26 ms·

Rejecting industry dogma, Costco backs calls to lift minimum wage

188 points by SparksZilla 14y ago

jurassic 14y ago
This doesn't surprise me at all. Since they already pay their workers a lot more than minimum wage, the increase would mainly be a hit to their primary competitor that relies on low wages: Walmart/Sam's Club.
- deleted 14y ago
  [deleted]
- jarjoura 14y ago
  Well, but it does hurt their employment advantage in areas where they actively compete for labor. I wouldn't take such a cynical view on why they support raising the minimum wage. Having people who make more money also means in areas where it really matters, people will buy more at Costco too :-). (in theory)
  - geon 14y ago
    > it does hurt their employment advantage Ar there areas whith a shortage of unskilled workers?
- adventured 14y ago
  It wouldn't hit Walmart at all, they don't pay minimum wage. Nationally the average full time Walmart associate earns $12.57 / hour. That has increased by roughly 30% in seven years.
  - smackfu 14y ago
    You are citing the full-time age for Walmart who is famous for not having people as full-time so they don't have to pay benefits?
    - adventured 14y ago
      How many of Walmart's employees are full time? I live in a relatively poor part of the country, and starting part-time associates here make about $9.50 / hour. 30% above minimum wage already. A minimum wage increase will not hit Walmart.
  - RockyMcNuts 14y ago
    Minimum wage hike is a winner for Walmart. Walmart employees are among the most productive in retail, Walmart has low labor cost/unit of sales. Their customers are low earners, so if their wages increase, that helps Walmart. Mostly, it helps Walmart because that small store in the little shopping district half an hour or an hour from the nearest Walmart will have a harder time staying in business. Indexing the minimum wage to inflation is a particularly bad idea, if there is ever a big supply shock and stagflation, you'll get a big increase in the minimum wage at the wrong time, when people and companies are struggling to avoid layoffs.
    - artsrc 14y ago
      > Indexing the minimum wage to inflation is a particularly bad idea, if there is ever a big supply shock and stagflation, you'll get a big increase in the minimum wage at the wrong time, when people and companies are struggling to avoid layoffs. I assume you agree that in the long run the minimum wage should rise with something like inflation. Put it in the hands of the Federal Reserve. Then can ensure it does not go up at the wrong times, and does go up the right amount over the long run.
      - jvm 14y ago
        During a supply shock, the fed should allow inflation to increase because prices are rising for a real reason. But equilibrium wages should remain steady because workers aren't becoming more productive. Basically this is just a way of saying everyone needs to take a hit to consumption, something which is readily facilitated by inflation. If minimum wages rise but equilibrium low-skilled wages don't rise or even fall, it will lead to layoffs and turn the supply shock into a high-unemployment recession. If the Fed tries to react by reducing inflation, equilibrium wages will fall further making the situation worse, and giving rise to a lot of inefficiencies where some people are shielded from the supply shock and others face the full brunt.
      - RockyMcNuts 14y ago
        I think it would be nice if wages rose faster than inflation. I just don't think the government can mandate it. There's nothing that special about labor markets that prices shouldn't be set by supply and demand. If the government e.g. the Fed isn't smart enough to constantly set the price, how are they smart enough to set a rule that would be permanently right? If government mandates a higher than market-clearing wage, people are going to be out of work who otherwise would be happy to work at the lower wage. There's no economic law that says wages for any or every job will always rise as fast as inflation, if productivity isn't growing, and supply of labor for that job is rising faster than demand. I kind of think the minimum wage should be more like a labor protection, ie set it 10-20% below the bottom 10% of the wage distribution. Basically for those cases where a local employer is a price-setter, as opposed to a price-taker, or a worker really doesn't have much choice of employer for some reason, or is a really bad negotiator, the employer can't totally abuse it. Just like they can't make you use a chainsaw without protective eyewear. Even that puts some people out of work. Economic conditions and prices can vary really widely, it's a big country. Kids, people with disabilities, at low wages they might want to work and it might be good for them to get experience and be tied to the labor force, and they might not have the productivity to justify minimum wage as messengers, delivery persons etc. But the law should also allow exceptions, eg people with tips, interns, subsidies for legit programs for the disabled. I'm not saying the market is perfect, I just don't see the sort of widespread abuse or great benefit of government price-fixing here. Mostly populism and bad economics. If it's OK to fix minimum prices for labor, why not for anything else? Sticky prices and wages are a big part of recessions, layoffs etc. Quantity adjusts instead of price. So you get layoffs, GDP drops. Doing things that make prices and wages more sticky makes things worse. One group that benefits from a high minimum wage is cash workers/illegals. Once you push people out of legit employment into the casual sector/black market, they don't get any protections.
windsurfer 14y ago
Blogspam. Original is here: http://www.latimes.com/business/money/la-fi-mo-costco-wages-20130306,0,7790766.story http://www.latimes.com/business/money/la-fi-mo-costco-wages-...
- SparksZilla 14y ago
  Not blogspam. Circa is a pretty cool tool that tells a news story by pulling in all the sources talking about it, and then updates the story as new information comes in. Take a look at them; it's really useful.
  - MartinCron 14y ago
    Even if it's not technically blogspam, the best practice should still be to link to direct sources, no?
    - sukuriant 14y ago
      One link versus several? I like one link, personally.
      - MartinCron 14y ago
        So if you can aggregate more than one source, you're not blogspam anymore? :)
        falcolas 14y ago
        If you're adding quality on top of citing sources, then yeah, in my book they're not blogspam.
  - windsurfer 14y ago
    Never heard of Circa, but I don't think it's allowed anyways. From the guidelines (http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html) Please submit the original source. If a blog post reports on something they found on another site, submit the latter.
jdreaver 14y ago
They want a wage of $10.10 per hour? I bet a Costco employee starts around $10.20 per hour.
- SatvikBeri 14y ago
  You're on the right track. From the article: "Costco pays a starting wage of $11.50 an hour, gives most employees healthcare and other benefits, and has not switched to the model adopted by many big-box retailers of using temporary firms in warehouses to keep costs low." A higher minimum wage costs Costco nothing and hurts their competitors.
  - georgemcbay 14y ago
    I wouldn't say it costs them nothing. If competitors are forced to raise their wages near Costco's, Costco either needs to up the ante or lose some of the luster they've created in treating their employees so well compared to the average retailer. I'm not saying they don't have good business reasons for this, they do, but it isn't all pure business upside for them.
    - datasage 14y ago
      Some of the costs from vendors may also increase as a result.
      - pixl97 14y ago
        In theory, that is a shared cost amongst all their competitors.
- deleted 14y ago
  [deleted]
- ortusdux 14y ago
  13 $/hr + 0.5$ raise every 300 hours worked up to about 18$.
tptacek 14y ago
I like Costco, I think we should raise the minimum wage, and I am a reliable Democratic voter, which is one of the reasons I know that Costco is a key corporate supporter of the Democratic party, and that the minimum wage is a Democratic party identity issue. Agree also with the other comment here that the minimum wage is a structural advantage for Costco against Walmart.
- MartinCron 14y ago
  I'm surprised we haven't heard more arguments for raising the minimum wage over the last few years. The main argument against it is that it leads to inflation, but inflation has been the least of our worries recently.
  - dantheman 14y ago
