Costco Is The Perfect Example Of Why The Minimum Wage Should Be Higher

Costco Wholesale

Photo: Glassdoor

Big-box warehouse store Costco is often compared with Walmart’s Sam’s Club. Both stores are places where people go to buy in bulk and save money. But while Walmart employees are striking for higher wages and health care, Costco has some of the happiest employees in the business.

Costco pays its employees an average hourly wage of $11.50 to start. After five years, they make $19.50 an hour and get an “extra check,” a bonus of more than $2,000 every six months, according to Slate

While Wal-Mart’s Sam’s Club starts employees at $10 an hour, they make $12.50 after about five years, Slate reported

Costco workers pay a 12 per cent out of pocket premium for benefits, while Wal-Mart workers pay 40 per cent. 

This results in lower turnover and more skilled workers, Costco CEO Craig Jelinek said, according to the Puget Sound Business Journal

He told advocacy group Business for a Fair Minimum Wage that he supports a national minimum wage increase. 

The bill just introduced in Congress would increase the federal minimum wage to $10.10 an hour from $7.25 an hour over time.

“Instead of minimising wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximise employee productivity, commitment and loyalty,” Jelinek said in the statement. 

Having more knowledgeable employees results in better sales, according to David Worrell at AllBusiness.com.

Costco averages $814 in sales per square foot, while Sam’s Club makes just $586 per square foot. 

In a recent earnings announcement, Wal-Mart Stores revealed that sales at Sam’s Club were down. 

Investing in employees creates loyalty and better customer service that trickles down to the consumer. 

“Look at people as an investment and hire the best you can possibly afford,” Worrell said. “Stretch to your limit to keep them excited about coming to work … then watch as they actually perform.” 

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