Wal-Mart vs. Costco, Part IV

Wal-Mart's decision to staff up also illustrates, again, why it can't pay its workers the way Costco pays its workers.

A few weeks back, I wrote about how the number of products a store carries can drive its labor model, and a lot of other business decisions. Costco Wholesale Corp. has a few products and a lean labor force, each of whom is paid more than a Wal-Mart Stores Inc. worker; Wal-Mart has a lot of products and a lot of workers, many of whom make less than $10 an hour. When you suggest that "Costco shows it's possible" for Wal-Mart to pay its workers much more, what you're actually suggesting -- though you don't realize it -- is a radical shift in the way that the store does business. (And as presidential economic advisor Jason Furman has noted, one that might actually make workers worse off, by leaving a lot of them unemployed.)

To continue reading this article you must be a Bloomberg Professional Service Subscriber.