    One of the biggest arguments against it is that raises unemployment by making more people unemployable. Some people do not generate $10 + overhead cost per hour. Raising the minimum wage hurts the young the most since they need low skill, low value jobs to learn and gain experience. By removing that rung of the ladder we hurt them greatly throughout their life.
    - mmanfrin 14y ago
      That sure has happened in Australia. These assessments of minimum wage that end at 'it raises unemployment' are intellectually stunted; it belies a simplistic understanding of economics and either an oversight or refusal to see that rising minimum wage makes for more spenders, which in turn drives demand. The higher-wage:higher-unemployment argument is a go-to in the wheelhouse of supply-side economists.
      - brc 14y ago
        That's why if you go to a restaurant in Australia you have to serve yourself - certainly nobody will be coming to your table to help you unless you're paying at least $50 per head. Whether that is right or wrong depends on the observer. But it is true.
sageikosa 14y ago
I'm pretty sure that increasing the cost of labor will drive the prices of labor dependent goods and services up, while also probably flattening growth or decreasing employment numbers when employers try to maximize the margins on the labor they already employ.
- antoko 14y ago
  I'm pretty sure that giving lots of people more disposable income will increase demand. Which will in turn increase revenues and allow successful businesses to expand, increasing employment numbers, creating a positive feedback loop. In reality however things are a little more complicated.
  - mentat 14y ago
    Part of the argument is that this isn't disposable income, that it's in fact needed as a baseline against poverty.
    - antoko 14y ago
      disposable and discretionary are not the same thing http://en.wikipedia.org/wiki/Disposable_and_discretionary_income http://en.wikipedia.org/wiki/Disposable_and_discretionary_in... disposable = wage - taxes Therefore disposable income pays for rent, food, gas... All of which would be needed to alleviate poverty, but I guess that depends on how we're defining poverty.
    - ctdonath 14y ago
      Define "poverty". The lack of a meaningful definition shared by both law and society is the root of much of the consternation over the topic.
      - wildgift 14y ago
        There are many, but one would be the lack of opportunity to improve ones situation by self-improvement. For example, you might be working two jobs to pay rent and other necessary expenses, so you have no time to learn new skills. Another would be that you cannot afford to send your kids to school (i mean K-12 public school) because you need them to work in the fields, so you can't create inter-generational opportunities. People working at minimum wage can find themselves in such situations. At this time, you can get ahead on MW, if you team up with other MW workers to live together and one person can get enough "family" support to get to the next level. However, our society, being very individualistic, doesn't really recognize this.
hkmurakami 14y ago
>And why Costco, a public company that has investors watching every penny and questioning every management decision? I guess the author doesn't know that Costco is one of the few companies out there who famously give the middle finger to Wall Street analysts (who want them to reduce wages and benefits, and increase the price of goods sold)
- tomrod 14y ago
  Costco is still subject to economic reality. They make money by reducing overhead as much as possible and exercising monopsony power over brands (Walmart does this also for certain vendors). I haven't looked enough into the issue to answer decisively, but I suspect they probably can't cut much more than they already have, unless their food is a cost center.
sukuriant 14y ago
This is a dangerous statement; but I know that raising the minimum wage doesn't really hurt people making six figures; but, doesn't it hurt people making only a small multiplier of minimum wage? Like people making 1.25x minimum, and 1.5x minimum, because they'll now be making 1.05x and 1.15x minimum wage, reducing their own personal buying power once the prices settle again..? I'm all for people earning more functional income. I've said before that I hate the corporate-level, money-hungry models of wages; but I had been taught that increasing the minimum wage, though it helps for a short while, ends up hurting in the end
- lifeisstillgood 14y ago
  This is the wrong approach - simply ask what level of wage is needed to prevent a worker having to claim state benefits. Anything else is subsidising the employer
  - sukuriant 14y ago
    I believe my point was that, as wages change, so does that number. Isn't that part of the whole "cost of living" differences from one place to the next? People make different amounts of money, therefore they can spend different amounts of money on things they need, and the supply/demand curve adjusts accordingly? See: price of an apartment in Washington vs Texas Long complaint short: It's broken. How do we fix it?
    - seanmcdirmid 14y ago
      An apartment in Austin Texas is more expensive than one in Spokane Washington, your point?
  - crapshoot101 14y ago
    not true and way too simplistic. If they can't get employed at all because the minimum wage is too high, the entire burden falls on those same state benefits.
    - 14y ago
lifeisstillgood 14y ago
Here is a plan - set the minimum wage at a level where one person working full time will not have to collect any state benefits in order to raise their family. Any other level, is an indirect but tangible subsidy to companies who employ minimum wage staff
- adventured 14y ago
  How big of a family are you talking about subsidizing? 1 child? 3? 5? Radical difference in cost. So which target is the cost basis? If you say one child, who are you to say one? If you say seven, who are you to say seven? And it is thus the moral hazard presents itself: forcing tax payers to pay for other people's optional life choices (specifically ones so easily avoided as having children that you cannot afford). It essentially gets into a scheme in which the claim has to be made that being able to afford to have children is a right (a right paid for by someone else that is more responsible and more productive).
- Dove 14y ago
  Teenagers don't need to support a family. Without much in the way of valuable skills, they may still want a job for spending money and experience. Your proposed minimum wage would make this illegal. College students don't need to support a family. They may want to take a low-paying internship to build experience in their chosen field. Your proposed minimum wage could make this illegal. Mothers of school-age children who are supported by their husbands don't need to support a family. They may wish to do part-time, low-skilled work to build expertise in preparation for a future career after their children leave. Your proposed minimum wage would make this illegal. Retirees with pensions don't need to support a family. They may wish to do work, possibly even very low-skilled work, as a way to combine a hobby with a sense of being useful. Or possibly as a launching-pad for more of a "fun" career than the "serious" career they've already finished. Your proposed minimum wage could make this illegal. Low-skilled immigrants do sometimes need to support a family. When one member can't do it alone, sometimes mom, dad, and the oldest kid hold down four full-time jobs between them to make it work. The arrangement isn't permanent; it lasts until they can do better. But in the mean time, they can support themselves. Your proposed minimum wage law could make it impossible for them to support themselves this way, and force them to rely on charity. This in turn could make it impossible for them to immigrate at all. Some people have very low expenses. A paid-off house, a renter, a garden in the backyard, and a low-paying job can be enough to make ends meet. Setting the minimum wage at a level such that someone with a mortgage and unproductive hobbies can raise a family would force this person, who could otherwise support themselves, to rely on charity. I could go on. My point is that the world is a complicated place. Not every worker is a single-head-of-household-with-three-children sort of worker. Not every job is a permanent career. They can be educational, transitional, temporary. They can be held by all sorts of people for all sorts of reasons. Provide assistance to the poor if you like, but don't make work illegal. Don't ever do that. There's a huge potential to hurt a lot of people, just because they're living lifestyles you aren't familiar with.
paltman 14y ago
