On the evening of November 12, we joined Brian, Kim, and the 2
grandkids at an employee (and family) function at the GEICO office where Kim
works.
In addition to an amazing Mexican catered dinner, there were numerous
electronic games, the largest fun house I have seen in my life, and a free
movie for the kids
What I learned last night is that GEICO is owned by Berkshire Hathaway, the investment firm owned by Warren Buffett. Unlike venture capitalists like Carl Icahn, Buffett is far more interested in investing in great companies, and holding on to them for a long time. As a result, Berkshire Hathaway has a market capitalization of $730 billion.
https://en.wikipedia.org/wiki/GEICO
GEICO
was founded in 1936 by Leo Goodwin
Sr. and
his wife Lillian Goodwin to provide auto insurance directly
to federal government employees and
their families. Since 1925, Goodwin had worked for USAA, an insurer that
specialized in insuring only military personnel. He decided to start his own
company after rising as far as a civilian could go in USAA's military-dominated
hierarchy. The Goodwins funded the creation of GEICO with $25,000 of their own
money and $75,000 from Fort Worth,
Texas-based banker Cleaves Rhea, with legal assistance from future
GEICO CEO Lorimer Davidson. Based
on Goodwin's experience at USAA, GEICO's original business model was predicated
on the assumption that federal employees, as a group, would constitute a less
risky and more financially stable pool of insureds compared to the general
public.
In
1996, after many years as a publicly traded firm, GEICO became a wholly owned
subsidiary of Berkshire Hathaway.
Berkshire Hathaway Inc.is an
American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States. The company
wholly owns GEICO, Duracell, Dairy Queen, BNSF Railway, Lubrizol, Fruit of the Loom, Helzberg Diamonds, Long & Foster, FlightSafety
International, Shaw Industries, Pampered Chef, Forest River,
and NetJets, and also owns 38.6% of Pilot Flying J and significant minority
holdings in public companies Kraft Heinz Company , American Express (18.8%), Bank of America (11.9%), The Coca-Cola Company (9.32%),
and Apple (5.57%).
From 2016, the company acquired large
holdings in the major US airlines United Airlines, Delta Air Lines, Southwest Airlines,
and American Airlines, but
these were sold early in 2020 in the wake of the COVID-19 pandemic. Berkshire Hathaway has
averaged an annual growth in book value of 19.0% to its shareholders since 1965
(compared to 9.7% from the S&P 500 with dividends included for
the same period), while employing large amounts of capital, and minimal debt.
According
to the Forbes Global 2000 list and formula, Berkshire Hathaway is
the largest
public company in the world. As of August 2020, Berkshire's Class B stock is the
seventh-largest component of the S&P 500
Index (which is based on free-float market
capitalization) and the company is famous for having the most expensive share
price in history with Class A
shares costing around $500,000 each. This is because there has
never been a stock split in its Class A shares and
Buffett stated in a 1984 letter to shareholders that he does not intend to
split the stock. On 16 March 2022, Berkshire
Hathaway Class A shares closed above record $500,000 a share,
resulting in company's market cap above $730
billion.
GEICO, and (by extension) Berkshire Hathaway are examples of companies that prospered because they treat their employees well.
Walmart is the largest employer in the United States, but the company
is not noted for being overly generous to their employers. In contrast, Costco
(with fewer employees) is much more profitable than Walmart, in spite of the
fact that their employee benefits that are far more generous.
Walmart was one of the top four employers of SNAP and Medicaid beneficiaries in every state. McDonald’s was in the top five of employers with employees receiving federal benefits in at least nine states.
Meanwhile, the net worth of the Walton family is $250 billion.
https://www.affiliatebay.net/walton-family-net-worth/
- Walmart
has posted four straight years of declining profits.
- Costco
posted over triple the revenue growth of Walmart for 2018 and saw its
stock gain 42 percent in the last 12 months compared to 10.9 percent for
Walmart.
- Costco’s
profit margins of 2.21 percent are better than double Walmart’s 1.02
percent.
- The
return on equity of 26.29 percent would indicate management is leveraging
assets efficiently.
Costco employees have much better benefits than Walmart employees.
Here are some examples:
https://finance.yahoo.com/news/11-costco-employee-benefits-want-234600618.html?fr=yhssrp_catchall
Yes,
that is plural. Costco has plenty of savings, but first customers must pay to
become a member. Membership itself starts at $60 per year. While that's not
extravagant when stretched out over 365 days, it's still an upfront cost before
a single item is purchased.
Although
Costco employees don't get discounts on items in each store, all employees do
get four free memberships, one for themselves and three for people of their
choosing. Each membership is good for a year.
Variety
of health benefits
Employees
who have worked for 180 consecutive days at the company for more than 23 hours
a week, according to Glassdoor, qualify for Costco's health benefits plan. And
it's a solid one.
