Costco backs bill in Congress to raise the minimum wage

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NEW YORK — For many businesses, opposing minimum wage increases is a no-brainer: Raising the minimum wage increases their expenses. The U.S. Chamber of Commerce steadfastly opposes the proposal, as do many businesses big and small.

But on Tuesday a handful of businesses applauded a bill introduced in Congress to raise the minimum wage, and even sent out a news release vocalizing their support for doing so. They included retailer Costco and smaller businesses such as British American Auto Care in Columbia, Md., and Vintage Vinyl in St. Louis, Mo.

Why are some businesses bucking the trend and calling for a change in policy that would so clearly increase their expenses, especially at a time when finances are stable at best? And why Costco, a public company that has investors watching every penny and questioning every management decision?

After all, wages in retail, when adjusted for inflation, have actually decreased by about 30 cents an hour since 2007. Wouldn't retailers want to keep it that way?

For Costco, the answer is no. The company has earned a reputation over the years for treating employees relatively well. Costco pays a starting wage of $11.50 an hour, gives most employees health care 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.

"Instead of minimizing wages, we know it's a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty," said Craig Jelinek, Costco's chief executive.

Analysts have sometimes called on Costco to cut back on benefits or lower wages, but the company has not listened, James Ragan, a senior equity analyst at Crowell, Weedon & Co., said in an interview last year. Such calls on the company have quieted as the stock has continued to grow in value. The stock is now trading over $100 a share; a decade ago it was at $32 a share.

"I believe that their positive treatment of employees, especially compared to competitors, has definitely been positive," he said. "It has a strong company culture at the employee level."

The company doesn't outsource its call center; a few years ago, when it engaged a third-party company to clean its facilities, the company eventually decided to hire the workers full time and give them better wages and health benefits.

"I think we've always resisted several things that seem like they make economic sense," said Chief Financial Officer James Galanti. "For us, we feel it's better long term that we do it this way."

Costco employees typically stay with the company longer than employees at other big-box retailers.