Rejecting industry dogma, Costco backs calls to lift minimum wage

http://www.latimes.com/business/money/la-fi-mo-costco-wages-20130306,0,7790766.story

by SparksZilla • 13 years ago

188 462 13 years ago

jurassic• 13 years ago

This doesn't surprise me at all. Since they already pay their workers a lot more than minimum wage, the increase would mainly be a hit to their primary competitor that relies on low wages: Walmart/Sam's Club.

jarjoura• 13 years ago

Well, but it does hurt their employment advantage in areas where they actively compete for labor. I wouldn't take such a cynical view on why they support raising the minimum wage.

Having people who make more money also means in areas where it really matters, people will buy more at Costco too :-). (in theory)

geon• 13 years ago

> it does hurt their employment advantage

Ar there areas whith a shortage of unskilled workers?

adventured4• 13 years ago

It wouldn't hit Walmart at all, they don't pay minimum wage.

Nationally the average full time Walmart associate earns $12.57 / hour. That has increased by roughly 30% in seven years.

smackfu• 13 years ago

You are citing the full-time age for Walmart who is famous for not having people as full-time so they don't have to pay benefits?

RockyMcNuts2• 13 years ago

Minimum wage hike is a winner for Walmart. Walmart employees are among the most productive in retail, Walmart has low labor cost/unit of sales.

Their customers are low earners, so if their wages increase, that helps Walmart.

Mostly, it helps Walmart because that small store in the little shopping district half an hour or an hour from the nearest Walmart will have a harder time staying in business.

Indexing the minimum wage to inflation is a particularly bad idea, if there is ever a big supply shock and stagflation, you'll get a big increase in the minimum wage at the wrong time, when people and companies are struggling to avoid layoffs.

windsurfer2• 13 years ago

Blogspam. Original is here: http://www.latimes.com/business/money/la-fi-mo-costco-wages-...

SparksZilla2• 13 years ago

Not blogspam. Circa is a pretty cool tool that tells a news story by pulling in all the sources talking about it, and then updates the story as new information comes in. Take a look at them; it's really useful.

MartinCron10• 13 years ago

Even if it's not technically blogspam, the best practice should still be to link to direct sources, no?

windsurfer2• 13 years ago

Never heard of Circa, but I don't think it's allowed anyways. From the guidelines (http://ycombinator.com/newsguidelines.html)

Please submit the original source. If a blog post reports on something they found on another site, submit the latter.

jdreaver• 13 years ago

They want a wage of $10.10 per hour? I bet a Costco employee starts around $10.20 per hour.

SatvikBeri• 13 years ago

You're on the right track. From the article:

"Costco pays a starting wage of $11.50 an hour, gives most employees healthcare and other benefits, and has not switched to the model adopted by many big-box retailers of using temporary firms in warehouses to keep costs low."

A higher minimum wage costs Costco nothing and hurts their competitors.

georgemcbay• 13 years ago

I wouldn't say it costs them nothing. If competitors are forced to raise their wages near Costco's, Costco either needs to up the ante or lose some of the luster they've created in treating their employees so well compared to the average retailer.

I'm not saying they don't have good business reasons for this, they do, but it isn't all pure business upside for them.

ortusdux• 13 years ago

13 $/hr + 0.5$ raise every 300 hours worked up to about 18$.

tptacek• 13 years ago

I like Costco, I think we should raise the minimum wage, and I am a reliable Democratic voter, which is one of the reasons I know that Costco is a key corporate supporter of the Democratic party, and that the minimum wage is a Democratic party identity issue.

Agree also with the other comment here that the minimum wage is a structural advantage for Costco against Walmart.

MartinCron10• 13 years ago

I'm surprised we haven't heard more arguments for raising the minimum wage over the last few years. The main argument against it is that it leads to inflation, but inflation has been the least of our worries recently.

dantheman• 13 years ago

One of the biggest arguments against it is that raises unemployment by making more people unemployable. Some people do not generate $10 + overhead cost per hour.

Raising the minimum wage hurts the young the most since they need low skill, low value jobs to learn and gain experience. By removing that rung of the ladder we hurt them greatly throughout their life.

protomyth6• 13 years ago

The main argument for me is that it leads to higher unemployment for teenagers and its affects on small businesses trying to get part time workers.

gibsonf12• 13 years ago

The main argument against it is that many people loose their jobs when the minimum is raised for those who can't provide that much value to their employers. Any interference with the free market never results in a good thing. Note that the most innovative part of the economy, computers/software, is also the least regulated.

cjy3• 13 years ago

The main argument against the minimum wage is that it may increase unemployment for unskilled workers. However, recent empirical work suggests that the minimum wage is currently low enough in the U.S. that raising it has quite a small effect on unemployment. Therefore, some economists feel the redistribution effects are worth a small cost in efficiency. Here is a survey of prominent economists on the effects of raising the minimum wage to $9:

http://www.igmchicago.org/igm-economic-experts-panel/poll-re...

