Class Warfare?

The Wall Street Journal reports on investor concerns that Costco treats its employees too well. Not that Costco is unprofitable, or net income didn't go up 25% last quarter. But that's just not good enough:

"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."

Costco appears to pay a penalty for its largesse to workers. The company's shares trade at about 20 times projected per-share earnings for 2004, compared with about 24 for Wal-Mart. Mr. Dreher says the unusually high wages and benefits contribute to investor concerns that profit margins at Costco aren't as high as they should be.

I'm not knocking Wal-Mart here. They provide a lot of jobs, and they respond to market forces. If anything, I blame the market analysts who are unable to accept the proposition that the Costco strategy of treating employees well is a better long-term approach. But even they are attempting to fulfill their role in the market economy.

I have no solution. I only have frustration, and a sneaking suspicion that the "invisible hand" described by Adam Smith may be giving the finger to the non-wealthy.