just another story of a business getting involved in public policy in order to hurt competitors. costco can (and already does) pay workers more than minimum wage as is in line with their operating philosophy. government shouldn't be in the business of regulating wages, that's an agreement between an employer and employee.
w3pm 14y ago
Costco is free to pay their employees as high of wages as they'd like, no legislation required. This lobbying isn't out of their good will but a strategic play to hurt competitors that rely on lower wages. Such is politics.
- throwaway420 14y ago
  That Costco isn't doing this purely out of goodwill needs to be mentioned further. If Costco already starts all employees at $11.50, increasing the minimum wage to any point less than $11.50 doesn't initially impact their own bottom line, but just serves to increase their competitor's costs.
  - addlepate 14y ago
    So your charge is that Costco is engaging in the practice of capitalism. In that case, I reckon they are guilty.
  - dfxm12 14y ago
    The other side is that if people see an increase in their pay, they'll have more money to spend (hopefully at Costco).
    - caw 14y ago
      Not at Costco. The average wage of a person who shops at Costco is 74k. Sams Club perhaps; the customers they attract are at a lower income. http://www.nytimes.com/2005/07/17/business/yourmoney/17costco.html?pagewanted=all&_r=0 http://www.nytimes.com/2005/07/17/business/yourmoney/17costc...
  - OstiaAntica 14y ago
    Costco is more concentrated in higher wage, higher cost states on the West Coast. They'd love to extend California wage rates to Walmart's red state operations.
- Apocryphon 14y ago
  Isn't competition that takes advantages of factors beyond the free market still competition? In practice, shouldn't the free market extend beyond the "market" itself, and into the state as well? Because all real-world capitalist economies are really mixed economies where the state still has an effect on the market. So aren't rational economic actors making use of every weapon at their disposal by lobbying, pursuing tax loopholes, patent trolling, etc?
protomyth 14y ago
A bit of statistics about minimum wage workers http://www.bls.gov/cps/minwage2011.htm http://www.bls.gov/cps/minwage2011.htm
stretchwithme 14y ago
The labor market is governed by the law of supply and demand, just like any other. If you arbitrarily increase the price of something, in this case low-skilled labor, surpluses are the result. If you want to help people, find a way that doesn't destroy the incentives to hire them and the incentives to become a more valuable employee.
mistercow 14y ago
The more time goes on, the more I think maybe a minimum guaranteed income is the solution that makes the most sense. Maybe we should just accept that there isn't going to be enough work for everyone, and that that's going to become more true in the future, not less. And furthermore, maybe we should accept that that's a good thing, as long as we shape our economy accordingly.
- jimzvz 14y ago
  >The more time goes on, the more I think maybe a minimum guaranteed income is the solution that makes the most sense. Why? Someone has to pay for it.
  - ken_railey 14y ago
    Not coming down for or against, but one argument is that it causes less market distortion than a minimum wage. http://en.wikipedia.org/wiki/Negative_income_tax http://en.wikipedia.org/wiki/Negative_income_tax
  - mistercow 14y ago
    >Why? See the rest of my comment. >Someone has to pay for it. Of course, and those would be the people who choose to work in order to earn more than the guaranteed minimum. The result would be more available jobs with more relaxing hours, giving people more time to spend with their families, on side projects, or on creative pursuits that enrich our culture. The idea that automation and technological advancement can cause people to go hungry is frankly crazy. Instead of celebrating the fact that humans don't have to waste their time on menial crap, we are forced by our economic system to wring our hands over the fact that that menial crap can no longer be used as an arbitrary metric for distributing resources.
    - jimzvz 14y ago
      >Of course, and those would be the people who choose to work in order to earn more than the guaranteed minimum. The result would be more available jobs with more relaxing hours, giving people more time to spend with their families, on side projects, or on creative pursuits that enrich our culture. I don't follow this logic. The easier it is for people to skate through life without working or working effectively, the less incentive they have to contribute. The people that pay for this life will decrease and quality of life will decrease for everyone.
bjhoops1 14y ago
I support a minimum wage increase (trickle-down economics is moronic and makes much less sense than a bottom-up approach, but I digress), but let's not forget that a minimum wage increase helps Costco's bottom line, since their biggest competitor's business model is completely tied to low wages. Just saying let's not pretend this is as righteous of a move as it would be if it were coming from Wal-Mart (who stands to lose). :P
jimzvz 14y ago
Higher labour costs just push business overseas. Is this not true?
- smsm42 14y ago
  For Costco, probably not - I won't drive as far as Mexico for some cheaper eggs :)
- aneth4 14y ago
  To China, where there is a rapidly increasing minimum wage. The Chinese understand income distribution will naturally fall extremely toward the powerful, and the powerless will make too little money to create a middle class. Raising the minimum wage distributes income to low income people who spend all their money and contribute to the consumer economy.
  - Volpe 14y ago
    Are you really saying there is not a middle class in china?
    - Spooky23 14y ago
      Proportionally, the middle class in China is small, but growing.
    - aneth4 14y ago
      I did not say that at all. There is a rapidly growing middle class in China.
- tsotha 14y ago
  Retailing doesn't follow the same logic as manufacturing since the jobs really aren't mobile. But things that can be automated will be automated. Also, artificially high labor costs shut out younger and less employable people. If I have to pay $15 anyway, I never need to take the chance on someone who's run afoul of the law or high school dropouts. People who get a slow start in life are going to have that much more difficulty.
Symmetry 14y ago
Whenever I hear people talking about the minimum wage I want to know why they don't talk about the earned income tax credit instead. EITC: Money is given to the poor people that need it most. The money that goes to them comes out of progressive taxation. Very little dis-employment effect. Minimum wage: Money mostly comes from higher prices, which fall disproportionately on poor people. Fairly substantial dis-employment effect. The only reason to favor the later is that politicians can rely on the public not noticing that they're paying for it.
- lifeisstillgood 14y ago
  Tax credits rely on someone who is struggling to stay afloat to fill in yet another set of forms, correctly and then wait for the government to process it. They were and still are a disaster in the UK - something like 20% of eligible people have never claimed and now billions have been overpaid - yes, clerical error and overly complex systems means the UK government is trying to claw back over payments from some of the poorest in UK, who have already spent it anyway. It's ridiculous. No - keep it simple stupid, almost everyone can work out what they have to spend by looking in their pay packet. Working out what complex tax credit - no way
  - gadders 14y ago
    I've never understood why the lower income tax allowances and limits were raised instead, so the lower paid people just paid no or less tax.
- shardling 14y ago
  I don't think anything about the minimum wage is as settled as you make it out to be.
- dkl 14y ago
  There's a big reason this won't fly in the US. The GOP won't support it because it's a gift to moochers. I agree with you, it's a better way to do it and to raise the standard of living in this country. It might even have a big effect on reducing crime.
kevinpet 14y ago
The most utterly evil profit maximizing business would always prefer that the government mandated minimum wage is somewhere near what they pay their lowest paid employees. Sad state of journalism that a group of businesses lobbying for their self interest is swallowed so frequently as selfless action for the public good.
- corresation 14y ago
