Costco CEO Craig Jelinek said that the retailer will boost its minimum wage to $16 an hour starting next week, up from its current baseline pay of $15 an hour. That will hike Costco's lowest pay rate to $1 an hour above that of many competitors, including Amazon.com and Target.
Jelinek announced the pay boost while speaking at a U.S. Senate Budget Committee hearing on worker wages at large companies such as Costco, Walmart and McDonald's. Costco's philosophy is that higher pay reduces employee turnover, increases loyalty and ultimately improves efficiency and the bottom line, Jelinek said. The company has 180,000 workers in the U.S.
Providing competitive pay "makes sense for our business," Jelinek said. "We try to take care of our employees because they play a significant role in our success."
The announcement comes amide debate over whether to lift the federal minimum wage, which has remained at $7.25 an hour since 2009, the longest stretch without a raise in the base wage's history. Part of President Joe Biden's $1.9 trillion stimulus relief effort includes a measure to boost the minimum wage to $15 an hour by 2025 — a pay hike that Republican lawmakers argue would add to the financial strain of small businesses as they struggle to recover from the economic impact of the pandemic.
Costco had last boosted its baseline pay in 2019, when it raised its minimum wage to $15 an hour. Jelinek added that many of its workers earn far more than that, noting that more than half of its hourly workers earn more than $25 an hour. Amazon.com boosted its baseline pay to $15 an hour in 2018, while Walmart's minimum hourly rate remains at $11 an hour.
Senator Bernie Sanders, an independent from Vermont, held the Thursday hearing to examine issues surrounding low-wage workers and public aid programs such as food stamps and Medicaid, the government health care program for low-income households. Sanders last year commissioned a report from the U.S. Government Accountability Office that found millions of adults who hold full-time jobs also rely on public aid programs to make ends meet, including employees of McDonald's, Walmart, Dollar Tree and Dollar General.