Costco: Jim Sinegal and Paying People Well

Jim Sinegal co-founded Costco in 1983 and ran it until 2011, paying frontline workers well above retail averages and offering health and retirement benefits at a time when most chains treated those as costs to minimize. Wall Street grumbled that he was leaving money on the table; some analysts said he should squeeze labor the way competitors did. Sinegal, whose own salary was modest by big-retail standards, never budged. His defense was not that high pay was the kind thing to do. It was something colder and more interesting.

For founders and operators, this is a case about whether your people are a cost line to shave or an asset that compounds. It sharpens the decision every leader in a high-turnover, customer-facing business eventually faces: what you actually pay when employees keep walking out the door, and whether the conventional wisdom on labor cost is quietly bleeding you.