Many economists would argue that increasing the EITC would be a better way to help the poor.

smsm4211• 13 years ago

It's not only inflation. The argument is making more low-skilled youngsters unemployable and thus preventing them from stepping on the lowest step of the skills ladder which eventually would take them to higher wages. It also precludes people that are unable to generate enough value to justify minimum wage from earning any income instead of completely relying on state assistance. Inflation can be counteracting this - since if dollar costs less, eventually the value of it would fall low enough so that value generated by an unskilled worker is worth the dollars state prescribes to pay him - but that'd take time, and getting on the dole is easier than getting off.

csomar2• 13 years ago

No it doesn't lead to inflation (maybe inflation in products that the $10/hour employees mostly use) but the general rate of inflation should be the same.

Raising the minimum wage redistribute the wealth from the rich to the poor. The disadvantage is that it creates a Deadweight loss (http://en.wikipedia.org/wiki/Deadweight_loss) resulting in unemployment and lost economic value.

In a perfect, competitive and free market there should be no minimum wages. However, as a liberal capitalist, I think we should keep some standard.

specialist• 13 years ago

Agree also with the other comment here that the minimum wage is a structural advantage for Costco against Walmart.

Walmart socialize their labor costs by pushing their employees on to government aid, eg food and healthcare.

US Government mandated minimize wage forces corporate welfare basket cases like Walmart to start carrying more of their own water.

People arguing against minimize wage carefully omit that corporate profits are at all time high while wages have stagnated for decades. Coincidence?

jwallaceparker• 13 years ago

> US Government mandated minimize wage forces corporate welfare basket cases like Walmart to start carrying more of their own water.

This is probably true, but wouldn't ending corporate welfare be a better strategy to achieve that end?

redthrowaway• 13 years ago

>the minimum wage is a structural advantage for Costco against Walmart.

It's a structural advantage for Costco, period. They sell necessities in bulk. When people can afford to buy in bulk, they will. So the more people who can afford to hop in the car and pack it to the gunnels with canned goods and 48 packs of toilet paper, the better Costco does.

dennisgorelik7• 13 years ago

1) When Costco raises their entry-level wages - it's probably a good thing.

2) Using legal system (mandatory minimum wage law) to fight their competitors - is a sleazy tactic.

wildgift5• 13 years ago

Nearly all professions and businesses do #2.

holmak2• 13 years ago

This is backtracking a bit, but what are the goals of raising the minimum wage?

The implied goal seems to be to help the poor, but as others have pointed out, other policies (EITC, guaranteed minimum income, negative income tax) are better suited to that goal. So, do proponents of the idea have a different (or additional) goal in mind? Do proponents believe that these other policies are not more effective solutions?

I would like to hear others' opinions on the answer to this question, especially if you support the raise.

Nursie24• 13 years ago

Those other solutions involve the taxpayer footing the bill, why should we be subsidising employers?

erichocean• 13 years ago

Raising the minimum wage does not "just" impact low-income workers, at the margins.

It actually affects the entire economy because many contracts are tied to __multiples of__ the minimum wage.

So it's not just about marginal workers either (a) getting a raise, or (b) losing (or not getting) a job. It's far more about union workers and other collective bargaining agreements with pay and benefits tied to minimum wage. Those are the people the legislation is designed to benefit. If anything, low-income workers are a distraction.

And that's why it's a core Democrat issue, not because it helps the poor or the young. Government already has programs that effect the poor and young far more than any minor adjustment in the minimum wage, but those programs do nothing for those under collective bargaining agreements, which is the actual purpose of increasing the minimum wage.

stephengillie• 13 years ago

It actually affects the entire economy because many contracts are tied to __multiples of__ the minimum wage.

I've not heard of this before. Is this common in federal or municipal contracts?

ekianjo• 13 years ago

> I think we should raise the minimum wage

It means you want unemployment to raise as well? Because that's a very typical effect of minimum wage increase.

Ygg2• 13 years ago

I think overall better move would be to reduce the number of hours people work. Reduce weekly hours from 40 to 30, and make overtime really pricey. That will increase employment. It will reduce profits of companies substantially though.

sageikosa3• 13 years ago

I'm pretty sure that increasing the cost of labor will drive the prices of labor dependent goods and services up, while also probably flattening growth or decreasing employment numbers when employers try to maximize the margins on the labor they already employ.

antoko4• 13 years ago

I'm pretty sure that giving lots of people more disposable income will increase demand. Which will in turn increase revenues and allow successful businesses to expand, increasing employment numbers, creating a positive feedback loop.

