Costco Announces Increasing Minimum Wage to $ 16 Because ‘It Makes Business Sense’

People love going to Costco for the generous free samples, super low prices on pizza slices, and the ability to purchase an annual supply of UTZ mix. But now, there’s another reason to renew your Cost card: The retail giant has raised its minimum wage to $ 16 an hour.

Costco has about 180,000 employees in the US, and the pay increase will affect roughly 20% of its hourly employees. Previously, the company raised its minimum wage to $ 14 in 2018 and $ 15 in 2019.

The average Costco employee makes about $ 24 per hour.

Costco employees recently received a $ 2 an hour risk raise due to the COVID-19 virus. Given the increase in the minimum wage, the company is looking to end its hazard pay program, although some employees will receive a permanent raise.

“Since Costco’s inception, the company has been committed to paying employees very competitive retail salaries and providing them with comprehensive and affordable health care benefits,” said CEO Craig Jelinek during a Senate Budget Committee hearing. “Two years ago we changed our starting hourly wage to $ 15 across the United States. Starting next week, the starting wage will be $ 16.”

According to Jelinek, it makes business sense.

“I want to point out that this is not altruism,” Jelinek said at a Senate hearing. “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 term by minimizing turnover and maximizing employee productivity.”

By making Costco a more attractive place for workers, it is pushing rivals like Amazon to raise its minimum wage.

The decision comes as Democrats hope to raise that national minimum wage to $ 15 an hour. The threshold has been stuck at a meager $ 7.25 since 2009. President Joe Biden tried to include the $ 15-an-hour wage increase in his COVID-19 relief proposal, but didn’t think it would pass Senate budget negotiations.

Raising the minimum wage to $ 15 an hour would help many Americans, but it would also lead to layoffs, as some companies with low margins will not be able to survive rising labor costs.

The Congressional Budget Office said phasing in a federal minimum wage of $ 15 by 2025 would raise 17 million Americans and lift one million out of poverty. However, it could also result in 1.4 million people losing their jobs, raising the unemployment rate by 0.09%.

“Young and less educated people would account for a disproportionate share of those job cuts,” the CBO said.

Costco’s decision to step up and give its employees a raise shows that companies can do the right thing without having to be forced by the government. It also sets a great example for other major corporations by showing how raising the minimum wage can be good for both employees and bottom line.

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