  The most utterly evil profit maximizing business would always prefer that the government mandated minimum wage is somewhere near what they pay their lowest paid employees. How so? Costco in this case has always benefited from a happier, more loyal, consistent workforce because they have a job that many other service workers actually strive for. I fail to understand how reducing the advantage of their position helps maximize their profit.
  - forrestthewoods 14y ago
    Because their profit margins remained unaffected by the change but their competitors already razor thin margins get significantly reduced.
    - praxulus 14y ago
      I think you missed his/her point. Costco gets to have more motivated and more loyal employees because their pay is significantly higher than minimum wage. If minimum wage goes up, they lose some/all of the benefit unless they further increase wages.
  - AlbertoPier 14y ago
    This is the same company that was for the higher taxes for the rich and then made sure to get a huge loan to pay bonuses ahead of schedule so the Costco execs and board members could avoid the tax hike. Hypocrites.
    - Evbn 14y ago
davidroberts 14y ago
It makes sense for Costco, because they pay above minimum wage anyway, and any increase in the minimum wage will hurt their competitors more than them.
deleted 14y ago
[deleted]
kyllo 14y ago
Costco employees start higher than minimum wage already, so this won't affect them. But it's in Costco's interest for their competitors to have higher labor costs. So, Costco supports minimum wage increases. Labor unions do the same thing.
smsm42 14y ago
It probably hurt small independent shops much more than it would hurt Costco, due to economies of scale - if you have 100 workers and you had to raise wages 10%, you probably could do the same with 90 workers or cut a little service here and there without too much effect, but if you have just one worker and you don't have enough money for 10% raise, you're toast.
- brc 14y ago
  ..and that is what it would be about. If Costco can hurt their competition by forcing up their labour force costs, plus at the same time give a good aura, and advertise their hiring policies to potential employees, it's a win-win-win. This type of thing isn't done off the cuff, there would be very careful analysis behind it. Most people would think this is against Wal-Mart or other large retailers, but where it would really bit is the very small corner-store operations, which not only collectively sell a lot of stuff, they prevent customers from going into bigger stores for small items like milk and bread.
aneth4 14y ago
This makes complete sense: 1) Costco already pays much more than the minimum wage, so they would not be affected directly from a cost perspective. 2) Competitors do not necessarily pay more than minimum wage, so this can only increase the costs of competitors. 3) Increasing minimum wage gives income to the lowest income people who will spend all of this money and are likely value shoppers of the kind attracted to big box stores like Costco. There is nothing for Costco to lose here. While I admire Costcos ethics all around, I can't say this is an entirely selfless gesture. Costco behaves rationally good with a long term view rather than irrationally bad with a short term view.
- danielharan 14y ago
  Not selfless at all, although the world is still a much better place for companies behaving this way.
AlbertoPier 14y ago
Costco is supporting the rise in minimum wage only because it helps them. They have lower labor cost then their competitors. I can hardly see any employees in Costco warehouses. This is the same type of hypocrisy as them supporting higher taxes for the rich and then getting a huge loan to pay ahead of schedule bonuses for the execs and board members to avoid new tax rates.
kokey 14y ago
Large, established retailers, in general, will favour a higher minimum wage if it's enforced on themselves and all their competitors. It's actually good for them, since they operate at a scale that can do more with less people. Unfortunately it reduces the market to a combination of large retailers, and small family run operations which can effectively get members of their family to work for less than the minimum wage, and very little in between.
- Evbn 14y ago
  That's a good thing. Efficient businesses with happy employees prosper. Inefficient sweatshops shut down.
scotty79 14y ago
I'd much preferred if they removed minimum wage and almost all of the welfare programs and replaced it with basic income guarantee (http://en.wikipedia.org/wiki/Basic_income_guarantee http://en.wikipedia.org/wiki/Basic_income_guarantee)
- bruceboughton 14y ago
  I can't imagine you'd find much public support for giving millionaires a weekly wage. What does this offer over the minimum wage? Is it that the universality makes it cheaper to administer or is the universality a principle rather than a pragmatic concession? In the UK, there is a movement for a living wage which seems to be more about a higher, regionally-calibrated minimum wage.
  - scotty79 14y ago
    Theres probably lots of well thought arguments for basic income guarantee but here's the things I could come up with: - much cheaper than welfare because you don't need to hire people who decide if you deserve it - less corruption than welfare because you can't bribe people who decide whether you deserve it. - you don't have to hide that you are working in order not to loose the benefit, so possibly more money from taxes and healthier, more honest social climate. Also no need for minimum wage. - no need for government sponsored pension or formalized retirement age - you no longer have to care so much about unemployment. From political issue it becomes only yet another indicator of the state of economy. Hence the government can safely shed off large quantities of its employees. - no need for minimum wage, wages can safely drop below any currently conceivable minimums. - more worker mobility since you don't have your whole income at stake when you decide to look for new job. - strong incentive for having kids since they add to family income, also parents have sense of security that they will be able to support a child and have time to raise it as well. - more money in hands of more careful consumers. Poor people tend to spend money more wisely as they choose products more carefully with regards to ratio between price and quality. More purchasing power in hands of dedicated consumers, results in more efficient market.
    - 14y ago
vijayboyapati 14y ago
This is terrible. Costco can get away with a higher minimum wage because they sell at a higher end. All this is doing is forcing Walmart to stop competing at the lower end of the spectrum of goods. The only people harmed by that are the poor.
matterhorn 14y ago
Raising the minimum wage will increase unemployment. Additionally, having any minimum wage at all increases unemployment. On top of the unemployment problem, a minimum wage is an intrusion into the rights of the individual to voluntarily enter into business with others.
- ahoyhere 14y ago
  Proof?
ahoyhere 14y ago
"especially at a time when finances are stable at best" Sloppy reporting. Here's what the author should have written: > Just four years after the worst shock to the economy since the Great Depression, U.S. corporate profits are stronger than ever. > In the third quarter, corporate earnings were $1.75 trillion, up 18.6% from a year ago, according to last week'si gross domestic product report. That took after-tax profits to their greatest percentage of GDP in history. > But the record profits come at the same time that workers' wages have fallen to their lowest-ever share of GDP. http://money.cnn.com/2012/12/03/news/economy/record-corporate-profits/index.html http://money.cnn.com/2012/12/03/news/economy/record-corporat... Whoever gets the mouthpiece gets to frame the debate. The debate is wrong. What's happening is this: Corporations have people on the hook, because the people are poor & desperate, meanwhile the corporations are more flush with cash than ever before. They know that everyone is running around, pretending we're in a terrible financial crisis… because we are, if you're an individual. The profit-taking is immense and ordinary people are suffering. This is not a debate about "Well gee can Joe-Bob really produce $8 of value an hour?" because the profits say yes, Joe-Bob is definitely producing much more value than he costs. Even more so, given that this is a time when CEO compensation (a cost that reduces profit) has skyrocketed, compared to the average worker's wage. Good for Costco. They have always behaved well towards workers, with regards to pay and benefits, even when things really were bad.
mhartl 14y ago
The minimum wage is as perfect a litmus test as we have for separating those who think they understand basic economics from those who actually do.