Health
insurance is affordable and includes dental and vision (and remember, there are
optometrists in Costco stores) and co-pays are low. Employees may also use the
company's pharmacies for any prescriptions that need to be filled.
Seasonal
work options
Although
many of the perks go to full-time employees, Costco also needs seasonal
employees each year. The holidays demand more people on the floor and in the
warehouse as demand picks up. That's good news for anyone trying to find
short-term work. The seasonal hiring period generally starts in October and
ends in January, with new employees on a 90-day probationary period.
Extra
pay on Sundays
Base
pay at Costco is good, but there are weekly chances for employees to make more.
Costco operates on a time-and-a-half pay structure on Sundays. That means each
hour an employee works they earn 50% more. No matter how many hours an employee
works during the week, they earn more per hour when working on a Sunday, so any
employees you see there on one of the busiest days of the week are earning
extra.
Turkey
time
Beyond
year-round benefits like health insurance, Costco also offers employees part of
a holiday meal. Business Insider reported in 2019 that all employees get a free
turkey in the holiday season, available from “mid-November through Christmas,”
according to an employee. That starts the holiday shopping season off right.
Employees not in need of a turkey can also donate theirs to charities.
Bonuses,
bonuses
Speaking
of additional benefits, there are bonuses available for employees paid both
annually and every six months. Reports on Indeed.com mention bonuses of $2,000
or more semi-annually, depending on how long an employee has been with the
company. The annual bonuses may be even higher, again depending on experience
and department.
Retirement
options
Costco
matches 50% of an employee's annual 401(k) contributions up to $500 per year.
If you're working there, that could be as much as $1,500 added to your 401(k)
plan each year. And for employees with 10 or more years of service, health
insurance is included in retirement benefits, according to Glassdoor.
Promotion
chances
While
many positions at Costco are entry level, employees aren't limited to that
role. Staff have several options to advance in their various departments.
Reports on Indeed and Glassdoor mention an employee mentorship program and
opportunities to train and learn new roles higher up in the company.
While
some departments require specialized education or certification for certain
roles, such as the optical and pharmacy sections, not every department does.
How long it takes to advance varies by position and other factors, but
employees can move up the ranks. The company itself notes that 70% of its
warehouse managers started out as hourly employees.
Time
off
The
company offers several time-off policies for staff. Staff at Costco are
eligible for paid time off, paid sick leave, and vacation hours as well. It
requires working 90 days before you can start accruing paid time off. Vacation
hours, to a certain extent, can roll over to the next calendar year.
For new
mothers, there are six weeks of paid maternity leave as well. The company also
pays employees for the time they serve on a jury.
Holidays
Beyond
the company's paid time off and vacation policies for employees, Costco
guarantees its staff seven paid holidays off, including the big ones of
Thanksgiving, Christmas, Memorial Day, and Labor Day. There's also a floating
paid holiday for Martin Luther King Jr. Day that can be taken before or after
the day itself.
Bottom
line
Costco
offers plenty of immediate and long-term benefits to its employees. Anyone
considering applying for a job at Costco should take into consideration all
that the store offers, even if it's just for a seasonal job around the
holidays. Looking to see what positions are hiring? The company's careers page is regularly updated with new roles.
Regardless
of where you look for work, job hunters should keep some common red flags about
new jobs in mind as they talk to a potential employer. But taking into consideration
salary, benefits, and company culture can help you find the best
jobs for your situation.
I’ve
heard Kim talk with customers on the phone, and she is very good at what she
does – and she loves working at GEICO.
The
unemployment rate in the United States averaged 5.74 percent from 1948 until
2022, reaching an all-time high of 14.7 percent in April of 2020, and a record
low of 2.5% in May of 1953.
https://tradingeconomics.com/united-states/unemployment-rate
1953 was the peak year for union membership in the United States, and the 1956 Republican National platform strongly supported union membership.
https://www.presidency.ucsb.edu/documents/republican-party-platform-1956
Ironically, the lowest unemployment percentage happened when a
Republican (Eisenhower) was president, and it was the highest when ANOTHER
Republican (Trump) was president.
Unions are once again gaining in prominence because companies have
recognized that they need to offer good wages and benefits in order to attract employees.
In 1953, over 30% of the jobs in America were union jobs, and
my dad (as a postal worker) had one of those jobs. Today, the union membership
is 10.8%, a slight increase from 2019. Within the public sector, the local government
sector, which includes police officers, firefighters, teachers, etc., had the
highest union membership rate of 41.7%. The union membership rate in the
private sector increased by 0.1% to reach 6.3% in 2020. This was a result of
the drop in the overall employment rate.
https://callhub.io/union-membership-trends/
In case you are wondering, our insurance company for our car and
our renter’s insurance is GEICO, in part because I like their ads.
In closing, the message that was brought home last night applies
to business, as well as to life.
If you treat people right, you’ll do very well.
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