Why Aren't Target Employees Striking Like Their Cousins At Wal-Mart?

Based on the variety of products sold in Costco (NASDAQ: COST  ) , Target (NYSE: TGT  ) , and Wal-Mart (NYSE: WMT  ) , a customer would have a difficult time telling one apart from another. But when the products are set aside, one thing does, in fact, separate Wal-Mart, Target, and Costco from one another – the happiness of their employees.

Some customers sense the differences in employee attitude when shopping at one retailer versus another; other customers do not. The news, however, tells the obvious truth: Wal-Mart employees are not happy with their low wages and are striking to change this. In fact, the largest worker revolt in Wal-Mart's 50 year history has just occurred, resulting in over 50 arrests. Target employees, on the other hand, have never voiced their concerns as publicly. This seems strange given that wages between the two companies are similar. Is there something else going on that explains this divergence?

Target versus Wal-Mart
Long ago at the turn of the century, a retailer known as the Dayton Dry Goods Corporation opened its doors in 1902. The founders may not have known it then, but that simple store would grow to become a great American brand – Target. In 1962, the first Target store opened its doors to the public, along with the first Wal-Mart store. Over the course of its history, Target has continued to improve its business model, company culture, pricing strategy, and interior store appearance. Its biggest competition has long been Wal-Mart, followed by other big box retailers like Costco and Kmart. However, when it comes to employee happiness, Wal-Mart is the least of their concerns. 

Higher wages don't create employee happiness
Believe it or not, hourly sales associates and cashiers at Target actually make less on average than Wal-Mart employees holding the same position. For instance, Target sales associate team members make an average of $8.34 per hour, whereas sales associates at Wal-Mart make an average of $8.86 per hour. In addition, cashiers at Target make $0.41 less per hour than Wal-Mart cashiers, who earn on average $8.51 per hour. Cashiers at Costco make the most, earning an average of $15.06 per hour, with most non-management roles earning on average $12 to $18 per hour. Based on this information, Target's employees should be rioting, not Wal-Mart employees. So why haven't they?

Target's happy employees 
Target's employees are overall content in several ways. Some investors may not know that Target actually won CareerBliss's Leap award in 2011, beating 250,000 other organizations. Employees rated their organization in several areas such as work-life balance, employee benefits, relationship between co-workers and bosses, job resources, daily tasks, company culture, work environment, career opportunities and advancement, compensation, and many others. Target's employees gave the company high ratings in all categories. In fact, Target actually improved its employee happiness by 12%. Unlike at Wal-Mart, Target associates seemingly care less about compensation and more about their work environment and its perks.

Happiness at its best
Target and Costco believe that a happy work environment leads to better customer service, and ultimately, profits for the company. Furthermore, both retailers treat their employees as a long-term investment rather than a gamble. For Costco, minimizing employee compensation is not what's important to the company's growth; rather, minimizing employee turnover and maximizing employee loyalty, productivity, and knowledge of customer service excellence is the key to success.  

The award goes to Costco
Costco's employees are actually the happiest of these three companies. Not only do they enjoy their jobs, but they also enjoy how well the company treats them. Costco treats its employees as individuals and believes that everyone has the ability to learn new skills and make decisions. Costco's generous wages and benefits packages are definitely a fantastic advantage to being an employee there. Even though Costco employees earn more per hour than Wal-Mart employees, Costco employees pay about 12% in out of pocket premium for benefits such as insurance, whereas Wal-Mart employees pay 40% out of pocket. That's quite a difference! While Wal-Mart is in the hot seat with its workforce, Costco employees aren't going anywhere anytime soon.

The outcome for Wal-Mart employees
Wal-Mart executives are not planning on raising their hourly associates' wages anytime in the near future unless forced to by Congress. The company has announced that it plans on promoting 160,000 employees over the next year. For now, Wal-Mart's hourly associates can only hope to receive more hours back in their pocket as the holiday season approaches. Gaining hours back on the clock may settle the strike for a short time, giving Wal-Mart executives additional time to devise a better solution to their employees' complaints of being paid "poverty wages." Foolish investors should note that in the long term, Target and Costco are likely to benefit from their employee-friendly methods, especially when compared to Wal-Mart. Consumers are becoming increasingly conscious of how organizations stand on social issues, and this could prove a deciding factor in which of these retailers wins out over the long term. 

