March 31, 2004

Corporate Largesse

As the economy recovers, it's imperative for corporate managers to squeeze as much out of their employees as possible. Remember, salary and benefits are cost centers, to be slashed down like noxious weeds. The high priests of capitalism are warning Costco of the dire consequences of treating workers like actual human beings.

"From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company."

Now we know who'll be first up against the wall when the revolution comes. Geez, what a shitty thing to say. I mean, what are we talking about by "overly generous" here?

Costco pays starting employees at least $10 an hour, and with regular raises a full-time hourly worker can make $40,000 annually within 3½ years. Cashiers are paid $10.50 to $17.50 an hour.

Wal-Mart doesn't disclose its wage rates, since they vary by location. According to a recent study funded by Wal-Mart, cashiers at its Supercenters in Las Vegas were paid $7.65 to $11.45 an hour.

Oh no, double-digits! Costco folks get better health insurance, too. Unfortunately, that's starting to go away as health-care costs continue to spiral upwards.

One can argue that outsourcing isn't a big deal, and one would probably be right in the macroeconomic sense. However, anecdotal stories like this one about a call center in Applalachia being closed in favor of one in India is the sort of political dagger that can kill an incumbent politician.

The Travelocity call center brought 250 jobs to a community wounded by the decline of coal mining, its mainstay for a century. It plugged the town's 1,500 residents into the global high-tech economy, offering the prospect of a secure future.

That illusion crumbled last month when Travelocity fired Clintwood, saying it would close the call center by year-end and move all the jobs to India. The Internet, far from being the town's salvation, is threatening it with collapse.

The call center only went to Clintwood, WV because the local officials bent showered them with tax breaks and subsidies, but there ain't no subsidy that can compete with the two-bucks-per-hour wages in India. I usually don't hold much sympathy for spoiled techies who thought they were too smart to be replaced, but it's another matter when townsfolk get sucker-punched by the Invisible Hand. Sympathy is about the best they can expect though, because those jobs ain't ever coming back. If it makes them feel any better, I doubt Travelocity will be around for much longer anyway. Stupid gnome.

Posted by mikewang on 10:06 AM