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Costco Raises Stakes, Now Offers $17 Minimum Wage

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Auburn Hills Costco Warehouse store | Costco Raises Stakes, Now Offers $17 Minimum Wage | featured

In the battle to get new workers, retail giant Costco raised the stakes by offering a $17 minimum wage. This move will put pressure on retail industry rivals given the tight labor market.  

RELATED: A Minimum Wage Bump Isn’t off the Table

Costco Bumps Pay By Offering $17 Minimum Wage

Minimum Wage At Blackboard Behind Stacked Coins-17 Minimum Wage

Last week, Costco informed its employees that it will increase its minimum wage from $16 to $17 starting this Monday. The retail chain employs around 180,000 US employees, with 90% paid by the hour.

As a result, Costco’s $17 minimum wage means its workers earn $2 per hour more than Amazon, Target, and other retailers.

Additionally, Costco workers will now earn $5 more per hour versus Walmart employees. As a result, Costco boasts one of the lowest turnover rates in the retail industry.  

The move to offer a $17 minimum wage comes as the retail, restaurant, and service sectors are in the midst of a labor shortage. Many companies started hiking their offered starting pay. 

Some offered to sign bonuses and reintroduced perks. In addition, some now offer free tuition and flexible working hours.  

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Costco Setting The Trend In Raising Minimum Wage Rates

The Washington-based retail company already raised its minimum above industry standards three times in the past three years. It first raised its minimum wage to $14 in 2018.

Costco then bumped to a $15 minimum wage in 2019. Early this year, the company announced it will now pay workers a $16 minimum wage. 

Meanwhile, CEO Craig Jelinek said that their pay raises help Costco stay afloat amidst a tight labor market. “These increases are part of Costco’s continuing efforts to ensure our hourly wages remain extremely competitive in the retail industry,” Jelinek told employees via a memo.

Rivals Pressured To Raise Their Wages

Now, the ball is in the court of Costco’s rivals. The pressure to increase their pay becomes even more apparent in the wake of the mass resignations across the industry.

As a result, average hourly pay for retail workers went up by 3.8% in September compared to rates a year ago. This is based on data provided by the US Department of Labor. In contrast, private-sector wages went up by 4.6% last September compared to last year. 

Recently, Amazon, Target, Best Buy, and other retailers hiked their starting pay to $15 an hour. Last April, Amazon announced that it will increase hourly pay between 50 cents to $3 for its half a million workers.

In August, CVS and Walgreens said they will raise their hourly rates to $15. The only noticeable chain lagging in offers is Walmart. Specifically, the company recently raised its starting pay from $11 to $12 an hour. 

Are Wages Keeping Up With Inflation?

While many onlookers lauded the pay raises, many workers remain unconvinced. That’s because rising inflations are wiping out gains.

According to Harvard professor of EconomicsJason Furman, compensation is now lower compared to December 2019. Adjusted for inflation, the value of current wages is below its pre-pandemic value.

Meanwhile, the Employment Cost Index is a metric that measures wages and salaries, along with health, retirement, and other benefits. During the second quarter, the ECI fell by 2% below pre-pandemic levels. 

Watch the Urgent News video reporting that Costco raised its minimum wage to $17 an hour:

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