Stock Market "Values"

I love Nightly Business Report; this week. This week, financial commentator Hilary Kramer talked about Costco.

Kramer noted that Costco pays employees $17 an hour, which is $10 a more than Wal-Mart. She commented that Costco was reaping the benefits of this decision.

Costco also touts its employee benefits to market itself to prospective employees. (Wal-Mart nakedly notes that its health plan is designed to protect employees from catastrophic medical costs.)

Wal-Mart is assailed in the press for a litany of perceived wrongs, including moving towards offering employees high deductible health care plans, forced overtime, and having a disproportionate number of employees using medicaid and other state sponsored benefit plans.

Costco’s stock price is up almost 12% in the last year; Wal-Mart is up 4.0% in the same period.

Now, I’m not sure that I’d call Wal-Mart and Costco strict comparables. Wal-Mart and Target are a bit closer. Target’s stock price is up 15.2%.

My view is that the stock market is another collective consciousness…and one that literally values companies.

I can’t tell you why the market likes Target and Costco more than it does Wal-Mart. But try Googling each company and see how many positive/negative websites come in the results. (And if you add “employee benefits” to your search, there is quite a marked difference.)

Benefits and insurance are tough in small businesses: Mom & Pop pay higher rates to provide employees with health insurance than Wal-Mart does. Many small businesses decide that they can’t afford to provide this benefit.

I don’t have any answers…but it is worth adding to the mix of things to consider as we decide what we want to create.

And to my recent points on conscious competition: you’re “competing” for the best employees, too.

2 thoughts on “Stock Market "Values"

  1. I don’t have answers either but it’s very odd that the richest nation on earth can’t provide health care coverage for all – as if the idea that citizens who work and pay taxes should not have to put up with diparities in health care because of their relative financial standing is communistic or something.Bodily health is as basic as it gets. Seems like in the US, our government is responsible only to the rich and to the spread of “democracy” in places they can spread a lot of contract money around.I think we’ve reached a point where we’ve become rigidly and ideology capitalist. Just let “the market” take care of everything, just let the rich get as rich as possible, and all will be well for the rest of us and our children’s future secured. Yeah, right.

  2. Paul, thanks for your thoughtful comment.I have decided not to participate in creating businesses that don’t offer employee health care. (And I prefer to be the customer of companies who do the same. Someone asked me, why pay $4 for a cup of coffee at Starbucks? I facetiously said, I’m paying for the employees to be nice to me. And then I said, I’m paying for health care for their employees. And can’t you see the difference in how they treat customers? Maybe Maslow’s hierarchy is old fashioned, but give me an employee whose survival needs are cared for, and I’ll show you someone who can put their full attention on the job at hand.)I had a high deductible insurance plan, which was a nightmare. I paid for everything out of pocket, and never made a claim. My premiums went up above $500.I’m currently earning my the bulk of living working at a large corporation. The other day, I had my first regular check-up in years. My premiums are less than half of what they were, and are deducted in pre-tax dollars. This doctor was in the plan: total cost of a comprehensive exam was $15 co-pay, which I paid from my flex plan. So it really cost me about $9. (And I can choose my own doctors outside of the plan, should I choose to pay a bit more for basic care.)Something is very, very wrong “out there”. And the market isn’t going to fix it in the short term. Efficient market theory says that markets are efficient over time, not at all moments in time. When you turn something over to the market, a functional market is not instantly created. (Hello, airline industry anyone?)It could take a lifetime for a market solution to reach a reasonable equilibrium. If it does reach equilibrium: and what are we willing to pay in human suffering to test efficient market theory? (It is a theory, after all.)If a family of 4 earns a Costco salary of about $35K — or even 2 Costco salaries — how could they possibly deal the cost of even ordinary “well baby/well kid” care you have to pay for out of pocket on a high deductible plan?And then, what if someone gets sick? Check out the “Minimum Wage” episode of the Morgan Spurlock’s *30 Days* to see how fast any disposable income they might possibly glean from even a Costco salary would disappear. And how fast Mom and Dad would stop attending to basic care for themselves…(Now, Costco’s not offering the high-deductible health care — Wal-Mart is. And what Hilary Kramer implied on NBR is that the stock market placed a higher value on Costco because of the benefits gained for offering their employees better pay.)

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