Costco starting pay $16, topping rivals

CEO testifies to senators, saying objective is to bolster retention, productivity

NEW YORK — Costco will increase its starting wage to $16 an hour, surpassing most of its main competitors.

Costco chief executive Craig Jelinek announced the increase Thursday at a Senate Budget Committee hearing, led by Sen. Bernie Sanders, to examine wages at major companies. Jelinek said the starting wage for Costco employees would rise to $16 next week, up from $15 the company instituted two year ago.

The starting wage scale puts Costco above competitors, including Amazon, Target and Best Buy, which have $15 minimum wages. Walmart’s starting pay is $11 an hour.

Jelinek said that the higher pay would bolster worker retention and productivity.

“I want to note: This isn’t altruism,” Jelinek said. “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.”

Workers from Walmart and McDonald’s testified at the hearing to demand those companies raise their minimum pay. The federal minimum wage is a $7.25. Democrats are trying to push through a $1.9 trillion covid-19 relief bill that would include a provision raising the federal minimum wage to $15 an hour over five years, a policy strongly opposed by Republicans.

That effort suffered a serious blow Thursday when the Senate parliamentarian decided the minimum wage provision must be dropped from the bill.

A growing number of states already have raised the minimum wage to $15 an hour.

Costco’s announcement also was made as labor groups are demanding hazard pay for grocery employees and other essential workers, which some companies offered at the beginning of the coronavirus pandemic and later ended.

Costco has continued to pay a $2 hourly premium to its workers since March. Jelinek said Costco would end the premium as the one-year mark approaches but would convert some of it through increases in wages across pay scales.

Costco has 180,000 employees in the U.S. Jelinek said more than half make $25 an hour or more.

(AP/Austin American-Statesman/Ricardo B. Brazziell) People line up last week to enter a Costco store in Pflugerville, Texas. Costco said it will raise its starting wage to $16 an hour, up from $15 that the company instituted two years ago.