Starbucks CEO Howard Schultz has become the second prominent Seattle-area business leader to come out in favor of raising the federal minimum wage, if tentatively. "On balance, I am a supporter of the minimum wage going up," Schultz told CNBC yesterday, while also cautioning that some employers might be scared away from adding jobs.
“We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low. An important reason for the success of Costco’s business model is the attraction and retention of great employees. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty."
So what do Schultz and Jelinek know about the minimum wage that other CEOs don't get? Both Starbucks and Costco are headquartered here in Washington, the state with the highest minimum wage in the nation (currently $9.19) thanks to a 1998 initiative that tied the wage to inflation. While Schultz is right that some employers may fear a minimum wage hike, neither Schultz nor Jelinek are afraid of it themselves, thanks in part, presumably, to their own benign experience with a relatively high minimum wage here in Washington State.
Starbucks and Costco are arguably two of the most success retailers in the nation. Costco in particular out-competes Walmart's Sam's Club while paying its typical workers about double. It's an experience with higher wages that CEO's elsewhere might do well to learn from.