The move puts Costco ahead of competitors.
Costco has long had competitive wages. But with its latest raise, the retail giant outpaces its competitors. Costco will raise its minimum wage to $16 per hour this week, one dollar more than its previous $15 minimum wage.
Costco CEO Craig Jelinek said in his opening remarks before a Senate Budget Committee on pay at large retail and fast-food employers, "Although there is a lot of external focus on starting wages and minimums, it's important to us that Costco employees have an opportunity to make more than just $15 or $16 an hour."
According to 9News, he told the committee "the average hourly wage for Costco employees is well above the company's minimum, sitting around $24 before bonuses," and that "wage increases typically occur twice a year for full-time employees and once a year for part-time employees. Jelinek added, "Since Costco's inception, the company has been committed to paying the employees very competitive retail wages and providing them broad and affordable health care benefits."
As Congress considers a federal minimum wage boost to $15 an hour by 2025, Costco may be years ahead of its competitors, including Amazon, Target, Best Buy, and Walmart. While Amazon, Target, and Best Buy have raised their starting wages to $15 an hour, Costco's move clearly makes it more competitive.
Their minimum wage raise strengthens their position especially in regards to Walmart, which starts at $11, although CEO John Furner recently stated, "On March 13, we’ll be raising pay for our store associates in digital and stocking workgroups. 425,000 store associates in these frontline roles will receive a raise, with starting rates moving to $13 – $19 per hour, based on the store’s location and market."
Dan Price, CEO of the online credit card processing company Gravity Payments, recently pointed out the difference between Costco and Walmart's wages.
Min wage— Dan Price (@DanPriceSeattle) February 26, 2021
Employees on food stamps (subsidized by you)
Costco: Virtually none
Walmart: More than any other company
Founder net worth
Costco: not a billionaire
Walmart: over $220 billion; up $30 billion in pandemic
Still, as Jelinek told the Senate Budget Committee, "I want to note this isn't altruism. At Costco we know that paying employees good wages ... makes sense for our business and constitutes a significant competitive advantage for us. It helps us in the long run by minimizing turnover and maximizing employee productivity."
As retail workers may be incentivized to make the move to Costco, we can only wait and see if other large retailers will follow suit once again.
What do you think of Costco's recent wage raise? Let us know in the comments.