News Feature | March 11, 2016

Costco To Raise Minimum Wage For Workers

Christine Kern

By Christine Kern, contributing writer

Costco Minimum Wage Increase

Wage hike is the first for the retailer since 2007.

Costco, the second-largest retailer by sales, has announced that it will increase entry-level wages for the first time in nine years, according to the Wall Street Journal. Beginning in March, workers will begin making at least $13 an hour. In august, Costco had 205,000 employees, including 88,000 part-time workers. The top of the wage scale for Costco is currently $23 per hour. That number is well above the federal minimum wage of $7.25 and approaches the highest minimum wages set by some cities in recent years.

Workers on the top end of the scale will see a 2.5 percent wage hike this year, according to MSN. The wage hikes follow similar moves by Walmart, Sam’s Club, and Target. Costco executives said they review their pay scale each March and institute wage increases for the top end of its scale, which some two-thirds of its employees receive.

Retailers across the board are feeling pressure to raise wages as unemployment falls below 5 percent and 14 states have raised minimum wage requirements this year. In a better economy, workers can often be more selective about their pay and working conditions, leading to greater challenges in finding and keeping better trained, better skilled retail workers.

The wage hike also reflects the tightening labor market and greater competition to win and retain quality workers in retail stores, according to Business Insider. The announcement came during the company’s earnings call, Bloomberg reported. The jobs report for February is expected to reveal that average hourly earnings for workers rose 2.5 percent year-on-year. 

“It will help, and it is important to do. This is a physically challenging job. You're on your feet, lifting cases, moving carts, and we thought it was time to do it,” Costco CFO Richard Galanti said on an analyst call. Still, he said Costco, widely admired for its benefits, was one of the most generous companies at the top of the pay scale. The move adds $1.50 per hour to the entry-level wages.