retail news in context, analysis with attitude

The Atlantic has some analysis of Costco's announcement last week that it plans to increase the minimum pay for employees for the first time in almost a decade, raising base pay by $1.50, to between $13 and $13.50 per hour.

The decision, the story suggests, may indicate "that, as the economy adds jobs, retailers will have to start paying their frontline workers more in order to hold onto them." And, it reflects some broader economic good news:

"The fact that both Costco and Walmart are raising wages for their workers is evidence that the U.S. labor market might be tightening," The Atlantic writes. "The last two jobs reports have seen the unemployment rate below 5 percent—as the U.S. economy improves and job opportunities become more abundant, it’s expected that workers will have options to jump from job to job. Many businesses are now reporting that it’s harder to find employees to fill vacant positions, and the competition for low-wage workers is growing as well.

"As wage growth still remains tepid for most workers in America, Costco workers’ raise is hopefully not just a move consistent with the company’s past treatment of workers, but an encouraging sign that wages will start to rise more generally."
KC's View:
The story also makes the point that Costco's CEO "has been outspoken in supporting a federal minimum wage above $10," and that "Costco workers tend to be satisfied in a way that’s unusual for the retail industry."

I know this is an approach that not everybody agrees with, and the debate can get somewhat contentious. But the system - pay people a living wage and give them great benefits, with the knowledge that these same people are key to your success - largely seems to be working for Costco, and that's a pretty good model.