Consumer Advocate Ralph Nader Calls on Costco to Support Raising the Minimum Wage, Help Jumpstart Economy and Increase Consumer Spending

Consumer advocate Ralph Nader sent a letter today to Costco CEO, W. Craig Jelinek, urging the corporation to again support raising the minimum wage to help jumpstart the economy and increase consumer spending.

In 2007, Costco expressed its support for the last increase to the minimum wage. Then-CEO Jim Sinegal said, “The more people make, the better lives they’re going to have and the better consumers they’re going to be.”

Ralph Nader commented in the letter about the minimum wage discrepancy. “The inflation-adjusted value of the minimum wage has been in decline since the 1960’s, leaving hard-working Americans across the country with less and less disposable income,” Nader said.

“But raising the minimum wage wouldn’t just benefit the workers;” he continued, “It could benefit businesses too by helping to jumpstart the economy and increase consumer spending,” he continued.

Nader said that raising the minimum wage to $10 per hour would benefit 30 million workers. Nader cited a 2011 Chicago Federal Reserve Bank study that found that for every dollar increase to the hourly wage of a minimum wage worker, the result is $2,800 in new consumer spending annually from that worker’s household. A 2009 Economic Policy Institute study estimated a minimum wage increase to $9.50 would add $60 billion in spending over two years.

Nader pointed out that Costco is already ahead of the curve on this issue, providing better entry-level wages and benefits than its competitors. Costco’s lowest starting wage was $11 per hour in 2010. When “CFO Magazine” asked Costco’s CFO Richard Galanti why they provided such high wages, he replied, “Because it’s the right thing to do.”

In the 2010 interview, Galanti explained that not only was it good for employees, but it also made good business sense because higher wages meant better employees.

Nader concluded the letter by looking back at 1914, when, in the midst of a deep recession, automaker Henry Ford more than doubled the wages of his workers.

Some years later, Ford said, “If you cut wages, you just cut the number of your own customers.” He said, “If an employer does not share prosperity with those who make him prosperous, then pretty soon there will be no prosperity to share. That is why we think it is good business always to raise wages and never to lower them. We like to have plenty of customers.”

A full copy of the letter can be found on