188 points by SparksZilla 14y ago

This doesn't surprise me at all. Since they already pay their workers a lot more than minimum wage, the increase would mainly be a hit to their primary competitor that relies on low wages: Walmart/Sam's Club.

deleted 14y ago
[deleted]
jarjoura 14y ago
Well, but it does hurt their employment advantage in areas where they actively compete for labor. I wouldn't take such a cynical view on why they support raising the minimum wage. Having people who make more money also means in areas where it really matters, people will buy more at Costco too :-). (in theory)
- geon 14y ago
  > it does hurt their employment advantage Ar there areas whith a shortage of unskilled workers?
adventured 14y ago
It wouldn't hit Walmart at all, they don't pay minimum wage. Nationally the average full time Walmart associate earns $12.57 / hour. That has increased by roughly 30% in seven years.
- smackfu 14y ago
  You are citing the full-time age for Walmart who is famous for not having people as full-time so they don't have to pay benefits?
  - adventured 14y ago
    How many of Walmart's employees are full time? I live in a relatively poor part of the country, and starting part-time associates here make about $9.50 / hour. 30% above minimum wage already. A minimum wage increase will not hit Walmart.
- RockyMcNuts 14y ago
  Minimum wage hike is a winner for Walmart. Walmart employees are among the most productive in retail, Walmart has low labor cost/unit of sales. Their customers are low earners, so if their wages increase, that helps Walmart. Mostly, it helps Walmart because that small store in the little shopping district half an hour or an hour from the nearest Walmart will have a harder time staying in business. Indexing the minimum wage to inflation is a particularly bad idea, if there is ever a big supply shock and stagflation, you'll get a big increase in the minimum wage at the wrong time, when people and companies are struggling to avoid layoffs.
  - artsrc 14y ago
    > Indexing the minimum wage to inflation is a particularly bad idea, if there is ever a big supply shock and stagflation, you'll get a big increase in the minimum wage at the wrong time, when people and companies are struggling to avoid layoffs. I assume you agree that in the long run the minimum wage should rise with something like inflation. Put it in the hands of the Federal Reserve. Then can ensure it does not go up at the wrong times, and does go up the right amount over the long run.
    - jvm 14y ago
      During a supply shock, the fed should allow inflation to increase because prices are rising for a real reason. But equilibrium wages should remain steady because workers aren't becoming more productive. Basically this is just a way of saying everyone needs to take a hit to consumption, something which is readily facilitated by inflation. If minimum wages rise but equilibrium low-skilled wages don't rise or even fall, it will lead to layoffs and turn the supply shock into a high-unemployment recession. If the Fed tries to react by reducing inflation, equilibrium wages will fall further making the situation worse, and giving rise to a lot of inefficiencies where some people are shielded from the supply shock and others face the full brunt.
    - RockyMcNuts 14y ago
      I think it would be nice if wages rose faster than inflation. I just don't think the government can mandate it. There's nothing that special about labor markets that prices shouldn't be set by supply and demand. If the government e.g. the Fed isn't smart enough to constantly set the price, how are they smart enough to set a rule that would be permanently right? If government mandates a higher than market-clearing wage, people are going to be out of work who otherwise would be happy to work at the lower wage. There's no economic law that says wages for any or every job will always rise as fast as inflation, if productivity isn't growing, and supply of labor for that job is rising faster than demand. I kind of think the minimum wage should be more like a labor protection, ie set it 10-20% below the bottom 10% of the wage distribution. Basically for those cases where a local employer is a price-setter, as opposed to a price-taker, or a worker really doesn't have much choice of employer for some reason, or is a really bad negotiator, the employer can't totally abuse it. Just like they can't make you use a chainsaw without protective eyewear. Even that puts some people out of work. Economic conditions and prices can vary really widely, it's a big country. Kids, people with disabilities, at low wages they might want to work and it might be good for them to get experience and be tied to the labor force, and they might not have the productivity to justify minimum wage as messengers, delivery persons etc. But the law should also allow exceptions, eg people with tips, interns, subsidies for legit programs for the disabled. I'm not saying the market is perfect, I just don't see the sort of widespread abuse or great benefit of government price-fixing here. Mostly populism and bad economics. If it's OK to fix minimum prices for labor, why not for anything else? Sticky prices and wages are a big part of recessions, layoffs etc. Quantity adjusts instead of price. So you get layoffs, GDP drops. Doing things that make prices and wages more sticky makes things worse. One group that benefits from a high minimum wage is cash workers/illegals. Once you push people out of legit employment into the casual sector/black market, they don't get any protections.

windsurfer 14y ago

Blogspam. Original is here: http://www.latimes.com/business/money/la-fi-mo-costco-wages-20130306,0,7790766.story http://www.latimes.com/business/money/la-fi-mo-costco-wages-...

SparksZilla 14y ago
Not blogspam. Circa is a pretty cool tool that tells a news story by pulling in all the sources talking about it, and then updates the story as new information comes in. Take a look at them; it's really useful.
- MartinCron 14y ago
  Even if it's not technically blogspam, the best practice should still be to link to direct sources, no?
  - sukuriant 14y ago
    One link versus several? I like one link, personally.
    - MartinCron 14y ago
      So if you can aggregate more than one source, you're not blogspam anymore? :)
      - falcolas 14y ago
        If you're adding quality on top of citing sources, then yeah, in my book they're not blogspam.
- windsurfer 14y ago
  Never heard of Circa, but I don't think it's allowed anyways. From the guidelines (http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html) Please submit the original source. If a blog post reports on something they found on another site, submit the latter.

jdreaver 14y ago

They want a wage of $10.10 per hour? I bet a Costco employee starts around $10.20 per hour.

SatvikBeri 14y ago
You're on the right track. From the article: "Costco pays a starting wage of $11.50 an hour, gives most employees healthcare and other benefits, and has not switched to the model adopted by many big-box retailers of using temporary firms in warehouses to keep costs low." A higher minimum wage costs Costco nothing and hurts their competitors.
- georgemcbay 14y ago
  I wouldn't say it costs them nothing. If competitors are forced to raise their wages near Costco's, Costco either needs to up the ante or lose some of the luster they've created in treating their employees so well compared to the average retailer. I'm not saying they don't have good business reasons for this, they do, but it isn't all pure business upside for them.
  - datasage 14y ago
    Some of the costs from vendors may also increase as a result.
    - pixl97 14y ago
      In theory, that is a shared cost amongst all their competitors.
deleted 14y ago
[deleted]
ortusdux 14y ago
13 $/hr + 0.5$ raise every 300 hours worked up to about 18$.

tptacek 14y ago

I like Costco, I think we should raise the minimum wage, and I am a reliable Democratic voter, which is one of the reasons I know that Costco is a key corporate supporter of the Democratic party, and that the minimum wage is a Democratic party identity issue. Agree also with the other comment here that the minimum wage is a structural advantage for Costco against Walmart.

