Costco announces that it is raising its minimum wage to $ 16 because it “makes business sense”

People love to go to Costco to get generous free samples, super low prices on pizza slices and the possibility to buy the UTZ mix for one year. But now, there is another reason to renew your Costo card: the retail giant has raised its minimum wage to $ 16 an hour.

Costco has approximately 180,000 employees in the United States and the salary increase will affect about 20% of its hourly employees. The company previously raised its minimum wage to $ 14 in 2018 and $ 15 in 2019.

The average Costco employee earns about $ 24 an hour.

Costco employees recently received a $ 2 per hour increase in their hazard pay due to the COVID-19 virus. Given the increase in the minimum wage, the company is looking to end its hazard premium program, although some employees receive a permanent raise.

“Since the beginning of Costco, the company has been committed to paying employees very competitive retail wages and providing them with broad and affordable health benefits,” said CEO Craig Jelinek during a Senate Budget Committee hearing. “Two years ago, we changed our starting hourly wage to $ 15 across the United States. Starting next week, the starting wage will be $ 16.”

According to Jelinek, it just makes business sense.

“I want to note that this is not altruism,” said Jelinek at a Senate hearing. “At Costco, we know that paying good wages to employees … makes sense for our business and constitutes a significant competitive advantage for us. This helps us in the long run, minimizing turnover and maximizing employee productivity.”

By making Costco a more attractive place for workers, it presses rivals like Amazon to raise their minimum wage.

The decision was made at a time when Democrats hope to raise the national minimum wage to $ 15 an hour. The limit has been stagnant at a meager $ 7.25 since 2009. President Joe Biden tried to put the $ 15 hourly increase on his COVID-19 aid proposal, but did not think it would go through the Senate budget negotiations.

Raising the minimum wage to $ 15 an hour would help many Americans, but it would also lead to layoffs, as some companies with narrow margins will not be able to survive rising labor costs.

The Congressional Budget Office said that introducing a federal minimum wage of $ 15 by 2025 would give 17 million Americans a raise and lift one million out of poverty. However, it can also result in 1.4 million people losing their jobs, increasing the unemployment rate by 0.09%.

“Young people, with less education, would be responsible for a disproportionate share of these job cuts,” said the CBO.

Costco’s decision to step up and give its employees a boost shows that companies can do the right thing without having to be forced by the government. It is also a great example for other large corporations, showing how raising the minimum wage can be good for employees and for financial results.