As Wal-Mart declines, who wins?
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Read/Post Comments (36) | Recommend This Article (18)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 16, 2013, at 10:37 AM, mr091468 wrote:

    Clearly, the writer of this article is biased against WMT. The FOOL should not put up with her nonsense.

    Quote from article: "Wal-Mart executives are not planning on raising their hourly associates' wages anytime in the near future unless forced to by Congress." This is tripe. You write about a congress of prostitutes who can't protect our own borders but will force a publically owned company to raise wages? And, if you're correct, which is doubtful, and TGT's wages are lower than that of WMT's, why single out WMT with respect to the congress of fools? Articles such as this make me wonder about the credibilty of the FOOL's management. Lastly, lady, there's nothing "generous" about a 15.00/wage in the land of 200+k housing.

  • Report this Comment On November 16, 2013, at 10:45 AM, Mathman6577 wrote:

    If someone does not like working at a particular company don't. If you don't like their products don't buy them. If you don't like their stock sell it. Just don't tell me what to do.

  • Report this Comment On November 16, 2013, at 10:46 AM, stephen647 wrote:

    Actually my take is they reported facts about Walmart. It is an evil, manipulative, corp. long removed from what Sam Walton created. If almost everyone agrees on something, its more a fact than opinion. They even had the nerve to promote selling american made products that were made in china for god sake. My take from the story is Target and Costco are getting the benefits from treating an employee like a human vs a number than be be removed for an extra dollar in the share holders pockets. I think your biased for Walmart sir.

  • Report this Comment On November 16, 2013, at 11:01 AM, Mathman6577 wrote:

    It's his choice to be biased for any company he chooses.

  • Report this Comment On November 16, 2013, at 11:07 AM, badlandsbabe wrote:

    Interesting. I hear a lot of Wal-Mart bashing from ex-employees and former customers, but mostly from union members who have a campaign against them. My question is, are Cosco & Target employees represented by a union? If not. why are they targeting only Wal-Mart?

  • Report this Comment On November 16, 2013, at 11:57 AM, Ronmc2 wrote:

    Stephen647-"promote selling american made products that were made in china for god sake."

    No they didn't. They sell USA-made products, and sell Chinese Products, as does Costco, but you NEVER read that(Liberal Spin). Target sells the SAME % of Chinese Goods and pays the same wage, and made an Anti-Union video for its employees. But the Media CHOOSES not to report it, because it doesn't further their Agenda. Why aren't you complaining about Target? Because the Liberal Media has convinced Gullible people like you that the Same, is somehow Different.

  • Report this Comment On November 16, 2013, at 11:58 AM, ryanchandler25 wrote:

    As a tax payer, I am sick and tired of having to subsidize companies like Wal-Mart and Target. When these companies fail to pay their employees a livable wage, they have to resort to government assistance. The HR folks at Wal-Mart hand out information packets on government assistance like food stamps and Medicaid. If Costco can afford to pay their employees $15/hour, so can Wal-Mart.

  • Report this Comment On November 16, 2013, at 12:11 PM, chikc wrote:

    I have shopped many times at Wal-Mart, Sam's, Target and Costco. Based on my experiences, Wal-Mart and Sam's employees have given me the best and friendliest service. I have found Target and Costco employees less friendly and responsive. In fact, I was once verbally berated by two Costco employees at the register for not upgrading to the premium membership they were trying to sell me. In my opinion,Wal-Mart is criticized the most simply because they are the biggest.

  • Report this Comment On November 16, 2013, at 12:34 PM, romath99 wrote:

    When it comes to wages, etc., the primary difference between Wal-Mart, Costco and Target is the proportion of high school students Target employs.

