Wednesday, March 6, 2013

Costco CEO Wants Government To Tip The Scales In His Company's Favor

By, Chris Rossini

What's more American these days than using government to tip the scales in your favor?

HuffPo reports:
On Tuesday, Costco CEO and President Craig Jelinek came out in support of the Fair Minimum Wage Act of 2013, which aims to raise the federal minimum wage to $10.10 per hour, then adjust it after that for inflation.
Now...Murray Rothbard smashed the minimum wage law in one succinct paragraph:
In truth, there is only one way to regard a minimum wage law: it is compulsory unemployment, period. The law says: it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.
The Costco CEO then tells us about his company:
"We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low."
So what?

Who cares that Costco's starting wage is $11.50/hr?

Does that change the economics of the minimum wage law? If Rothbard were still alive, would he have to retract his statement because of Costco's pay scales?

Not at all.

So, how could Costco benefit from their CEO publicly sticking his nose in on this issue? HuffPo says (my emphasis):
Costco has a reputation for paying its employees above market rate, with the typical worker earning around $45,000 in 2011, according to Fortune. Walmart-owned Sam's Club, in contrast, pays its sales associates an average of $17,486 per year, according to salary information website

Stick it to the competition!

This is the same reason that Unions are traditionally in favor of minimum wage hikes. Screw the non-union individuals who are willing to work for lower wages!

Or as Bob Wenzel has said to me, "Well then, if the Costco chief wants to pay currently unemployed people more than the minimum wage, he should start doing so now. Let Costco hire them. What's that? He doesn't have jobs for them? Oh."

So the Costco CEO is just playing the game. The government billy club is there...why not pick it up and beat your competition over the head with it?

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  1. give me walmart anyday, i don't have to buy the holy roman empire sized box and at 45k im not surprised to see 4 or 5 check outs open and line of at least 5 customers waiting at each one.

  2. Costco has always been a left-leaning company.

    Many years ago Costco produced a monthly news rag. Other than the advertised Costco deals, the "newsletter" was a complete left-wing advertising piece.

    Then, California decides to pass a law to screw over companies like Costco (I don't even remember the law, but I was against it on libertarian principles). Then, as I'm shopping at Costco, an employee -- who, by his clothing, I assume was some mid-level manager for the store -- approaches me to get a signature on a petition to squelch the new CA law.

    Even though I was against the law, the irony of the situation was more than I could bear. I started ripping the guy a new asshole. I "explained" to him that I received a Costco magazine every month that advocated every government program that screwed me over, but now that these same government assholes wanted to screw Costco over, Costco suddenly wanted my help.

    I was on a pretty good roll -- not yelling, but not being quiet either. I noticed out of my peripheral vision that I'd attracted a small group of onlookers -- maybe about 10 people. And quite a few of them were nodding their heads in agreement as I continued to rip on this guy.

    The Costco guy was clearly stunned. He obviously never expected an onslaught from the direction I came at him. Interestingly, about 2 months later the Costco magazine stopped being delivered. I've often wondered if my rant somehow made it up to corporate management who decided the political positions of the magazine were suddenly too large of a liability.

  3. I guess the days of Jim Senegal are over: the CEO who payed his employees respectable wages not because the government told him to. The CEO who fought inflation by keeping the 20oz soda and footlong hotdog - 1.50$ -- the very same price it was when he started the company in the 1980s. The CEO who ran a billion dollar business but only payed himself 300,000$ a year and instated the no markup higher than 15% rule while normal retail averages 25-50% markups on average. I was concerned when Senegal stepped down last March. Not even one year later and his replacement is playing crony hardball.

    1. yep, the passing of another era.
      BTW, should I refer to you as "7dffie"?
      What, THX1138 was taken? :)

  4. Amen Heath there are almost always enough checkers at Walmart to handle the shoppers. Plus Walmart employs far more people than Costco.

  5. Great article, Chris, and brilliant quote from Wenzel.

    I think it's great Costco pays its workers relatively high wages, but its desire to enforce that same standard on its competitors isn't due to altruism; quite the contrary. It is due to selfishness.