In reality however things are a little more complicated.

mentat• 13 years ago

Part of the argument is that this isn't disposable income, that it's in fact needed as a baseline against poverty.

sageikosa3• 13 years ago

You don't "give" more disposable income, you pay people for work. Pay for work is accounted for by receipts (prices paid for goods or services), causing prices to rise to cover the increased costs, or margins to fall if prices remain inflexible due to market price determination.

The artificial rise in wages will not help, as it will be met with a corresponding increase in prices to cover the costs of the wages.

adventured4• 13 years ago

Increase demand for what? Chinese goods of course, purchased at Costco and Walmart and Target.

How does exporting higher profits to China help America exactly?

I suppose the theory is: pay American service workers more, so that they can buy more Chinese goods, so China can become wealthier and build more factories and employ more production jobs, while America gets poorer by continuing to expand its service sector (consumption jobs). Interesting theory.

deelowe• 13 years ago

Money is just paper. It's a convenient way to exchange labor for goods in an asynchronous way. Raising the minimum wage, simply means you have to produce more paper for the same amount of labor. It doesn't change anything except temporarily.

If raising the minimum wage made any difference, McDonalds would be 5-star restaurant by now.

hkmurakami• 13 years ago

>And why Costco, a public company that has investors watching every penny and questioning every management decision?

I guess the author doesn't know that Costco is one of the few companies out there who famously give the middle finger to Wall Street analysts (who want them to reduce wages and benefits, and increase the price of goods sold)

tomrod• 13 years ago

Costco is still subject to economic reality. They make money by reducing overhead as much as possible and exercising monopsony power over brands (Walmart does this also for certain vendors).

I haven't looked enough into the issue to answer decisively, but I suspect they probably can't cut much more than they already have, unless their food is a cost center.

sukuriant3• 13 years ago

This is a dangerous statement; but I know that raising the minimum wage doesn't really hurt people making six figures; but, doesn't it hurt people making only a small multiplier of minimum wage? Like people making 1.25x minimum, and 1.5x minimum, because they'll now be making 1.05x and 1.15x minimum wage, reducing their own personal buying power once the prices settle again..?

I'm all for people earning more functional income. I've said before that I hate the corporate-level, money-hungry models of wages; but I had been taught that increasing the minimum wage, though it helps for a short while, ends up hurting in the end

lifeisstillgood18• 13 years ago

This is the wrong approach - simply ask what level of wage is needed to prevent a worker having to claim state benefits. Anything else is subsidising the employer

sukuriant3• 13 years ago

I believe my point was that, as wages change, so does that number. Isn't that part of the whole "cost of living" differences from one place to the next? People make different amounts of money, therefore they can spend different amounts of money on things they need, and the supply/demand curve adjusts accordingly?

See: price of an apartment in Washington vs Texas

Long complaint short: It's broken. How do we fix it?

crapshoot1012• 13 years ago

not true and way too simplistic. If they can't get employed at all because the minimum wage is too high, the entire burden falls on those same state benefits.

protomyth6• 13 years ago

The teenager at home trying to get some spending cash or save for college doesn't need to support a family. Every job doesn't need to support a family.

lifeisstillgood18• 13 years ago

Here is a plan - set the minimum wage at a level where one person working full time will not have to collect any state benefits in order to raise their family.

Any other level, is an indirect but tangible subsidy to companies who employ minimum wage staff

adventured4• 13 years ago

How big of a family are you talking about subsidizing?

1 child? 3? 5? Radical difference in cost.

So which target is the cost basis? If you say one child, who are you to say one? If you say seven, who are you to say seven? And it is thus the moral hazard presents itself: forcing tax payers to pay for other people's optional life choices (specifically ones so easily avoided as having children that you cannot afford).

It essentially gets into a scheme in which the claim has to be made that being able to afford to have children is a right (a right paid for by someone else that is more responsible and more productive).

Dove10• 13 years ago

Teenagers don't need to support a family. Without much in the way of valuable skills, they may still want a job for spending money and experience. Your proposed minimum wage would make this illegal.

College students don't need to support a family. They may want to take a low-paying internship to build experience in their chosen field. Your proposed minimum wage could make this illegal.

Mothers of school-age children who are supported by their husbands don't need to support a family. They may wish to do part-time, low-skilled work to build expertise in preparation for a future career after their children leave. Your proposed minimum wage would make this illegal.

