Costco Boosts Hourly Pay for Entry-Level Workers

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The warehouse-style chain makes a move to better compete for workers in a tightening labor market. See how the new wages stack up against those of competitors.

For the first time in nearly a decade, Costco is giving its entry-level workers a raise. The retail giant is hiking its minimum wage by $1.50 an hour, from $11.50 to $12 an hour to $13 to $13.50 an hour.

The Washington-based warehouse-style chain last boosted its starting wage for entry-level employees in 2007, Bloomberg reports. The bump in wages is expected to help Costco better compete for workers in a tightening labor market.

“Retailers are under pressure to boost wages as unemployment falls below 5 percent and 14 states have raised their minimum wage this year,” Bloomberg explains.

“We thought it was time to do it,” Richard Galanti, Costco’s chief financial officer, said during a second-quarter call with analysts, noting that other companies are raising pay at the bottom of the scale and “we want to be premium at all levels. … We think this will help and it’s important to do.”

According to The Seattle Times, Costco’s top-scale hourly wage – which Galanti said is earned by 60 to 65 percent of Costco employees – is about $23 an hour. Galanti said an average full-time entry-level employee can bring home top-scale pay after putting in about four years with the second-largest U.S. retailer. He added that top-scale wage earners usually see an increase in their hourly pay each March.

About 1.2 million Walmart and Sam’s Club employees got a wage increase on Feb. 20. The company’s average full-time hourly wage is $13.38 and its part-time hourly wage averages $10.58.

Last year, the City of Los Angeles adopted a plan to increase the minimum wage to $15. L.A. employers have until 2020 to implement the increase. Seattle also approved a $15 minimum wage in 2014, an increase that is being phased in over several years.

Also this week, Costco reported a disappointing 8.7 percent drop in quarterly earnings and a 4 percent increase in same-store sales.

What do you think of Costco’s entry-level wage bump? Share your comments below or on our Facebook page.

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