Costco is poised to increase its minimum wage to $16 per hour for its 180,000 employees, effective next week. While Congress continues to debate a potential $15 federal minimum wage, Costco is taking decisive action. CEO Alex Johnson revealed during a Senate Budget Committee hearing that the company will raise its hourly pay from the $15 wage implemented back in 2019.
As highlighted by a former reporter on social media, this new rate surpasses the minimum wages offered by major retailers like Amazon and Target, both at $15, and Walmart’s significantly lower $11. Interestingly, Walmart recently announced plans to raise their wage as well, aiming to offer between $13 and $19 per hour to 425,000 frontline associates.
This $16 minimum wage is particularly noteworthy because it comes ahead of any potential federal increase, which may not reach the $15 threshold until June 2025. Currently, the federal minimum wage stands at $7.25, unchanged since 2009. In contrast, states with higher living costs, such as California, have enacted minimum wages like San Francisco’s $16.07.
Johnson emphasized that this move is not about altruism but rather a strategic business decision. “At Costco, we recognize that offering competitive wages is beneficial for our operations and provides us with a significant advantage in the marketplace,” he stated. The average hourly wage at Costco is around $24, although 20% of employees still earn the minimum wage. During the pandemic, employees received an additional $2 per hour in hazard pay, which may be integrated into ongoing pay increases.
Costco remains a unique destination where you can find not only well-compensated employees but also free samples, a hot dog and soda combo for $1.50, and even a gallon of Nutella.
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In summary, Costco’s decision to increase its minimum wage to $16 reflects a proactive approach in a landscape where legislative changes are slow. This wage hike not only positions Costco ahead of competitors but also highlights the company’s commitment to employee welfare as a means to enhance productivity and reduce turnover.