We found it.

We knew there was a better corporate model out there that showed Wal-Mart’s philosophy of low employee wages and benefits and high dissatisfaction isn’t the only way to operate a retail business.

Costco’s worker-friendly corporate philosophy has been there all along, but it recently came to light in the pages of the Wall Street Journal.

What we found was a neatly wrapped lesson for U.S. companies as they deal with all of the worldwide economic challenges that have been created by the global economy.

Much of the lesson involves treating workers with dignity and respect, which is exactly the opposite of how retailing giant Wal Mart operates. “We pay much better than Wal-Mart,” said Costco CEO Jim Sinegal. “That’s not altruism. It’s good business.”

Costco is getting increasing attention lately for, of all things, treating employees with respect and paying them a decent wage. Recently, Costco received some unusual attention, in the form of a Wall Street Journal article in which stock analysts essentially accused the warehouse giant of being too good to its employees.

“Wal-Mart Stores Inc.’s parsimonious approach to employee compensation,” theJournal said, “has made the world’s largest retailer a frequent target of labor unions and even Democratic presidential candidate John Kerry, who has accused the Bentonville, Ark., chain of failing to offer its employees affordable health-care coverage. In contrast, rival Costco Wholesale Corp. often is held up as a retailer that does it right, paying well and offering generous benefits.

“But Costco’s kind-hearted philosophy toward its 100,000 cashiers, shelf-stockers and other workers is drawing criticism from Wall Street. Some analysts and investors contend that the Issaquah, Wash., warehouse-club operator actually is too good to employees, with Costco shareholders suffering as a result.”

The Journal then goes on to quote a stock analyst, eager to throw a wet blanket on Costco employees.

“From the perspective of investors, Costco’s benefits are overly generous,” said 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.”

So when Costco released its first-quarter 2004 earnings report, which included a 25 percent gain in profits based on a 14 percent sales hike, what did the stock market do? It drove Costco’s price down 4% because the company could have made higher profits if it would only pay its workers less.

According to Business Week magazine, low-wage Wal Mart has become the profit model for all retailers. A typical Wal-Mart worker earns $9.64 cents an hour, while employees of Wal-Mart subsidiary Sam’s Club earn an average of $11.52 per hour. That compares to Costco’s average hourly wage of $15.97 per hour – and the company shells out thousands more for health benefits, as well as a 401k and profit-sharing plans.

“They take a very pro-employee attitude,” said Rome Aloise, chief Costco negotiator for the Teamsters, which represents 14,000 Costco workers.

Business Week said, “The market’s view of Costco speaks volumes about the so-called Wal-Martization of the U.S. economy. True, the Bentonville (Ark.) retailer has taken a public-relations pounding recently for paying poverty-level wages and shouldering health insurance for fewer than half of its 1.2 million U.S. workers. Still, it remains the darling of the Street, which, like Wal-Mart and many other companies, believes that shareholders are best served if employers do all they can to hold down costs, including the cost of labor.”

Business Week added: “Surprisingly, however, Costco’s high-wage approach actually beats Wal-Mart at its own game on many measures.” The magazine ran through the numbers from each company to compare direct competitors Costco and Sam’s Club. They found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, “Costco gets lower turnover and higher productivity. Combined with a smart business strategy that sells a mix of higher-margin products to more affluent customers, Costco actually keeps its labor costs lower than Wal-Mart’s as a percentage of sales, and its 68,000 hourly workers in the U.S. sell more per square foot.”

Put another way, Business Week said Costco pulled in $13,647 in U.S. operating profit per hourly employee last year, vs. $11,039 at Sam’s Club. The magazine concluded: “Most of Wall Street doesn’t see the broader picture, though, and only focuses on the up-front savings Costco would gain if it paid workers less.”

Once upon a time in the United States, in the days before the North American Free Trade Agreement, in the days before U.S. workers were forced to compete with Third-World workers earning poverty-level wages, and before Wall Street ruled the mindset of U.S. corporate chieftains, most American businesses were content to earn a profit, and let workers earn a decent living, too, with good medical benefits and a decent retirement program.

Now wages are depressed by Third World competition, retirement plans are increasingly lousy, and health insurance is costly and/or unaffordable for millions of Americans. These are facts of life for most employees in the global economy. But Costco is thriving because they feel its good business to invest in their workforce.

Could it be that the remedy to maintaining America’s economic might can be found in raising workers’ standard of living, rather than trying to play Wal-Mart’s “how low can you go” game? Sounds like “good business” to us.