(L)etís assume that the total cost of replacing an hourly employee at Costco or Samís Club is only 60% of his or her annual salary. If a Costco employee quits, the cost of replacing him or her is therefore $21,216. If a Samís Club employee leaves, the cost is $12,617. At first glance, it may seem that the low-wage approach at Samís Club would result in lower turnover costs. But if its turnover rate is the same as Wal-Martís, Samís Club loses more than twice as many people as Costco does: 44% versus 17%. By this calculation, the total annual cost to Costco of employee churn is $244 million, whereas the total annual cost to Samís Club is $612 million. Thatís $5,274 per Samís Club employee, versus $3,628 per Costco employee.
The High Cost of Low Wages - Harvard Business Review