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STORY: When a branch of Costco opened last year in a small country town north of Tokyo, it caused ripples across the local economy - and, maybe, right across Japan.

Because the U.S. retail giant was offering pay that caused a stir.

At 1,500 yen, or nearly $10 per hour, its minimum wage is 60% above the minimum in the surrounding area, and would be good even in Tokyo.

That gave local firms something to think about.

At a nearby noodle shop, marketing manager Takehiro Ehashi decided he had no option but to hike wages to compete:

"For us, even a one- or two-yen rise in raw material cost is tough, so to increase hourly pay by even 10 yen is extremely challenging as we need to generate far more sales. But since Costco opened it's become a kind of magnet and we have more customers, so it's overall a positive."

Economists see a very hopeful signal.

If higher salaries at foreign firms force local companies to raise pay too, it might just spark a virtuous cycle of rising wages and consumption.

That would be huge news in a country where real wages barely grew at all between 1995 and 2021.

Better pay might mean people like Costco worker Ryu Kawane feel more ready to spend money and boost the economy:

"Partly due to COVID, my income really fluctuated before I joined Costco. Since starting at Costco I've received a high, stable salary so I've felt more stability in my everyday life as well.”

Prime Minister Fumio Kishida has made sustainable wage rises a key goal, while the Bank of Japan wants to see similar signs before it does more rate hikes.

Not everyone is happy though.

Some local businesses have complained about the pressure to raise wages, and the challenge in competing for workers.

But town mayor Motosuke Tomizuka says the store’s arrival has boosted pay all over the area, and sparked a tangible upturn:

"When the local economy enters a phase of rising wages, what do business owners do? They do their best to make money. That's how the economic pie finally grows and spurs revitalization.”

Now Costco plans to open many more stores in Japan, while other major foreign firms, including furniture giant IKEA, are also paying relatively well.

The government will be hoping that just might be the start of something big.