and Google are not comparable to Walmart. Don't even pretend they are. They supposedly do knowledge work, Walmart relies on unskilled labor - there's not much latitude in stocking shelves, goes traditional wisdom. Challenging that is radical.