MartinCron 14y ago
I'm surprised we haven't heard more arguments for raising the minimum wage over the last few years. The main argument against it is that it leads to inflation, but inflation has been the least of our worries recently.
- dantheman 14y ago
  One of the biggest arguments against it is that raises unemployment by making more people unemployable. Some people do not generate $10 + overhead cost per hour. Raising the minimum wage hurts the young the most since they need low skill, low value jobs to learn and gain experience. By removing that rung of the ladder we hurt them greatly throughout their life.
  - mmanfrin 14y ago
    That sure has happened in Australia. These assessments of minimum wage that end at 'it raises unemployment' are intellectually stunted; it belies a simplistic understanding of economics and either an oversight or refusal to see that rising minimum wage makes for more spenders, which in turn drives demand. The higher-wage:higher-unemployment argument is a go-to in the wheelhouse of supply-side economists.
    - brc 14y ago
      That's why if you go to a restaurant in Australia you have to serve yourself - certainly nobody will be coming to your table to help you unless you're paying at least $50 per head. Whether that is right or wrong depends on the observer. But it is true.

sageikosa 14y ago

I'm pretty sure that increasing the cost of labor will drive the prices of labor dependent goods and services up, while also probably flattening growth or decreasing employment numbers when employers try to maximize the margins on the labor they already employ.

antoko 14y ago
I'm pretty sure that giving lots of people more disposable income will increase demand. Which will in turn increase revenues and allow successful businesses to expand, increasing employment numbers, creating a positive feedback loop. In reality however things are a little more complicated.
- mentat 14y ago
  Part of the argument is that this isn't disposable income, that it's in fact needed as a baseline against poverty.
  - antoko 14y ago
    disposable and discretionary are not the same thing http://en.wikipedia.org/wiki/Disposable_and_discretionary_income http://en.wikipedia.org/wiki/Disposable_and_discretionary_in... disposable = wage - taxes Therefore disposable income pays for rent, food, gas... All of which would be needed to alleviate poverty, but I guess that depends on how we're defining poverty.
  - ctdonath 14y ago
    Define "poverty". The lack of a meaningful definition shared by both law and society is the root of much of the consternation over the topic.
    - wildgift 14y ago
      There are many, but one would be the lack of opportunity to improve ones situation by self-improvement. For example, you might be working two jobs to pay rent and other necessary expenses, so you have no time to learn new skills. Another would be that you cannot afford to send your kids to school (i mean K-12 public school) because you need them to work in the fields, so you can't create inter-generational opportunities. People working at minimum wage can find themselves in such situations. At this time, you can get ahead on MW, if you team up with other MW workers to live together and one person can get enough "family" support to get to the next level. However, our society, being very individualistic, doesn't really recognize this.

hkmurakami 14y ago

>And why Costco, a public company that has investors watching every penny and questioning every management decision? I guess the author doesn't know that Costco is one of the few companies out there who famously give the middle finger to Wall Street analysts (who want them to reduce wages and benefits, and increase the price of goods sold)

tomrod 14y ago
Costco is still subject to economic reality. They make money by reducing overhead as much as possible and exercising monopsony power over brands (Walmart does this also for certain vendors). I haven't looked enough into the issue to answer decisively, but I suspect they probably can't cut much more than they already have, unless their food is a cost center.

sukuriant 14y ago

This is a dangerous statement; but I know that raising the minimum wage doesn't really hurt people making six figures; but, doesn't it hurt people making only a small multiplier of minimum wage? Like people making 1.25x minimum, and 1.5x minimum, because they'll now be making 1.05x and 1.15x minimum wage, reducing their own personal buying power once the prices settle again..? I'm all for people earning more functional income. I've said before that I hate the corporate-level, money-hungry models of wages; but I had been taught that increasing the minimum wage, though it helps for a short while, ends up hurting in the end

lifeisstillgood 14y ago
This is the wrong approach - simply ask what level of wage is needed to prevent a worker having to claim state benefits. Anything else is subsidising the employer
- sukuriant 14y ago
  I believe my point was that, as wages change, so does that number. Isn't that part of the whole "cost of living" differences from one place to the next? People make different amounts of money, therefore they can spend different amounts of money on things they need, and the supply/demand curve adjusts accordingly? See: price of an apartment in Washington vs Texas Long complaint short: It's broken. How do we fix it?
  - seanmcdirmid 14y ago
    An apartment in Austin Texas is more expensive than one in Spokane Washington, your point?
- crapshoot101 14y ago
  not true and way too simplistic. If they can't get employed at all because the minimum wage is too high, the entire burden falls on those same state benefits.
  - 14y ago

lifeisstillgood 14y ago

Here is a plan - set the minimum wage at a level where one person working full time will not have to collect any state benefits in order to raise their family. Any other level, is an indirect but tangible subsidy to companies who employ minimum wage staff

adventured 14y ago
How big of a family are you talking about subsidizing? 1 child? 3? 5? Radical difference in cost. So which target is the cost basis? If you say one child, who are you to say one? If you say seven, who are you to say seven? And it is thus the moral hazard presents itself: forcing tax payers to pay for other people's optional life choices (specifically ones so easily avoided as having children that you cannot afford). It essentially gets into a scheme in which the claim has to be made that being able to afford to have children is a right (a right paid for by someone else that is more responsible and more productive).
Dove 14y ago
Teenagers don't need to support a family. Without much in the way of valuable skills, they may still want a job for spending money and experience. Your proposed minimum wage would make this illegal. College students don't need to support a family. They may want to take a low-paying internship to build experience in their chosen field. Your proposed minimum wage could make this illegal. Mothers of school-age children who are supported by their husbands don't need to support a family. They may wish to do part-time, low-skilled work to build expertise in preparation for a future career after their children leave. Your proposed minimum wage would make this illegal. Retirees with pensions don't need to support a family. They may wish to do work, possibly even very low-skilled work, as a way to combine a hobby with a sense of being useful. Or possibly as a launching-pad for more of a "fun" career than the "serious" career they've already finished. Your proposed minimum wage could make this illegal. Low-skilled immigrants do sometimes need to support a family. When one member can't do it alone, sometimes mom, dad, and the oldest kid hold down four full-time jobs between them to make it work. The arrangement isn't permanent; it lasts until they can do better. But in the mean time, they can support themselves. Your proposed minimum wage law could make it impossible for them to support themselves this way, and force them to rely on charity. This in turn could make it impossible for them to immigrate at all. Some people have very low expenses. A paid-off house, a renter, a garden in the backyard, and a low-paying job can be enough to make ends meet. Setting the minimum wage at a level such that someone with a mortgage and unproductive hobbies can raise a family would force this person, who could otherwise support themselves, to rely on charity. I could go on. My point is that the world is a complicated place. Not every worker is a single-head-of-household-with-three-children sort of worker. Not every job is a permanent career. They can be educational, transitional, temporary. They can be held by all sorts of people for all sorts of reasons. Provide assistance to the poor if you like, but don't make work illegal. Don't ever do that. There's a huge potential to hurt a lot of people, just because they're living lifestyles you aren't familiar with.

