Costco Raises Its Minimum Wage
The multinational corporation, Costco Wholesale, is planning on increasing its minimum wage in the United States to $16 per hour.
Costco’s long history stretches back to 1976 when Sol Price opened the world’s first membership warehouse club – Price Club. Several years later, Price Club’s executive vice-president of merchandising, Jim Sinegal, co-founded Costco Wholesale with Jeff Brotman. In 1983, the two enterprises merged and became the company we know today.
On February 25, 2021, during a US Senate Budget Committee hearing, Craig Jelinek - Costco’s president and CEO - announced that the retailer would boost its workers’ minimum wages to $16. Jelinek also stated that more than half of the company’s 180,000 US employees earn upwards of $25 per hour and that the average Costco employee earns around $24/hour.
According to The Wall Street Journal, the retail chain raised its starting rate from $13 to $14 per hour in 2018, adding another dollar less than a year later. Costco’s latest increase puts it ahead of its competitors such as Amazon and Target, whose minimum hourly wages are still $15 per hour.
Despite all these positive changes in the retail industry, the world’s largest company by revenue, Walmart, persists in maintaining its payments at $11/hour.
President Biden’s $15-minimum-wage proposal offered some hope in these troubled times, as it was supposed to be included in the $1.9 trillion COVID-relief stimulus package. However, the suggested increase recently suffered a significant setback due to an unfavorable ruling by a Senate official, so the future of America’s workers remains uncertain.
For now, Senate Democrats are looking into alternative methods of providing the wage increase: The options include tax credits for small businesses if they pay their employees higher hourly compensations or penalties for large corporations that avoid providing their staff with the specified sum.
At the moment, the federal minimum wage is $7.25 per hour - a woefully inadequate amount in the 21st century due to the steady climb of living costs. Fortunately, many states have adopted their own minimum-wage laws, of which some more than double the federal amount.
In his address to the Senate Budget Committee, Jelinek also said: “I want to note: this isn’t altruism. 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. It helps us in the long run by minimizing turnover and maximizing employee productivity, commitment, and loyalty."
Jelinek didn’t specify whether Costco supports the minimum wage hike, but when asked if he would support a bill that mandates a federal minimum wage of $11 per hour, he responded with: “11 dollars? It’s better than $7.25.”
Julia A. is a writer at SmallBizGenius.net. With experience in both finance and marketing industries, she enjoys staying up to date with the current economic affairs and writing opinion pieces on the state of small businesses in America. As an avid reader, she spends most of her time poring over history books, fantasy novels, and old classics. Tech, finance, and marketing are her passions, and she’s a frequent contributor at various small business blogs.
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