President took a big swipe at Walmart today without ever mentioning them by name. By speaking about everything that Costco is, President Obama pointed out what Walmart isn’t.
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The president said,
A hundred years ago, Henry Ford started Ford Motor Company. Model T — you remember all that? Henry Ford realized he could sell more cars if his workers made enough money to buy the cars. He had started this — factories and mass production and all that, but then he realized, if my workers aren’t getting paid, they won’t be able to buy the cars. And then I can’t make a profit and reinvest to hire more workers. But if I pay my workers a good wage, they can buy my product, I make more cars. Ultimately, I’ll make more money, they’ve got more money in their pockets — so it’s a win-win for everybody.
And leaders today, business leaders today, some of them understand this same concept. Costco’s CEO, Craig Jelinek, he understands this. He feels the same way. He knows that Costco is going to do better, all our businesses do better when customers have more money to spend. And listen, Craig is a wonderful guy, but he’s not in this for philanthropy. He’s a businessman. He’s looking at the bottom line. But he sees that if he’s doing right by Costco’s workers, then they can buy that 80-inch TV, too. Right?
Profitable corporations like Costco see higher wages as a smart way to boost productivity and to reduce turnover. So entry-level employees here — stock associates, cashiers — start out at $11.50 an hour. Start at $11.50.
The average hourly wage is more than $20, not including overtime or benefits. And Costco’s commitment to fairness doesn’t stop at the checkout counter; it extends down the supply chain, including to many of the farmworkers who grow the product — the produce that you sell. (Applause.)
Now, what this means is that that Costco has some of the lowest employee turnover in your industry. So you’re not constantly retraining folks because they quit. You got people like Teressa who has been here 27 years — because it’s a company that’s looking out for workers.
And I got to tell you, when I walk around, just — I had a little tour of the produce section, the bakery — you could just tell people feel good about their job and they feel good about the company, and you have a good atmosphere, and the managers and people all take pride in what you do.
Now, folks who work at Costco understand that, but there are a lot of Americans who don’t work somewhere like Costco, and they’re working for wages that don’t go as far as they once did. Today, the minimum wage — the federal minimum wage doesn’t even go as far as it did back in the 1950s. And as the cost of living goes up, the value of the minimum wage goes down over time. Just last year alone, workers earning the minimum wage basically got the equivalent of a $200 pay cut because the minimum wage stayed the same but costs of everything else are going up.
I don’t need to tell you this. You go shopping. So you’re like, mm-hmm. For a typical minimum-wage worker, that’s a month’s worth of groceries. It’s two months of electricity. It’s a big deal to a lot of families.
Peter Deier, an E.P. Clapp Distinguished Professor of Politics, Occidental College, explained why President Obama chose Costco as the venue for his speech, “Why Costco and not Walmart, which is a much bigger and better-known discount retailer? The answer is that Costco’s labor practices help reduce income inequality while Walmart’s labor practices widen it. Yes, Walmart is better-known, but what it’s known for is low wages and abusive labor practices….When Americans think of the phrase “working poor,” they think of Walmart. Many of its employees make so little that they are eligible for food stamps, Medicaid, and housing subsidies. America’s taxpayers are subsidizing Walmart’s poverty-wage labor practices to the tune of billions of dollars. The company’s low-wage business model contributes to its stocking problems, the low customer service ratings, and the retailer’s current decline in sales. Not only do Costco workers earn much more than their Walmart counterparts, but Costco’s CEO makes considerably less than Walmart’s CEO. So while Costco helps narrow the gap between the rich and the rest, Walmart widens it.”
President Obama was sending a not so subtle message to the corporate giant that is most responsible for income inequality in this country. The point of the president’s speech at Costco was that it is more than possible for a company to both pay a living wage and be profitable.
Costco proves both the Republican Party and Walmart wrong. A company can pay its employees well and be successful. Republicans always frame any proposed increase in the minimum wage as a choice between paying employees well and jobs. Even though research shows that increasing the minimum wage does not cause employers to layoff workers, Republicans still stick to this tired old talking point.
By highlighting what Costco does right, Obama was taking a shot at Walmart and all of the other retail and service industry giants who oppose raising the minimum wage. Costco should be the norm, not the exception. President Obama’s speech was a not so subtle reminder to the country of the damage that Walmart is doing to us all.
Jason is the managing editor. He is also a White House Press Pool and a Congressional correspondent for PoliticusUSA. Jason has a Bachelor’s Degree in Political Science. His graduate work focused on public policy, with a specialization in social reform movements.
Awards and Professional Memberships
Member of the Society of Professional Journalists and The American Political Science Association