  • Report this Comment On November 16, 2013, at 12:41 PM, Wenmomojo wrote:

    If WM raised its wages to $15/hr, they would have to restaff all the lower level employees.The sad fact is that many of WM's help are barely employable, that's why the positions pay so low.

    At a higher pay rate ($15/hr = about $30K/yr) you would have college graduates applying. The displaced workers would get kicked back onto social welfare.

    There is a happy medium somewhere between $8 and $15. No one should like patronizing businesses that treat the employees poorly.

  • Report this Comment On November 16, 2013, at 12:46 PM, Mathman6577 wrote:

    @stephen647: The unions and protestors do not target Costco because their management are union supporters (they provide cash to many union organizations) and bundlers for campaigns for pro-union (mostly Democrats) politicians. Ex-CEO Sengal is one of the biggest union supporters around. They practice a form of crony capitalism.

  • Report this Comment On November 16, 2013, at 2:56 PM, hbk72777 wrote:

    I've shopped at Walmart since 1995 (Long Island gets stores much later due to high rent costs).

    I'm in there once or twice a week. All of the cashiers know me. What does that say? That there isn't a high turnover, or even hardly any at all. Mos of them were there when the store opened.

    I moved from Long Island to NC 3 years ago, same thing happened. All of the same employees know me.

    Unhappy people don't stay loyal to their jobs. All of the cashiers are in the 50s-70s. They probably use it to supplement their SS.

    Who the hell are we to tell them what's best for them?

  • Report this Comment On November 16, 2013, at 3:45 PM, frellmedead wrote:

    Still doesn't really answer the question as to why Target employees are happier if the are making a lower wage. Do they get more hours that make them eligible for insurance and other benefits?

    @Mathman6577: "They practice a form of crony capitalism". You mean like 99.9 percent of American corporations and "capitalists"? True capitalism means no subsidies and no favoritism in regards to taxes.

  • Report this Comment On November 16, 2013, at 3:55 PM, igmo8 wrote:

    It is altogether unconscionable that the employees of the richest family in America should be underpaid. For this reason alone all of America should rally to put Walmart soundly out of business.

  • Report this Comment On November 16, 2013, at 4:08 PM, flyguyret wrote:

    I had to check the forum header, I thought this was written by a CNBC stringer. One, the strikers arrested were outside union organizers. Two, Target, pronounced tar-shae' now have a controlling interest from France and they embrace the unions. Three, I would not base my stock purchases on obviously biased opinion but I do shop at Wally World and not K'mart or Costco, or Tarshay!

  • Report this Comment On November 16, 2013, at 5:44 PM, vwgirl75 wrote:

    Hi All,

    I work for Target....no they are not union nor are they run by a French Company. They are based here in the USA in MN. Working any job has it's ups and downs.

  • Report this Comment On November 16, 2013, at 8:01 PM, bkhs81 wrote:

    flyguyret - Target is not now, nor has it ever been owned by anyone in France. Check snopes.com before you spread someone else's opinion. Target is publicly traded.

  • Report this Comment On November 16, 2013, at 8:14 PM, Lookie wrote:

    Whatever, unions are dead and really have no place in the American workforce anymore.

  • Report this Comment On November 16, 2013, at 8:40 PM, AWA48 wrote:

    When you are #1 people will do or say anything to knock you out of that spot. Wal-Mart is the #1 retailer in the world and that infuriates a lot of people. Wal-Mart would not have the lowest prices if they were union or paid high wages. The pay is not bad if you stick with them and prove yourself to be a good worker, and if you do that you will be rewarded. It is the sorry ones that do all of the complaining. Wal-Mart does a lot to help people. CMN Children's Miracle Network for example. They give millions of dollars to various charities. Whenever disaster strikes they are always on the scene providing free water and other goods. They are enviromental champions, going green wherever possible, using solar power in their stores. Their truckers have a no idle policy, saving countless gallons of diesel fuel. They are No. 1 because the customer knows that their money will go further there than anywhere else.

