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Thursday, March 21, 2013

Economy What Do Washington State CEOs Know About the Minimum Wage that Other CEOs Don't Get?

Posted by Goldy on Thu, Mar 21, 2013 at 12:22 PM

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.

Earlier this month, Costco President and CEO Craig Jelinek gave a more full-throated endorsement: "We support efforts to increase the federal minimum wage," Jelinek said in a press release.

“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.

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Comments (13) RSS

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Goddamn we were rich here in 1998.

Posted by six shooter on March 21, 2013 at 12:55 PM

I think it is pretty fucking sad that some people make $11.50 an hour. That sucks.

Posted by scratchmaster joe on March 21, 2013 at 1:07 PM

The economic reason is that it creates barriers to entry for smaller competitors. Both Starbucks and Costco can better absorb the increased cost of labor, in part due to other efficiencies of scale, more so than a smaller mom and pop, or few location franchise can. The result: fewer small competitors enter or expand in the marketplace. It is a move designed to use governmental action as a tool to preserve market share

Posted by chunkstyle on March 21, 2013 at 1:20 PM

Goldy, you just cited two of the most liberal CEOs in the country as saying they want a hike in the minimum wage.

Liberals love to spend OTHER people's money, so that is no surprise.

What they are failing to take into account is, higher minimum wage equates to higher unemployment, particularly for minorities and low skilled workers.

More structural unemployment is NOT what we need right now folks!

Posted by GeneStoner on March 21, 2013 at 1:28 PM

Good for them! Schultz in particular has a long way to go before he's made up for his misguided "Fix the Debt" deficit-hawk silliness, though.

Posted by TomJohnsonJr on March 21, 2013 at 1:37 PM

@3 -- Let the free market work and everybody wins!

Plus they're building their own markets.

Posted by six shooter on March 21, 2013 at 1:50 PM

You should mention the push for a $15 minimum wage in Seattle by Kshama Sawant in these posts. What do Conlin and other councilmembers think about increasing the city's minimum wage?

Posted by raku on March 21, 2013 at 1:56 PM

Big surprise, @4 has no idea what the fuck he's talking about.

Posted by JonnoN on March 21, 2013 at 3:12 PM

Of course CEOs don't get minimum wage. They make big bucks.

Posted by fletc3her on March 21, 2013 at 4:35 PM

@ 4 And Conservatives want to screw the poor.

Here is why the GOP is wrong on the minimum wage.

http://www.salon.com/2013/03/14/robert_r…

Posted by Seattle14 on March 21, 2013 at 8:01 PM

@8: Shocked and surprised I am, hrmm.

Posted by venomlash on March 21, 2013 at 10:58 PM

I think it could not hurt to increase the minimum wherever possible. It is obviously easier for larger companies with more cushy gross profits. However, it has been proven that happier employees provide more productivity and loyalty, and many examples come from small companies. I am not too knowledgeable about mom and pop accounting, but their success would probably increase if they adhered to the same principle.

Posted by StephanieSpeaks on April 1, 2013 at 5:11 PM

Younger people earning a better wage can also afford to go for higher education, thus move up the ladder with respect ! And perhaps return to where they were given those opportunities, having gained the skills leading to managerial positions !

Posted by samtheamsoilman on April 1, 2013 at 5:34 PM