Costco Employees and "Market Analysts"
The job of a shareholder-owned company is to make money for shareholders, not to coddle its employees. But sometimes, being good to your employees can be good for the shareholders.
In “Living the Dog’s Life at Costco,” Kevin Carson takes to task Wall St analysts who are trying to run Costco’s business for them:
“He has been too benevolent,” she said. “He’s right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden.”
Too benevolent? Hmmm. Are Costco’s costs out of line? Because that chart sure seems to indicate that Costco has found a model that works. If it didn’t, comparatives might be interesting. I would bet that Costco sees fewer sick days, lower shrinkage, and other measurable effects for its better health care.
Analysts who demand that Costco pay its employees less are forgetting that management gets paid, not to impoverish employees, but to reward shareholders. And Costco seems to be doing that well.
(The chart shows Costco in blue, vs S&P and Nasdaq in green and red. Click for the original at Yahoo Finance.)