Have you ever worked for the minimum wage? Welcome to the club…

When you are slaving away at the bottom of the economic ladder, you are no doubt in favor of increasing the minimum wage.

But what if you were a CEO? 

Last week, Costco CEO Craig Jelinek made waves in the financial sector when he spoke out in support of increasing the minimum wage.

His statement was made in response to the President’s State of the Union address, in which he outlined his plan to raise the minimum wage to $9/hour and index it to inflation. Jelinek agreed with the President’s position, and actually proposed an even larger increase to $10.10/hour.  

At the current minimum hourly wage of $7.25, a family of four with one parent working full-time lies considerably below the poverty line. By comparison, the minimum wage in 1968 was $10.57/hr, equating out to about $5,000 more yearly than the current standard.

Let’s face it, an extra five thousand dollars is a nice chunk of change.

So… why would a CEO want to increase the minimum wage? Wouldn’t that cost his company money?

Sure… at first. But in time it helps the company. There would be an increase in economic activity in the area as employees spend their new cash.

As more money is spent in local stores and restaurants, the employees of those businesses will have more money to spend locally other services. And it gets better…

As the local economic activity expands, all sorts of good things happen. Increased sales taxes help state education budgets and there will be more money around for folks to buy goods from the company that upped its minimum wage for workers.

Its an economic concept known as circular flow.

One of the most outspoken advocates for increased wages for workers was capitalist hero Henry Ford, of Ford Automotive fame. Ford paid his workers $5 a day, more than double the standard wage of the time. The increased wage resulted in a much lower turnover rate of employees, leading to less time wasted with on-the-job training and more productivity in general. Ford is reputed to have asserted that any man who was good enough to produce a Ford automobile deserved to own one.

Craig Jelinek, then, can be called the Henry Ford of the 21st century.

“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,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.”

And, based on the Wall Street Journal-reported $537 million in profit for Costco in Q2 of 2013, it looks like Jelinek’s attitude is a winning one.