paltman 14y ago

just another story of a business getting involved in public policy in order to hurt competitors. costco can (and already does) pay workers more than minimum wage as is in line with their operating philosophy. government shouldn't be in the business of regulating wages, that's an agreement between an employer and employee.

w3pm 14y ago

Costco is free to pay their employees as high of wages as they'd like, no legislation required. This lobbying isn't out of their good will but a strategic play to hurt competitors that rely on lower wages. Such is politics.

throwaway420 14y ago
That Costco isn't doing this purely out of goodwill needs to be mentioned further. If Costco already starts all employees at $11.50, increasing the minimum wage to any point less than $11.50 doesn't initially impact their own bottom line, but just serves to increase their competitor's costs.
- addlepate 14y ago
  So your charge is that Costco is engaging in the practice of capitalism. In that case, I reckon they are guilty.
- dfxm12 14y ago
  The other side is that if people see an increase in their pay, they'll have more money to spend (hopefully at Costco).
  - caw 14y ago
    Not at Costco. The average wage of a person who shops at Costco is 74k. Sams Club perhaps; the customers they attract are at a lower income. http://www.nytimes.com/2005/07/17/business/yourmoney/17costco.html?pagewanted=all&_r=0 http://www.nytimes.com/2005/07/17/business/yourmoney/17costc...
- OstiaAntica 14y ago
  Costco is more concentrated in higher wage, higher cost states on the West Coast. They'd love to extend California wage rates to Walmart's red state operations.
Apocryphon 14y ago
Isn't competition that takes advantages of factors beyond the free market still competition? In practice, shouldn't the free market extend beyond the "market" itself, and into the state as well? Because all real-world capitalist economies are really mixed economies where the state still has an effect on the market. So aren't rational economic actors making use of every weapon at their disposal by lobbying, pursuing tax loopholes, patent trolling, etc?

protomyth 14y ago

A bit of statistics about minimum wage workers http://www.bls.gov/cps/minwage2011.htm http://www.bls.gov/cps/minwage2011.htm

stretchwithme 14y ago

The labor market is governed by the law of supply and demand, just like any other. If you arbitrarily increase the price of something, in this case low-skilled labor, surpluses are the result. If you want to help people, find a way that doesn't destroy the incentives to hire them and the incentives to become a more valuable employee.

mistercow 14y ago

The more time goes on, the more I think maybe a minimum guaranteed income is the solution that makes the most sense. Maybe we should just accept that there isn't going to be enough work for everyone, and that that's going to become more true in the future, not less. And furthermore, maybe we should accept that that's a good thing, as long as we shape our economy accordingly.

jimzvz 14y ago
>The more time goes on, the more I think maybe a minimum guaranteed income is the solution that makes the most sense. Why? Someone has to pay for it.
- ken_railey 14y ago
  Not coming down for or against, but one argument is that it causes less market distortion than a minimum wage. http://en.wikipedia.org/wiki/Negative_income_tax http://en.wikipedia.org/wiki/Negative_income_tax
- mistercow 14y ago
  >Why? See the rest of my comment. >Someone has to pay for it. Of course, and those would be the people who choose to work in order to earn more than the guaranteed minimum. The result would be more available jobs with more relaxing hours, giving people more time to spend with their families, on side projects, or on creative pursuits that enrich our culture. The idea that automation and technological advancement can cause people to go hungry is frankly crazy. Instead of celebrating the fact that humans don't have to waste their time on menial crap, we are forced by our economic system to wring our hands over the fact that that menial crap can no longer be used as an arbitrary metric for distributing resources.
  - jimzvz 14y ago
    >Of course, and those would be the people who choose to work in order to earn more than the guaranteed minimum. The result would be more available jobs with more relaxing hours, giving people more time to spend with their families, on side projects, or on creative pursuits that enrich our culture. I don't follow this logic. The easier it is for people to skate through life without working or working effectively, the less incentive they have to contribute. The people that pay for this life will decrease and quality of life will decrease for everyone.

bjhoops1 14y ago

I support a minimum wage increase (trickle-down economics is moronic and makes much less sense than a bottom-up approach, but I digress), but let's not forget that a minimum wage increase helps Costco's bottom line, since their biggest competitor's business model is completely tied to low wages. Just saying let's not pretend this is as righteous of a move as it would be if it were coming from Wal-Mart (who stands to lose). :P

jimzvz 14y ago

Higher labour costs just push business overseas. Is this not true?

smsm42 14y ago
For Costco, probably not - I won't drive as far as Mexico for some cheaper eggs :)
aneth4 14y ago
To China, where there is a rapidly increasing minimum wage. The Chinese understand income distribution will naturally fall extremely toward the powerful, and the powerless will make too little money to create a middle class. Raising the minimum wage distributes income to low income people who spend all their money and contribute to the consumer economy.
- Volpe 14y ago
  Are you really saying there is not a middle class in china?
  - Spooky23 14y ago
    Proportionally, the middle class in China is small, but growing.
  - aneth4 14y ago
    I did not say that at all. There is a rapidly growing middle class in China.
tsotha 14y ago
Retailing doesn't follow the same logic as manufacturing since the jobs really aren't mobile. But things that can be automated will be automated. Also, artificially high labor costs shut out younger and less employable people. If I have to pay $15 anyway, I never need to take the chance on someone who's run afoul of the law or high school dropouts. People who get a slow start in life are going to have that much more difficulty.

Symmetry 14y ago

Whenever I hear people talking about the minimum wage I want to know why they don't talk about the earned income tax credit instead. EITC: Money is given to the poor people that need it most. The money that goes to them comes out of progressive taxation. Very little dis-employment effect. Minimum wage: Money mostly comes from higher prices, which fall disproportionately on poor people. Fairly substantial dis-employment effect. The only reason to favor the later is that politicians can rely on the public not noticing that they're paying for it.

lifeisstillgood 14y ago
Tax credits rely on someone who is struggling to stay afloat to fill in yet another set of forms, correctly and then wait for the government to process it. They were and still are a disaster in the UK - something like 20% of eligible people have never claimed and now billions have been overpaid - yes, clerical error and overly complex systems means the UK government is trying to claw back over payments from some of the poorest in UK, who have already spent it anyway. It's ridiculous. No - keep it simple stupid, almost everyone can work out what they have to spend by looking in their pay packet. Working out what complex tax credit - no way
- gadders 14y ago
  I've never understood why the lower income tax allowances and limits were raised instead, so the lower paid people just paid no or less tax.
shardling 14y ago
I don't think anything about the minimum wage is as settled as you make it out to be.
dkl 14y ago
There's a big reason this won't fly in the US. The GOP won't support it because it's a gift to moochers. I agree with you, it's a better way to do it and to raise the standard of living in this country. It might even have a big effect on reducing crime.

kevinpet 14y ago

The most utterly evil profit maximizing business would always prefer that the government mandated minimum wage is somewhere near what they pay their lowest paid employees. Sad state of journalism that a group of businesses lobbying for their self interest is swallowed so frequently as selfless action for the public good.

