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Costco says it’s worth it to pay more than minimum wage

Costco's experience is that higher wage employees are more productive. (AP Photo/File)

In the debate to raise the minimum wage to $15 an hour, who is right?

According to the University of Minnesota, almost 27 percent of fast-food employees require assistance to buy groceries, almost twice the rate of the general population.

The average hourly wage at McDonald’s, according to, which compiled reports from hundreds of employees, is $7.66 an hour, or about $16,000 per year.

So what would happen if you doubled that wage to $15? According to Business Week, it would likely wipe out profits at company-owned stores, unless prices went up.

Menu prices at McDonald’s, 80 percent of which are franchises, would have to go up about 25 percent, which means an extra $1 for a Big Mac and the dollar menu would have to become the “Dollar Twenty-Five Menu.”

But wait a minute – we have a very famous local company, Costco, that pays far above minimum wage, and makes plenty of profit.

CBS’ Moneywatch quoted a Costco exec [Joel Benoliel] who said companies like McDonald’s are so focused on paying the minimum, they fail to look at productivity per hour.

Costco’s experience is that higher wage employees are more productive.

And that “If you have the best people in the marketplace working very hard because they’re being paid better, you end up spending less on labor, not more.”

Makes sense to me. It’s pretty hard to concentrate on your job when you’re worried about whether you’ll be able to make rent that week.

Read more:
Arrests cap day of Seattle fast food wage protests
Why robots could soon replace fast food workers demanding higher minimum wage
Backer defends SeaTac’s minimum wage initiative
Employer: Raising SeaTac minimum wage to $15 an hour would put him out of business

Dave Ross on KIRO Radio 97.3 FM

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About the Author

Dave Ross

Dave Ross hosts the Morning News on KIRO Radio weekdays from 5-9 a.m. Dave has won the national Edward R. Murrow Award for writing five times since he started at KIRO Radio in 1978.


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