Costco Wholesale Corporation (NASDAQ:COST), unlike the other retailers, has come out in support of President Obama’s proposal concerning a hike in the federal minimum wage to $9 an hour. In fact Costco CEO Craig Jelinek fully supports the Fair Minimum Wage Act of 2013 that will raise the federally-mandated minimum wage to $10.10.
“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,” Jelinek said. “We support efforts to increase the federal minimum wage.”
After the proposal for a higher minimum wage introduced by Obama in his State of the Union address, the National Retail Federation completely rejected it saying it will kill job growth. But somehow, Jelinek supports it as he already pays his employees at least $11.50 an hour, so an increase in accordance to the new act won’t relay have an impact on the company’s payroll. Also, Jelinek is a Democrat who supported Obama in the re-election campaign.
The new laws will, infact, be beneficial for Costco Wholesale Corporation (NASDAQ:COST) as the costs of the competitors like Wal-mart will increase. Also, a higher minimum wage will result in a higher disposable income for Costco Wholesale Corporation (NASDAQ:COST)’s customers. The same point was highlighted by Obama in his address “for businesses across the country, it would mean customers with more money in their pockets.”
Other supporters for the bill include British American Auto Care in Maryland, Organ Company in Massachusetts and Busboys and Poets, a restaurant chain in Washington, D.C., Virginia, and Maryland, Vintage Vinyl in St. Louis.
Factoring the inflation, minimum wage has not risen proportionally. Workers who earn $7.25 an hour or $15,080 have comparatively less purchasing power than enjoyed by the workers in 1956. In contrast, corporate profits as a percentage of national income are highest since 1950 while the pay to employees is close to its lowest.
“Wages are a basic cost of business and like energy, transportation and other expenses, costs change over time,” said Amy Chender, Chief Operating Officer of retailer ABC Home. “The minimum wage must increase to reflect the rising cost of living. ABC Home pays well above the current minimum wage and we are ardently committed to supporting a minimum wage raise. No business is an island. A minimum wage increase will improve our economy, and is long overdue.”
Research also supports that a hike in the minimum wage does not lead to increased unemployment and business closures, as Business for a Fair Minimum Wage summarizes in Research Shows Minimum Wage Increases Do Not Cause Job Loss.