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👋 Good Morning. Two warehouse giants, same product, same customer. One keeps its workers. One can't stop losing them. The difference is simpler than you think.

Read time: 3 minutes | 676 words

STORY 

Costco Vs Sam’s Club

Costco's CEO makes $950,000 and pays workers $29/hour with full benefits. Sam's Club CEO makes $25 million and pays $15/hour with minimal coverage. One company has 6% turnover. The other has 44%.

Here's what that gap actually means.

This isn't charity. It's strategy.

Costco generates nearly twice the profit per employee as Sam's Club, while using 38% fewer workers to match them in total sales volume.

Here's how the benefits stack up in practice:

• Costco employees cover only 8-12% of their health insurance premiums

• Sam's Club employees cover over 40% of theirs

• Costco offers semi-annual bonuses for long-tenured hourly workers

• Sam's Club offers no equivalent bonus structure

When Sam's Club finally raised wages, productivity jumped 16%, turnover dropped 25%, and sales rose 25% in just two years.

They proved their own model was working against them.

The real cost of cheap labor:

Replacing one employee costs 50-200% of their annual salary. At 44% turnover, Sam's Club is running a permanent hiring and training tax on itself every single year.

Costco reinvests that money into the same people, year after year.

What the numbers actually show:

A Costco cashier after five years earns around $40,000 annually. A comparable Sam's Club employee earns closer to $31,000, with fewer benefits and no guaranteed hours.

The CEO pay gap tells the whole story.

One CEO earns under a million while his workers thrive. The other earns $25 million while his workers struggle to cover basic health costs.

Happy employees stay longer. They sell more. They steal less. They train each other.

Costco didn't stumble into low turnover. They bought it.

And the math proves it was worth every penny.

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INSIGHT

Low Wages Aren't a Savings — They're a Hidden Tax

Every time a worker quits, a company pays to find, hire, and train a replacement. At 44% turnover, that cost never stops compounding.

It shows up in:

• slower service from undertrained new hires

• higher theft rates from disengaged employees

• constant recruiting costs that never go away

• lower productivity across every shift, every day

Sam's Club spends millions annually just to stay in place.

Costco spends that same money on the people already doing the work.

The math is brutal. Replacing one employee can cost up to 200% of their annual salary. At scale, across hundreds of locations, that's not a rounding error. That's a strategic disaster hiding inside a spreadsheet.

Cheap labor creates expensive problems. The companies that figure this out first win. The ones that don't keep paying for it -- just in ways that are harder to see.

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ACTION

Audit Your Turnover Cost

Take one position in your business that has turned over in the last 12 months. Estimate what it actually cost: job posts, interview time, training hours, lost productivity during the gap. Most owners have never done this math. Once you see the real number, the conversation about raising wages changes completely.

MEME