Costco has set a new minimum wage standard: $16 an hour.
That puts the warehouse-style retailer, which topped $4 billion in profit in 2020, ahead of rivals including Amazon, Target, and Best Buy.
At a Feb. 25 US Senate Budget Committee hearing on wages at large companies, Costco CEO Craig Jelinek said the company will hike its minimum hourly wage to $16 beginning next week. Costco, which is headquartered in Washington state, has more than 800 stores and 180,000 US workers, 90% of whom work hourly. Two years ago, it increased its minimum wage to $15 an hour.
Already more than half of Costco’s hourly employees in the US earn at least $25 an hour, according to Jelinek. The average wage, which doesn’t include a hazard pay premium paid during the pandemic, is around $24, he says.
Retailing has always been a high-turnover industry, but the pressure to up wages has been intensifying in recent years. Walmart created an inflection point in 2015 when it raised its starting pay for store employees, some of whom were paid the federal minimum wage of $7.25, to $9 an hour, followed by a bump to $10 an hour the next year. Today its minimum wage is $11, and earlier this month it pledged to raise pay for around 425,000 employees, a quarter of its workforce, to at least $13 an hour.
The move to a $15 minimum wage was led by Amazon in 2018, while Target and Best Buy upped their wages to $15 in 2020.
In a handful of US states, a $15 minimum is becoming standard. The federal minimum has stayed $7.25 an hour since 2009—just one-third of the median US wage in 2020. Democrats in Congress have been pushing for a $15 federal minimum wage. US president Joe Biden has also endorsed the increase, but it’s not clear whether the proposal will be part of the next coronavirus relief package.
Either way, Costco has broken new ground.
“This isn’t altruism,” said Jelinek. “It makes sense for our business and constitutes significant competitive advantage for us.”