Costco to raise starting hourly wage to $16; end hazard pay

A Costco sign is seen on the wall of a new store in Ridgeland, Miss., Thursday, March 12, 2020. Costco will increase its starting wage to $16 an hour, surpassing most of its main competitors at a time when efforts to raise the minimum wage are gaining traction in the U.S. Costco CEO Craig Jelinek announced the increase Thursday, Feb. 25, 2021, at a Senate Budget Committee hearing, led by Sen. Bernie Sanders, to examine wages at major companies. (AP Photo/Rogelio V. Solis)

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

Costco CEO 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 saying 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 currently $7.25. Democrats are trying to push through a $1.9 trillion COVID-19 relief bill that would include a provision hiking 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, according to Democratic Senate aides, who spoke on condition of anonymity because the decision hadn't been released.

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

Costco's announcement also comes as labor groups are demanding hazard pay for grocery and other essential works, 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 hourly 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.