Retirees with pensions don't need to support a family. They may wish to do work, possibly even very low-skilled work, as a way to combine a hobby with a sense of being useful. Or possibly as a launching-pad for more of a "fun" career than the "serious" career they've already finished. Your proposed minimum wage could make this illegal.

Low-skilled immigrants do sometimes need to support a family. When one member can't do it alone, sometimes mom, dad, and the oldest kid hold down four full-time jobs between them to make it work. The arrangement isn't permanent; it lasts until they can do better. But in the mean time, they can support themselves. Your proposed minimum wage law could make it impossible for them to support themselves this way, and force them to rely on charity. This in turn could make it impossible for them to immigrate at all.

Some people have very low expenses. A paid-off house, a renter, a garden in the backyard, and a low-paying job can be enough to make ends meet. Setting the minimum wage at a level such that someone with a mortgage and unproductive hobbies can raise a family would force this person, who could otherwise support themselves, to rely on charity.

I could go on. My point is that the world is a complicated place. Not every worker is a single-head-of-household-with-three-children sort of worker. Not every job is a permanent career. They can be educational, transitional, temporary. They can be held by all sorts of people for all sorts of reasons.

Provide assistance to the poor if you like, but don't make work illegal. Don't ever do that. There's a huge potential to hurt a lot of people, just because they're living lifestyles you aren't familiar with.

lifeisstillgood18• 13 years ago

The "wages good enough to send your kids to college" proposal is really a thought experiment - let's imagine we are going to see an doubling of productivity in the economy as Software Eats The World. But no increase in the number of jobs.

There will be a dramatic decline in employment as all those journalists and factory operators and researchers get laid off.

So what do we do? Corporations are going gang busters, the share of a vastly increased wealth is not going to the majority of the people.

So let's whack up the minimum wage - make it 60k. (remember we just doubled GDP). All other wages have to rise as well to maintain parity. And so the share of GDP to wages gets rebalanced - but there are less jobs? That's ok we have gone back to the sngle worker family, and the world has nice picket fences again.

This is a poor solution to a good scenario - obviously the 50s solution is socially sub optimal, obviously the above scenario carries massive inflation risk.

But the essence is the same - the jobs are gone. How do we fix it? Minimum wage is one lever that if pulled hard in one direction will lift the veil on the oncoming storm.

We need all the warning we can get

fr0sty• 13 years ago

Thus ensuring all HS and College students that want to work part-time (or during the summer) can't because there are no jobs available that pay the requisite wage.

The earned income tax credit phases out a over 40k/yr for a married couple with one child. which is ~$20/hr working 255 days/yr. Other benefits and subsidies might phase out at higher amounts so the wage in question would be higher still.

paltman• 13 years ago

just another story of a business getting involved in public policy in order to hurt competitors. costco can (and already does) pay workers more than minimum wage as is in line with their operating philosophy. government shouldn't be in the business of regulating wages, that's an agreement between an employer and employee.

w3pm2• 13 years ago

Costco is free to pay their employees as high of wages as they'd like, no legislation required. This lobbying isn't out of their good will but a strategic play to hurt competitors that rely on lower wages. Such is politics.

throwaway420• 13 years ago

That Costco isn't doing this purely out of goodwill needs to be mentioned further.

If Costco already starts all employees at $11.50, increasing the minimum wage to any point less than $11.50 doesn't initially impact their own bottom line, but just serves to increase their competitor's costs.

dfxm122• 13 years ago

The other side is that if people see an increase in their pay, they'll have more money to spend (hopefully at Costco).

OstiaAntica2• 13 years ago

Costco is more concentrated in higher wage, higher cost states on the West Coast. They'd love to extend California wage rates to Walmart's red state operations.

Apocryphon• 13 years ago

Isn't competition that takes advantages of factors beyond the free market still competition? In practice, shouldn't the free market extend beyond the "market" itself, and into the state as well? Because all real-world capitalist economies are really mixed economies where the state still has an effect on the market. So aren't rational economic actors making use of every weapon at their disposal by lobbying, pursuing tax loopholes, patent trolling, etc?

mdesq• 13 years ago

Yes, it's called rent seeking.

hetman2• 13 years ago

Why does that automatically preclude being motivated by good will? If their goal is to provide better wages to their employees then they would be best able to do so by increasing their competitive advantage by any means possible. Clearly there is a limit to the level of wage increase they are able to sustain when their competition is paying their employees rock bottom wages.

There's no reason why corporate interests and good will can't sometimes go hand in hand.

protomyth6• 13 years ago

A bit of statistics about minimum wage workers http://www.bls.gov/cps/minwage2011.htm

stretchwithme7• 13 years ago

The labor market is governed by the law of supply and demand, just like any other. If you arbitrarily increase the price of something, in this case low-skilled labor, surpluses are the result.

