retail news in context, analysis with attitude

The Street has a story suggesting that Costco won't be impacted much by an increase in California's minimum age to $15 per hour by 2022.

"That is because Costco -- which counts California as its largest market at 31% of annual sales via its 105 stores there -- has long prided itself on paying its workers well above minimum wage, believing it helps them get better workers and retain them.

"Since 2007, Costco's starting wage in the U.S. and Canada has been $11.50 to $12 an hour. After four-and-a-half years at the company, a typical Costco worker tends to earn $23 an hour. And according to a Costco spokesman, the average hourly wage for a Costco worker in California is already $22.50."

The story goes on to point out that "although Costco's competitors will be forced to shell out at least $15 an hour to workers in California by 2022, it's unlikely Costco will lose employees or have trouble attracting new ones.

First, Costco gives a clear line of sight (about four years) to store employees earning in excess of $20 an hour, something that Walmart, Target and other retailers will unlikely ever be able to hang their hats on. Further, judging by past behavior, Costco will likely lift its starting and top wages even higher compared to competitors in order to attract the best talent."
KC's View:
I understand that Costco has a different business model, and that its membership fees give it a financial foundation from which it can do different things. But I cannot help but wonder if its approach - pay people better, give them better benefits, make them feel invested in the company, and trust them to drive growth - has more applicability than some folks believe.