  • Report this Comment On November 16, 2013, at 8:57 PM, betty15 wrote:

    Natalie, do you realize that the union is targeting WALMART? They figure if Walmart caves into the union that it will be easy to get Target and all the rest. Walmart is the biggest, so if you get them, the others will fall in line. I can't believe you are so naïve. I know lots of Walmart workers who have been there for years. They ask about me when I go in. The union isn't concerned with how many workers it is getting fired or with them losing their jobs because of talking them into protesting, etc, because they know there are plenty others. The union is using those people.

  • Report this Comment On November 17, 2013, at 12:20 AM, porpoiseboy wrote:

    funny that every target i ever go into has TERRIBLE customer service. nice that the peeps working there are happy.....'cause it never seems i leave that way.

    this is just another silly bash W article. but at least the truth that they pay better than avg in their industry is out there. they are also one of the "greenest" large companies on the planet and they are one of the innovators of sustainability which is really a cut above being green. the article stinks

  • Report this Comment On November 17, 2013, at 3:41 AM, xscharm wrote:

    At my local Target there's apparently no employee over the age of 25. Walmart seems to have all ages including older folks. The age differences may explain the "happiness" survey results.

  • Report this Comment On November 17, 2013, at 6:58 AM, Kevin434 wrote:

    What know one wrote is that Costco charges a yearly fee to shop there, while the other stores are open to the public.

  • Report this Comment On November 17, 2013, at 7:13 AM, Kim63 wrote:

    I find this article ridiculous. I worked for Target for 5 years, first as a cashier then worked the overnight shift stocking, four of those years were in New Jersey and one in Florida. Target workers are not happier with their jobs than Walmart workers, it's an individual thing not an overall thing. In Jersey, Target was known (by employees) for hiring undocumented workers till one of my coworkers blew the whistle on them. Target is out to make money just like Walmart, bottom line is kissing customers ass, move the product at all costs. If you don't like it you know where the door is. Also, there was alot of employee theft from the workers whether is was on the sales floor from Associates to the Team Leaders or in Customer Service (with credit cards). After awhile I grew to hate working there but I loved my cooworkers (in Jersey anyways).

  • Report this Comment On November 17, 2013, at 7:34 AM, manbigus wrote:

    I don't care if one company offers medical insurance and the other doesn't. I also don't care if one company has happier employees. What IS important to me is an item or items that can be purchased that are less expensive yet, of good quality.

  • Report this Comment On November 17, 2013, at 8:36 AM, craig02021 wrote:

    What turns me off about Wal-Mart was I had a friend who I worked with full-time , who started moonlighting part-time at Wal-Mart for extra cash. He started working in the Electronics dept. in the evening.

    He told me on his first day when his shift ended he punched out with all his other co-workers and was about to leave;when the manager approached him and told him that after all the workers punched out the staff was expected to remain and straighten the store out.

    He told me that he thought this was not right but relectantly agreeed to it. He told me he whipped through his electronic dept. in about 15 minutes cause he was pissed -off and wanted to go home. When he was about to leave then the manager asked him to help straighten the clothing dept.because they were behind.

    Long story short he was there another 1/2 hour off the clock for a total of 45 minutes,after getting only 4 hours pay at $9 an hour.

    MY QUESTION IS WHAT KIND OF LOW WAGE SLEAZZY OPERATION WOULD EVEN THINK OF ASKING YOU TO WORK FOR FREE???

    He quit after about 2 weeks of this and I will NEVER shop there after hearing this!!

  • Report this Comment On November 17, 2013, at 9:03 AM, toby wrote:

    i have managed to raise 5 kids by myself, with no child support , while working for walmart for over 20 years .

    people expect good wages immediately

    i am sorry but i believe you need to prove you should make more money , not just have it given to you .

    unions are always trying to get walmart under their belt . walmart would make a union very rich with all of its associates.

    i for one am grateful that walmart has put up with my needing days off at certain moments , or when i was needing help.

    a story about what an associate told you about working off the clock ... no business can make you stay and work without pay , that is just ridiculous

    noone ever hears the good things walmart does and that is too bad .

