Costco announces it's raising its minimum wage to $16 because it 'makes sense for business'
02.26.21
People love going to Costco for the generous free samples, super-low prices on pizza slices, and the ability to buy a year's supply of UTZ mix. But now, there's another reason to renew your Costo card: The retail giant has raised its minimum wage to $16 an hour.
Costco has around 180,000 employees in the U.S. and the wage increase will affect about 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 around $24 an hour.
<p>Recently, Costco employees received a $2-an-hour hazard pay 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.</p><p>"Since Costco's inception, the company has been committed to paying employees very competitive retail wages and providing them broad and affordable health care benefits," CEO Craig Jelinek <a href="https://www.nbcnews.com/politics/politics-news/costco-raise-hourly-pay-16-minimum-wage-fight-brews-congress-n1258889" target="_blank">said during a Senate Budget Committee hearing</a>. "Two years ago we moved our starting hourly wage to $15 everywhere in the U.S. Effective next week, the starting wage will go to $16."</p><p>According to Jelinek, it just makes good business sense.</p><div class="rm-shortcode" data-rm-shortcode-id="b962833b274bf23c6c9638885bccb646" id="7b437"><blockquote class="twitter-tweet twitter-custom-tweet" data-partner="rebelmouse" data-twitter-tweet-id="1365016522863878152"><div style="margin:1em 0">BUDGET COMMITTEE HEARING: Cosctco CEO Craig Jelinek argues that a higher wage and healthcare benefits for employees… https://t.co/rrs0OTiLE9</div> — Forbes (@Forbes)<a href="https://twitter.com/Forbes/statuses/1365016522863878152">1614280274.0</a></blockquote></div><p>"I want to note this isn't 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 run by minimizing turnover and maximizing employee productivity."<br/></p><p>By making Costco a more attractive place for workers it puts pressure on rivals such as Amazon to increase their minimum wage.</p><p>The decision comes as Democrats are hoping 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 attempted to put the $15-an-hour pay raise in his COVID-19 aid proposal but didn't think it'll make it past Senate budget negotiations.</p><p>Raising the minimum wage to $15 an hour would help many Americans but also lead to layoffs as some companies with slim margins won't be able to survive the increase in labor costs.<br/></p><p>The <a href="https://www.npr.org/2021/02/08/965483266/-15-minimum-wage-would-reduce-poverty-but-cost-jobs-cbo-says" target="_blank">Congressional Budget Office</a> said the phase-in of a $15 federal minimum wage by 2025 would give 17 million Americans a raise 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%.<br/></p><p>"Young, less educated people would account for a disproportionate share of those reductions in employment," the CBO said.</p><p>Costco's decision to step up and give their employees a raise shows that companies can do the right thing without having to be forced to 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 the bottom line.</p>
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