One of the many arguments against raising the minimum wage, or even having a minimum wage, is it puts a too much of a strain on business. Ignoring the fact that $7.25 an hour isn't even close to enough money for someone to live on without going into debt, the question of our business's survival is still a fair one. However, I'm no longer sure if the numbers actually support this theory. A specific example of a potential source of discrediting information is Costco. Workers start at $11.50 an hour, and tend to have better potential growth in their wages than competitors like Sam's Club. In addition, CEO Jim Sinegals has done everything in his power to make sure every Costco worker has access to benefits and affordable healthcare. Despite this generosity, Costco has seen steady growth annually as Walmart has been slowing down. While Walmart tends to have better profits (potentially from an almost 50% turnover rate among employees, as well as low wages), Cost-Co remains to be a strong competiter.
Why is this? Is it the fact that about a third of the workers are represented by the Teamsters Union? Is it because Costco's employee's are better paid and therefore have a reason to give better service to the customers? I'll be the first to admit that I am not an economist, but it seems to me that the success that Costco, and other firms which act with great generiosity to their employees, seems to show that (at least from a long term perspective) they can still be competitive. They can still make money. Food for thought.
As always, if anyone has any comments I'd love to hear them!
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