Costco will raise its minimum starting wage to $16 an hour starting in the first week of March, CEO W. Craig Jelinek revealed during a Senate panel hearing on Feb. 25.
“I want to note this isn’t altruism,” Jelinek told the U.S. Senate Budget Committee. “At Costco, we know that paying employees good wages … 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.”
Jelinek’s testimony to the Senate panel comes as 20 states have committed to raising the minimum wage in 2021 and Congress considers a national minimum wage increase to $15 per hour. The current federal minimum wage is $7.25 an hour.
Several retailers have recently boosted their employees’ hourly pay; Target and Hobby Lobby increased their minimum wages to $15 and $17 respectively in 2020. Amazon began offering $15 an hour as a starting wage in 2018. Walmart has raised wages for employees amid the coronavirus pandemic, but its minimum wage is still $11 an hour.
Costco increased its minimum wage from $14 to $15 an hour in 2019.
Jelinek said that the company believes employees should not be limited to $15 or $16 an hour. Full-time Costco workers receive biannual raises, and part-timers have yearly pay increases. Employees earn raises until they reach the top of the company’s pay scale, and that number also increases annually.
In addition to pay increases, Costco workers can also receive bonuses of up to $4,000 a year. With bonuses included, Jelinek noted that the average wage of an employee for the warehouse retailer is about $24 an hour. He said that the company offers broad and affordable health care benefits, as well.
He said the approach seems to pay off in employee commitment and the reduction of turnover.
“In the U.S., our employees average over nine years of service with the company,” Jelinek told the panel. “Over 60% of U.S. employees have five or more years with Costco, and over one-third have more than 10 years. We’re very proud of the fact that more than 12,000 of our U.S. employees have worked for Costco for 25 years or more. Again, we feel the experience level and loyalty of our employees is a significant advantage for our company.”