If you want to help people, find a way that doesn't destroy the incentives to hire them and the incentives to become a more valuable employee.

mistercow9• 13 years ago

The more time goes on, the more I think maybe a minimum guaranteed income is the solution that makes the most sense. Maybe we should just accept that there isn't going to be enough work for everyone, and that that's going to become more true in the future, not less. And furthermore, maybe we should accept that that's a good thing, as long as we shape our economy accordingly.

jimzvz3• 13 years ago

>The more time goes on, the more I think maybe a minimum guaranteed income is the solution that makes the most sense.

Why? Someone has to pay for it.

ken_railey• 13 years ago

Not coming down for or against, but one argument is that it causes less market distortion than a minimum wage. http://en.wikipedia.org/wiki/Negative_income_tax

mistercow9• 13 years ago

>Why?

See the rest of my comment.

>Someone has to pay for it.

Of course, and those would be the people who choose to work in order to earn more than the guaranteed minimum. The result would be more available jobs with more relaxing hours, giving people more time to spend with their families, on side projects, or on creative pursuits that enrich our culture.

The idea that automation and technological advancement can cause people to go hungry is frankly crazy. Instead of celebrating the fact that humans don't have to waste their time on menial crap, we are forced by our economic system to wring our hands over the fact that that menial crap can no longer be used as an arbitrary metric for distributing resources.

jvm3• 13 years ago

Someone has to pay for the increased minimum wage too. I agree with parent that EITC has more bang for the buck if you're interested in helping the poor. I guess someone on the right would just want neither; fair enough I say.

WONKY ASIDE:

The incidence of the minimum wage is almost certainly equivalent to that of a regressive consumption tax. So assuming no disemployment effects, it basically transfers wealth from everyone who buys the products of low-wage labor (disproportionately from the poor) to people who work minimum wage jobs, some of whom are also poor. It also kills some low-wage workers' jobs.

By contrast, EITC is a transfer from people who pay income tax (disproportionately the rich) to people with low incomes. So unlike the minimum wage increase, it is unambiguously beneficial to the poor.

In my personal opinion, one of the big reasons the minimum wage is so popular (and it really is, even across party lines) is that the costs are hidden, so people can pretend it's being paid for by big bad corporations even though the costs are ultimately borne by disproportionately poor consumers.

_wwz42• 13 years ago

I'd be okay with some bare subsistence level income, but the reality is that politicians will buy votes by redefining "bare subsistence" over time.

Eventually these types of programs all get out of control. See medicare, social security, student loans, food stamps, etc.

mistercow9• 13 years ago

>Eventually these types of programs all get out of control. See medicare, social security, student loans, food stamps, etc.

I don't know what you see as "out of control" about medicare, social security, or food stamps, but it doesn't really matter.

The more important question is why you think the minimum income should be limited to bare subsistence. Once the system is in place, you can use it to control job availability. Not enough jobs? Raise the minimum income and people will work fewer hours.

robryan4• 13 years ago

For this to work there really has to be significant rewards for working on the lower end. If people are guaranteed 40k but can make 50k toiling away at Walmart full time it will likely become hard to find people to fill the jobs.

maxerickson• 13 years ago

Just take away $0.25 (of basic income) for every $1 earned working.

Or whatever numbers make sense. But it should be straightforward enough to keep incentives available.

mistercow9• 13 years ago

Maybe. The difference between 40k and 50k sounds small in terms of raw percentage, but if you consider disposable income, it's more significant. What I think you'd much more likely see is an increase in part time work. In your scenario, likely nobody would be willing to work full time as a cashier at Walmart. But they would work part time if they wanted to save up for a new car, for example.

If the labor pool can support it, I think that's as it should be. The neat thing about the minimum guaranteed income is how well it scales as we automate jobs in the future. If we no longer need very many people working jobs at the skill level of Walmart cashiers, then raising the minimum income will account for that relatively painlessly.

But it's obviously not something you can just slap into place. You have to analyze the problem to figure out both how to set the minimum income initially, and how to adjust it over time.

eli_gottlieb19• 13 years ago

That's why you grant a smaller basic income stipend (say, more like $15k/year -- equivalent to minimum wage at full time), but take away nothing for working. So if you grant $15k and Wal-Mart pays $15k (same wage levels as now), the worker has a total income of $30k.

