Last updated on March 21st, 2016 at 09:37 am
Should Walmart and Costco—two stores with differing target customers, business models and profit margins—be required to pay employees the same minimum wage? No, according to a new study from the National Center for Policy Analysis (NCPA).
The analysis, authored by NCPA senior fellow Pam Villarreal and research associates Anna Shapovalova and Jacob Kohlhepp, warns that requiring the same minimum wage regardless of industry could be detrimental to the very workers “living wage” advocates are trying to help. In their comparison of Costco and Walmart, the first and least favorite retailers of “living wage” advocates, the authors found that:
- Retail wages vary by type or store, ranging from an average of $11.19 paid to gas station clerks, to $22.12 paid to electronics and appliance store clerks.
- Profit margins for retail industries also vary, ranging from about 2 to 4 percent.
- Business models also differ between retailers. Thus, Costco caters to a higher income and small business shopper than Walmart, and they charge a membership fee.
- Productivity aside, raising wages often leads to price increases on basic goods, which hurts price-sensitive, low-wage workers.
According to a geographic analysis of Florida and Texas contained in the study, Costco stores are more likely to be located in areas with higher median household incomes than Walmart store. While Walmart stores are ubiquitous, Costco stores are more likely to be located in areas with a median income in the top 40 percent.
“It is simply unrealistic to expect that one retailer is going to provide the same pay and benefits as another, particularly if they are targeting shoppers of different income levels,” says Villarreal.