Costco, the popular members-only wholesale warehouse chain, will increase its starting pay wage to $16 an hour, surpassing most of its main competitors.
Costco CEO Craig Jelinek announced the increase Thursday at a Senate Budget Committee hearing, led by Sen. Bernie Sanders, to examine wages at major companies. Jelinek said the starting wage for Costco employees would rise to $16 next week, up from $15 the company instituted two year ago.
The starting wage scale puts Costco above competitors including Amazon, Target and Best Buy, which have $15 minimum wages. Walmart’s starting pay is $11 an hour.
Jelinek said the higher pay would bolster worker retention and productivity.
“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.”
Workers from Walmart and McDonald’s testified at the hearing to demand those companies raise their minimum pay.
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The federal minimum wage is $7.25. Congress hasn’t raised the minimum wage for more than 11 years — the longest gap between increases.
Democrats were trying to push through a $1.9 trillion COVID-19 relief bill that included a provision hiking the federal minimum wage to $15 an hour over five years, a policy strongly opposed by Republicans.
That effort suffered a serious blow Thursday when the Senate parliamentarian decided the minimum wage provision must be dropped from the bill, according to Democratic Senate aides, who spoke on condition of anonymity because the decision hadn’t been released.
President Joe Biden has acknowledged that he may have to reintroduce the plan later as a separate $15 minimum wage bill that, if passed, would uplift millions of the working poor, reduce America’s vast financial inequality and help boost the economy.
BIDEN'S PLAN: President Joe Biden's minimum wage plan would shake things up. He proposes gradually raising the $7.25 minimum wage to $15 an hour by 2025, starting with a jump to $9.50 this year. Thereafter, it would be indexed to grow at the same rate as the U.S. median wage — the point at which half earn more and half earn less.
Assessing Biden's $15 plan, for instance, economists at Morgan Stanley have concluded that “the impact to employment, positive or negative, would be minimal, while the social benefits to lifting real wages of lower-income earners and millions out of poverty are substantial."
But Biden's plan would enter uncharted territory. Most minimum wage increases amount to 5% to 15%. A doubling of the minimum, as Biden proposes, could potentially exert a more harmful effect on jobs.
The nonpartisan Congressional Budget Office, however, estimated that raising the minimum wage to $15 by 2025 would derail 1.4 million jobs as employers cut payrolls to make up for higher labor costs.
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 workers, which some companies offered at the beginning of the coronavirus pandemic and later ended.
Costco has continued to pay a $2 hourly premium to its hourly workers since March. Jelinek said Costco would end the premium as the one-year mark approaches but would convert some of it through increases in wages across pay scales.
Costco has 180,000 employees in the U.S. Jelinek said more than half make $25 an hour or more.
Compiled by ArLuther Lee for The Atlanta Journal-Constitution.
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