OstiaAntica2• 13 years ago

Society's income, or capacity to work, isn't a fixed pie.

mistercow9• 13 years ago

I'm not sure if that point is intended to support or reject GMI.

bjhoops1• 13 years ago

I support a minimum wage increase (trickle-down economics is moronic and makes much less sense than a bottom-up approach, but I digress), but let's not forget that a minimum wage increase helps Costco's bottom line, since their biggest competitor's business model is completely tied to low wages. Just saying let's not pretend this is as righteous of a move as it would be if it were coming from Wal-Mart (who stands to lose). :P

jimzvz3• 13 years ago

Higher labour costs just push business overseas. Is this not true?

smsm4211• 13 years ago

For Costco, probably not - I won't drive as far as Mexico for some cheaper eggs :)

aneth43• 13 years ago

To China, where there is a rapidly increasing minimum wage. The Chinese understand income distribution will naturally fall extremely toward the powerful, and the powerless will make too little money to create a middle class. Raising the minimum wage distributes income to low income people who spend all their money and contribute to the consumer economy.

Volpe• 13 years ago

Are you really saying there is not a middle class in china?

tsotha6• 13 years ago

Retailing doesn't follow the same logic as manufacturing since the jobs really aren't mobile. But things that can be automated will be automated.

Also, artificially high labor costs shut out younger and less employable people. If I have to pay $15 anyway, I never need to take the chance on someone who's run afoul of the law or high school dropouts. People who get a slow start in life are going to have that much more difficulty.

Symmetry3• 13 years ago

Whenever I hear people talking about the minimum wage I want to know why they don't talk about the earned income tax credit instead.

EITC: Money is given to the poor people that need it most. The money that goes to them comes out of progressive taxation. Very little dis-employment effect.

Minimum wage: Money mostly comes from higher prices, which fall disproportionately on poor people. Fairly substantial dis-employment effect.

The only reason to favor the later is that politicians can rely on the public not noticing that they're paying for it.

lifeisstillgood18• 13 years ago

Tax credits rely on someone who is struggling to stay afloat to fill in yet another set of forms, correctly and then wait for the government to process it.

They were and still are a disaster in the UK - something like 20% of eligible people have never claimed and now billions have been overpaid - yes, clerical error and overly complex systems means the UK government is trying to claw back over payments from some of the poorest in UK, who have already spent it anyway. It's ridiculous.

No - keep it simple stupid, almost everyone can work out what they have to spend by looking in their pay packet. Working out what complex tax credit - no way

gadders• 13 years ago

I've never understood why the lower income tax allowances and limits were raised instead, so the lower paid people just paid no or less tax.

shardling• 13 years ago

I don't think anything about the minimum wage is as settled as you make it out to be.

dkl2• 13 years ago

There's a big reason this won't fly in the US. The GOP won't support it because it's a gift to moochers.

I agree with you, it's a better way to do it and to raise the standard of living in this country. It might even have a big effect on reducing crime.

twoodfin11• 13 years ago

Huh? The EITC only pays you if you work, it was enacted under Nixon, and Reagan, Bush the Elder and Bush the Younger all signed expansions of it.

At least this Republican thinks it's a way better anti-poverty choice than raising the minimum wage, for many of the reasons already argued here.

As to any difficulty the eligible have in claiming it: How hard would it be to add another checkbox to the W-4 asking about other sources of income? If your total income including the job you're filling out witholding for is estimated to be less than X, it's your employer's responsibility to claim the EITC for you and add it to your paycheck. Perhaps grease the skids on this a bit by giving the employer some tax benefit for doing so.

eli_gottlieb19• 13 years ago

Two reasons, from two different political ideologies.

Right: because it's giving money to moochers. Period. Makers and takers, man. (This is what the Republican Party actually ran their campaign on this past November.)

Left: because it's an effective subsidy for sub-living-wage employers.

jcampbell12• 13 years ago

Nice political talking points, but the EITC has been expanded consistently by both parties. See the growth of EITC benefits:

http://www.taxpolicycenter.org/briefing-book/key-elements/fa...

shrikant• 13 years ago

Makers and takers?

Sounds oddly close to the "strivers vs scroungers" debate the Conservative and UKIP parties in the UK are trying to drum up.

matterhorn2• 13 years ago

Government handouts of taxpayer money only creates dependency. If you wish to give money to the poor, then give YOUR money to the poor. Do not vote to have government give your neighbor's money to the poor. Your neighbor's money does not belong to you. When you vote for politicians who favor government handouts of taxpayer money, then you are acting as a thief who lacks the courage to perform the act of robbery himself. Socialism is therefore simply a cowardly form of theft.

The minimum wage, however, while not theft, is a destroyer of jobs. The minimum wage increases unemployment. Raising it, further increases unemployment. Additionally, you are telling people under what terms they may enter into voluntary business arrangements with each other, which is none of your concern. You have no natural right to direct the affairs of others.

kevinpet2• 13 years ago

The most utterly evil profit maximizing business would always prefer that the government mandated minimum wage is somewhere near what they pay their lowest paid employees.