corresation 14y ago
The most utterly evil profit maximizing business would always prefer that the government mandated minimum wage is somewhere near what they pay their lowest paid employees. How so? Costco in this case has always benefited from a happier, more loyal, consistent workforce because they have a job that many other service workers actually strive for. I fail to understand how reducing the advantage of their position helps maximize their profit.
- forrestthewoods 14y ago
  Because their profit margins remained unaffected by the change but their competitors already razor thin margins get significantly reduced.
  - praxulus 14y ago
    I think you missed his/her point. Costco gets to have more motivated and more loyal employees because their pay is significantly higher than minimum wage. If minimum wage goes up, they lose some/all of the benefit unless they further increase wages.
- AlbertoPier 14y ago
  This is the same company that was for the higher taxes for the rich and then made sure to get a huge loan to pay bonuses ahead of schedule so the Costco execs and board members could avoid the tax hike. Hypocrites.
  - Evbn 14y ago

davidroberts 14y ago

It makes sense for Costco, because they pay above minimum wage anyway, and any increase in the minimum wage will hurt their competitors more than them.

deleted 14y ago

[deleted]

kyllo 14y ago

Costco employees start higher than minimum wage already, so this won't affect them. But it's in Costco's interest for their competitors to have higher labor costs. So, Costco supports minimum wage increases. Labor unions do the same thing.

smsm42 14y ago

It probably hurt small independent shops much more than it would hurt Costco, due to economies of scale - if you have 100 workers and you had to raise wages 10%, you probably could do the same with 90 workers or cut a little service here and there without too much effect, but if you have just one worker and you don't have enough money for 10% raise, you're toast.

brc 14y ago
..and that is what it would be about. If Costco can hurt their competition by forcing up their labour force costs, plus at the same time give a good aura, and advertise their hiring policies to potential employees, it's a win-win-win. This type of thing isn't done off the cuff, there would be very careful analysis behind it. Most people would think this is against Wal-Mart or other large retailers, but where it would really bit is the very small corner-store operations, which not only collectively sell a lot of stuff, they prevent customers from going into bigger stores for small items like milk and bread.

aneth4 14y ago

This makes complete sense: 1) Costco already pays much more than the minimum wage, so they would not be affected directly from a cost perspective. 2) Competitors do not necessarily pay more than minimum wage, so this can only increase the costs of competitors. 3) Increasing minimum wage gives income to the lowest income people who will spend all of this money and are likely value shoppers of the kind attracted to big box stores like Costco. There is nothing for Costco to lose here. While I admire Costcos ethics all around, I can't say this is an entirely selfless gesture. Costco behaves rationally good with a long term view rather than irrationally bad with a short term view.

danielharan 14y ago
Not selfless at all, although the world is still a much better place for companies behaving this way.

AlbertoPier 14y ago

Costco is supporting the rise in minimum wage only because it helps them. They have lower labor cost then their competitors. I can hardly see any employees in Costco warehouses. This is the same type of hypocrisy as them supporting higher taxes for the rich and then getting a huge loan to pay ahead of schedule bonuses for the execs and board members to avoid new tax rates.

kokey 14y ago

Large, established retailers, in general, will favour a higher minimum wage if it's enforced on themselves and all their competitors. It's actually good for them, since they operate at a scale that can do more with less people. Unfortunately it reduces the market to a combination of large retailers, and small family run operations which can effectively get members of their family to work for less than the minimum wage, and very little in between.

Evbn 14y ago
That's a good thing. Efficient businesses with happy employees prosper. Inefficient sweatshops shut down.

scotty79 14y ago

I'd much preferred if they removed minimum wage and almost all of the welfare programs and replaced it with basic income guarantee (http://en.wikipedia.org/wiki/Basic_income_guarantee http://en.wikipedia.org/wiki/Basic_income_guarantee)

bruceboughton 14y ago
I can't imagine you'd find much public support for giving millionaires a weekly wage. What does this offer over the minimum wage? Is it that the universality makes it cheaper to administer or is the universality a principle rather than a pragmatic concession? In the UK, there is a movement for a living wage which seems to be more about a higher, regionally-calibrated minimum wage.
- scotty79 14y ago
  Theres probably lots of well thought arguments for basic income guarantee but here's the things I could come up with: - much cheaper than welfare because you don't need to hire people who decide if you deserve it - less corruption than welfare because you can't bribe people who decide whether you deserve it. - you don't have to hide that you are working in order not to loose the benefit, so possibly more money from taxes and healthier, more honest social climate. Also no need for minimum wage. - no need for government sponsored pension or formalized retirement age - you no longer have to care so much about unemployment. From political issue it becomes only yet another indicator of the state of economy. Hence the government can safely shed off large quantities of its employees. - no need for minimum wage, wages can safely drop below any currently conceivable minimums. - more worker mobility since you don't have your whole income at stake when you decide to look for new job. - strong incentive for having kids since they add to family income, also parents have sense of security that they will be able to support a child and have time to raise it as well. - more money in hands of more careful consumers. Poor people tend to spend money more wisely as they choose products more carefully with regards to ratio between price and quality. More purchasing power in hands of dedicated consumers, results in more efficient market.
  - 14y ago

vijayboyapati 14y ago

This is terrible. Costco can get away with a higher minimum wage because they sell at a higher end. All this is doing is forcing Walmart to stop competing at the lower end of the spectrum of goods. The only people harmed by that are the poor.

matterhorn 14y ago

Raising the minimum wage will increase unemployment. Additionally, having any minimum wage at all increases unemployment. On top of the unemployment problem, a minimum wage is an intrusion into the rights of the individual to voluntarily enter into business with others.

ahoyhere 14y ago
Proof?

ahoyhere 14y ago

"especially at a time when finances are stable at best" Sloppy reporting. Here's what the author should have written: > Just four years after the worst shock to the economy since the Great Depression, U.S. corporate profits are stronger than ever. > In the third quarter, corporate earnings were $1.75 trillion, up 18.6% from a year ago, according to last week'si gross domestic product report. That took after-tax profits to their greatest percentage of GDP in history. > But the record profits come at the same time that workers' wages have fallen to their lowest-ever share of GDP. http://money.cnn.com/2012/12/03/news/economy/record-corporate-profits/index.html http://money.cnn.com/2012/12/03/news/economy/record-corporat... Whoever gets the mouthpiece gets to frame the debate. The debate is wrong. What's happening is this: Corporations have people on the hook, because the people are poor & desperate, meanwhile the corporations are more flush with cash than ever before. They know that everyone is running around, pretending we're in a terrible financial crisis… because we are, if you're an individual. The profit-taking is immense and ordinary people are suffering. This is not a debate about "Well gee can Joe-Bob really produce $8 of value an hour?" because the profits say yes, Joe-Bob is definitely producing much more value than he costs. Even more so, given that this is a time when CEO compensation (a cost that reduces profit) has skyrocketed, compared to the average worker's wage. Good for Costco. They have always behaved well towards workers, with regards to pay and benefits, even when things really were bad.

mhartl 14y ago

The minimum wage is as perfect a litmus test as we have for separating those who think they understand basic economics from those who actually do.