Costco is boosting its minimum hourly wage to $16 starting next week, the warehouse retailer’s chief executive said during congressional testimony on Thursday.
The $1-an-hour wage increase exceeds the pay that competitors Target, Walmart and other big-box retailers offer their employees and comes amid a national discussion about raising the federal minimum wage to $15 an hour.
Earlier this month, Walmart said it would raise the average pay for 425,000 of its employees to $15 an hour, while still maintaining its starting wage of $11.
“This isn’t altruism,” Costco’s CEO, Craig Jelinek, told the US Senate Budget Committee on Thursday. “In the long run, by minimizing turnover, maximizing employee productivity, commitment and loyalty, we encourage our employees to view Costco as providing a career rather than just a job.”
Jelinik said half of Costco’s 180,000 employees in the US are paid at the top of the company’s hourly pay scale in excess of $25 an hour and most of these employees, he added, receive regular twice yearly bonuses of up to $4,000 a pop.
The average hourly wage for employees including these bonuses comes to about $24 an hour, he said.
The Biden administration has proposed raising the federal minimum wage to $15 an hour from $7.25 an hour.
During the pandemic Costco had added an extra $2 an hour in so called hazard pay to frontline workers’ checks, but that will end this year as the company adds a permanent pay increase, Jelinik said.
The members-only discount retailer based in Issaquah, Wash. claims that its pay and benefits have resulted in lower turnover as more than 60 percent of its employees have been with the company for at least five years and more than a third have been there for more than a decade.
“We feel the experience level and loyalty of our employees is a significant advantage for our company,” Jelinik said.
Costco’s move, industry experts said, is likely to put pressure on other large retailers to revamp their pay.