Sad state of journalism that a group of businesses lobbying for their self interest is swallowed so frequently as selfless action for the public good.

corresation3• 13 years ago

The most utterly evil profit maximizing business would always prefer that the government mandated minimum wage is somewhere near what they pay their lowest paid employees.

How so? Costco in this case has always benefited from a happier, more loyal, consistent workforce because they have a job that many other service workers actually strive for. I fail to understand how reducing the advantage of their position helps maximize their profit.

forrestthewoods• 13 years ago

Because their profit margins remained unaffected by the change but their competitors already razor thin margins get significantly reduced.

AlbertoPier2• 13 years ago

This is the same company that was for the higher taxes for the rich and then made sure to get a huge loan to pay bonuses ahead of schedule so the Costco execs and board members could avoid the tax hike. Hypocrites.

Tichy• 13 years ago

Obviously lifting the minimum wage would increase pressure on their competition. Maybe they can not operate as efficiently as Costco and having to pay their workers more would send them on a tailspin to bankruptcy (for example). It really doesn't make sense for a business to call for higher minimum wages (other than for PR and hurting the competition). If they believe in paying more, they can do so without a law.

robryan4• 13 years ago

My thinking also, as long as the minimum wage doesn't cross $11.50 it has no effect on Costco and would just be raising other competitors costs who do pay minimum wage to some employees.

lukifer2• 13 years ago

It's more likely to have a positive effect on Costco rather than none at all: if all minimum-wage workers have more money in their pocket, they're more likely to buy a CostCo membership, or spend more if they have one already.

rndmize• 13 years ago

You have an odd definition of "utterly evil". By my measure, the most "utterly evil profit maximizing business" would prefer to externalize the costs of employment as much as possible by not paying for healthcare and paying employees as little as possible. Surprisingly, it seems that Walmart does something along such lines[1]. There are other business strategies that might approach utterly evil, like child labor in third world countries, or sweatshops, or paying no attention to physically/medically dangerous working places/conditions, but somehow I don't really find supporting a higher minimum wage to be one of them - especially when that business has continually ignored calls from Wall Street to increase its profitability at the expense of its employees.

[1] http://www.politifact.com/truth-o-meter/statements/2012/dec/...

kevinpet2• 13 years ago

That's an overly narrow view. I start with the assumption that Costco has already found the optimum wage to pay their employees. It's a rare business that does well by mistreating their employees. I'm trying to emphasize that this has nothing at all to do with any altruistic motives and is entirely consistent with profit maximization.

ams61102• 13 years ago

The term "utterly evil" in the context of discussing a mainstream retailer is pretty out of place IMHO.

hetman2• 13 years ago

That assumes a rather static view of the situation. For Costco to maintain the advantages they gain from the wage disparity (employee loyalty, motivation, etc) they would have to further increase their own wages if such legislation was passed.

davidroberts• 13 years ago

It makes sense for Costco, because they pay above minimum wage anyway, and any increase in the minimum wage will hurt their competitors more than them.

kyllo• 13 years ago

Costco employees start higher than minimum wage already, so this won't affect them. But it's in Costco's interest for their competitors to have higher labor costs. So, Costco supports minimum wage increases.

Labor unions do the same thing.

smsm4211• 13 years ago

It probably hurt small independent shops much more than it would hurt Costco, due to economies of scale - if you have 100 workers and you had to raise wages 10%, you probably could do the same with 90 workers or cut a little service here and there without too much effect, but if you have just one worker and you don't have enough money for 10% raise, you're toast.

brc6• 13 years ago

..and that is what it would be about. If Costco can hurt their competition by forcing up their labour force costs, plus at the same time give a good aura, and advertise their hiring policies to potential employees, it's a win-win-win.

This type of thing isn't done off the cuff, there would be very careful analysis behind it.

Most people would think this is against Wal-Mart or other large retailers, but where it would really bit is the very small corner-store operations, which not only collectively sell a lot of stuff, they prevent customers from going into bigger stores for small items like milk and bread.

aneth43• 13 years ago

This makes complete sense:

1) Costco already pays much more than the minimum wage, so they would not be affected directly from a cost perspective.

2) Competitors do not necessarily pay more than minimum wage, so this can only increase the costs of competitors.

3) Increasing minimum wage gives income to the lowest income people who will spend all of this money and are likely value shoppers of the kind attracted to big box stores like Costco.

There is nothing for Costco to lose here.

