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Online Extra: At Costco, "Good Jobs and Good Wages"

CEO James Sinegal disputes Wal-Mart's low-pay model and says in the long run, it doesn't pay the right dividends

James Sinegal is the CEO of Costco Wholesale Corp., which compensates its workers far better than rival Wal-Mart Stores (WMT ) does. A recent study by BusinessWeek found that by paying its employees more, Costco (COST ) gets lower turnover and higher productivity. That, coupled with a business strategy that includes a mix of higher-margin products, enables Costco to keep its labor costs lower than Wal-Mart's as a percentage of sales (see BW, 4/12/04, "The Costco Way"). Sinegal recently spoke about Costco's strategy with BusinessWeek Associate Editor Michelle Conlin. Edited excerpts from their conversation follow:

Q: Is your treatment of employees limited to those in the U.S.?

A:

In every country where we conduct business, we pay good wages. Not just the U.S. We have Costcos in the UK, Canada, Mexico, Japan, South Korea, Taiwan, and Puerto Rico. We always strive to be the best in the wage package.