  • Report this Comment On November 17, 2013, at 9:23 AM, Mathman6577 wrote:

    @toby: Some of the writers here are trying to document the good side of Walmart, such as the fact that it has returned a lot of its earnings to shareholders and employees (and charities) over the years.

  • Report this Comment On November 17, 2013, at 9:25 AM, elise0511 wrote:

    I worked at Walmart in 2008/09. Despite a college degree and thirty year work experience, I was hired in as a cashier at $8.00 per hour, a wage that didn't increase even when the minimum wage was increased to its current level. The most hours I ever worked per week was 33. I had to stop teaching religious school and singing in the choir and participating in community theater because I didn't have steady hours around which I could make long term plans. Some weeks I would work Friday night until 11pm, then have to be there on Saturday morning at 7am. (Just because the law says you must have eight hours between shifts doesn't mean it's right or fair.) I made so little money per month I was eligible for SNAP benefits throughout my employment. The only health insurance they offered I could afford had a very high deductible that I would almost never accrue in an average year. I wanted dental insurance, but it was only available to full time employees, meaning 40 hpw when nobody worked 40 hpw. The employee discount did not apply to groceries except during November and December. The store is only closed on Christmas Day, so I, like most of my colleagues, had to work on Thanksgiving Day. They claim to have educational assistance, but when I applied for assistance to go to pharmacy technician school so I could transfer to the Walmart pharmacy, I was told those benefits were not available to me.

    When my doctor determined I needed more regular hours and no more night work, I had to complete an FMLA form. I turned it in on a Saturday and was fired the following Monday for allegedly asking a customer to bag her own groceries, which even the Virginia Employment Commission didn't believe when I applied for unemployment benefits.

    The only good thing I can say about my employment there was there was no requirement ever to work off the clock.

    IMO, Walmart practices systematic employee abuse because there is neither a government entity nor a union to stop them.

  • Report this Comment On November 17, 2013, at 11:26 AM, goobie wrote:

    Retail has always been an underpaid profession.

  • Report this Comment On November 17, 2013, at 12:06 PM, fuskiegirl21 wrote:

    I doubled my money in WalMart stock so from a shareholder perspective I am happy. I thought the Motley Fool was a stock report.

  • Report this Comment On November 17, 2013, at 1:05 PM, mr091468 wrote:

    I thought it was a stock report, too, fuskigirl21. Evidently, it has somewhat changed to frustrated liberal writers with an agenda. Something like S/A.

  • Report this Comment On November 17, 2013, at 1:37 PM, Mathman6577 wrote:

    Walmart has returned a lot value to shareholders through the hares, including dividend growth of better than 20% per year since the 70's.

  • Report this Comment On November 17, 2013, at 7:39 PM, tigger1158 wrote:

    I worked at wm for almost 13yrs.And just quit,walked in and quit!! I had enough! The icing on the cake was almost losing my house!!! Get a hardship loan on my 401k NOT!! It brought me to tears and I walked in the next day and QUIT!!!! My store manager was shocked? She thought wm could help!!NOT I covered my bases already and figured it all out!! I'm not stupid,well maybe for working there that long duh.I got a job a week later and it's not the best but it's money coming in and can work overtime.The best thing I did ever in my life was walking out of hell WM!!!!!!!!!!!!!!!!!!!!!! They work you to death for peanuts.And I saved the house.Btw thank you for that wm! Now I stress-free!!

  • Report this Comment On November 18, 2013, at 4:15 PM, Mathman6577 wrote:

    The following story gives you an idea of what kind of company COST is:

    http://www.foxnews.com/opinion/2013/11/18/costco-bible-is-fi...

  • Report this Comment On April 09, 2014, at 4:31 PM, Dinsdale wrote:

    stephan647,

    The world is flat, remember?

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