While I admire Costcos ethics all around, I can't say this is an entirely selfless gesture. Costco behaves rationally good with a long term view rather than irrationally bad with a short term view.

danielharan• 13 years ago

Not selfless at all, although the world is still a much better place for companies behaving this way.

AlbertoPier2• 13 years ago

Costco is supporting the rise in minimum wage only because it helps them. They have lower labor cost then their competitors. I can hardly see any employees in Costco warehouses. This is the same type of hypocrisy as them supporting higher taxes for the rich and then getting a huge loan to pay ahead of schedule bonuses for the execs and board members to avoid new tax rates.

kokey• 13 years ago

Large, established retailers, in general, will favour a higher minimum wage if it's enforced on themselves and all their competitors. It's actually good for them, since they operate at a scale that can do more with less people. Unfortunately it reduces the market to a combination of large retailers, and small family run operations which can effectively get members of their family to work for less than the minimum wage, and very little in between.

Evbn17• 13 years ago

That's a good thing. Efficient businesses with happy employees prosper. Inefficient sweatshops shut down.

scotty793• 13 years ago

I'd much preferred if they removed minimum wage and almost all of the welfare programs and replaced it with basic income guarantee (http://en.wikipedia.org/wiki/Basic_income_guarantee)

bruceboughton2• 13 years ago

I can't imagine you'd find much public support for giving millionaires a weekly wage. What does this offer over the minimum wage? Is it that the universality makes it cheaper to administer or is the universality a principle rather than a pragmatic concession?

In the UK, there is a movement for a living wage which seems to be more about a higher, regionally-calibrated minimum wage.

scotty793• 13 years ago

Theres probably lots of well thought arguments for basic income guarantee but here's the things I could come up with:

- much cheaper than welfare because you don't need to hire people who decide if you deserve it

- less corruption than welfare because you can't bribe people who decide whether you deserve it.

- you don't have to hide that you are working in order not to loose the benefit, so possibly more money from taxes and healthier, more honest social climate. Also no need for minimum wage.

- no need for government sponsored pension or formalized retirement age

- you no longer have to care so much about unemployment. From political issue it becomes only yet another indicator of the state of economy. Hence the government can safely shed off large quantities of its employees.

- no need for minimum wage, wages can safely drop below any currently conceivable minimums.

- more worker mobility since you don't have your whole income at stake when you decide to look for new job.

- strong incentive for having kids since they add to family income, also parents have sense of security that they will be able to support a child and have time to raise it as well.

- more money in hands of more careful consumers. Poor people tend to spend money more wisely as they choose products more carefully with regards to ratio between price and quality. More purchasing power in hands of dedicated consumers, results in more efficient market.

vijayboyapati• 13 years ago

This is terrible. Costco can get away with a higher minimum wage because they sell at a higher end. All this is doing is forcing Walmart to stop competing at the lower end of the spectrum of goods. The only people harmed by that are the poor.

matterhorn2• 13 years ago

Raising the minimum wage will increase unemployment. Additionally, having any minimum wage at all increases unemployment. On top of the unemployment problem, a minimum wage is an intrusion into the rights of the individual to voluntarily enter into business with others.

ahoyhere3• 13 years ago

Proof?

ahoyhere3• 13 years ago

"especially at a time when finances are stable at best"

Sloppy reporting. Here's what the author should have written:

> Just four years after the worst shock to the economy since the Great Depression, U.S. corporate profits are stronger than ever.

> In the third quarter, corporate earnings were $1.75 trillion, up 18.6% from a year ago, according to last week'si gross domestic product report. That took after-tax profits to their greatest percentage of GDP in history.

> But the record profits come at the same time that workers' wages have fallen to their lowest-ever share of GDP.

http://money.cnn.com/2012/12/03/news/economy/record-corporat...

Whoever gets the mouthpiece gets to frame the debate.

The debate is wrong.

What's happening is this: Corporations have people on the hook, because the people are poor & desperate, meanwhile the corporations are more flush with cash than ever before. They know that everyone is running around, pretending we're in a terrible financial crisis… because we are, if you're an individual. The profit-taking is immense and ordinary people are suffering.

This is not a debate about "Well gee can Joe-Bob really produce $8 of value an hour?" because the profits say yes, Joe-Bob is definitely producing much more value than he costs. Even more so, given that this is a time when CEO compensation (a cost that reduces profit) has skyrocketed, compared to the average worker's wage.

Good for Costco. They have always behaved well towards workers, with regards to pay and benefits, even when things really were bad.

mhartl• 13 years ago

The minimum wage is as perfect a litmus test as we have for separating those who think they understand basic economics from those who actually do.

Rejecting industry dogma, Costco backs calls to lift minimum wage

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