Costco plans to hike up its minimum wage to $16 an hour starting next week, putting its pay above the majority of its key competitors, Chief Executive Officer Craig Jelinek announced Thursday.
Jelinek made the announcement at a Senate Budget Committee hearing on worker wages at large companies, saying the company’s starting wage for employees would rise from the $15 figure Costco rolled out two years ago.
Competitors including Amazon, Target, and Best Buy have $15 starting wages, while Walmart’s minimum wage is $11 an hour.
“I want to note: this isn’t altruism,” Jelinek said. “At Costco, we know that paying employees good wages and providing affordable benefits makes sense for our business and constitutes a significant competitive advantage for us.”
Jelinek said the move would bolster worker retention and productivity at the company, which is based in Issaquah, Washington, and hires over 180,000 people in the United States.
“It takes a lot of time to interview, find employees, lot of labor involved just trying to hire individuals. We want people to stay with us,” he added. “In my past experience, wages usually don’t put people out of business. How you run your business will put you out of business.”
The federal;y mandated minimum wage is currently $7.25, and has been since 2009. Democrats are trying to push through President Joe Biden’s $1.9 trillion COVID-19 stimulus proposal that looked to include a provision hiking the federal minimum wage for all types of businesses to $15 an hour by 2025, a policy strongly opposed by Republicans.
Senate parliamentarian Elizabeth MacDonough ruled Thursday that the provision could not be included in the Democrats’ COVID-19 stimulus package. She ruled that the wage hike didn’t meet the criteria to be included in the bill under the budget reconciliation—a process that would allow a bill to clear the Senate without Republican support in the 50-50 chamber.
A growing number of states have already raised the minimum wage to $15 an hour.
Costco’s announcement also comes as labor groups are demanding hazard pay for grocery and other essential works, which some companies offered at the beginning of the coronavirus pandemic and later ended.
Since the onset of the COVID-19 pandemic in March 2020, Costco has continued to pay a $2 hourly premium to its hourly workers. Jelinek said Costco would end the premium as the one-year mark approaches but would convert some of it through increases in wages across the pay scale.
Jelinek added that more than half of the company’s employees earn at least $25 an hour.
The Associated Press contributed to this report.