Costco CEO Craig Jelinek said the retailer will raise its minimum wage to $ 16 an hour starting next week from its current base salary of $ 15 an hour. This will raise Costco’s lowest pay rate to $ 1 an hour, above that of many competitors, including Amazon.com and Target.
Jelinek announced the salary increase when speaking at a hearing of the US Senate Budget Committee on workers’ salaries at large companies like Costco, Walmart and McDonald’s. Costco’s philosophy is that higher wages reduce employee turnover, increase loyalty, and ultimately improve efficiency and bottom line, said Jelinek. The company has 180,000 workers in the USA
Offering competitive compensation “makes sense for our business,” said Jelinek. “We try to take care of our employees because they play a significant role in our success.”
The announcement comes amid debate about raising the federal minimum wage, which remains at $ 7.25 an hour since 2009, the longest stretch without an increase in the history of the base salary. Part of President Joe Biden’s $ 1.9 trillion stimulus effort includes a measure to raise the minimum wage to $ 15 an hour by 2025 – a salary increase that Republican lawmakers argue would increase financial pressure on small businesses while struggle to recover from the economic impact of pandemic.
Costco had last increased its base salary in 2019, when it raised its minimum wage to $ 15 an hour. Jelinek added that many of his workers earn much more than that, noting that more than half of his hourly workers earn more than $ 25 an hour. Amazon.com driven your basic $ 15 hourly payment in 2018, while Walmart’s minimum hourly rate remains at $ 11 an hour.
“A profound question”
Senator Bernie Sanders, an independent from Vermont, held the hearing on Thursday to examine issues related to low-income workers and public aid programs, such as food stamps and Medicaid, the government’s health program for low-income families. . Sanders last year commissioned a report from the US Government Accountability Office that found that millions of adults who have full-time jobs also depend on public aid programs to survive, including employees of McDonald’s, Walmart, Dollar Tree and Dollar General.
The hearing was aimed at what Sanders called “a very simple question, although I believe it profound” about whether taxpayers should subsidize low-paying work in large, profitable companies. In its report, GAO found that about 70% of adult wage earners who also received Medicaid or who collected food stamps worked full-time.
“There are millions of low-income workers left who contribute to the workforce while raising their families. Unfortunately, they still can’t pay the bills,” said Cindy Brown Barnes, director of education, workforce and income security at GAO, at the hearing. .
“The biggest beneficiary of social security in America is the richest family in America: the Walton family,” Sanders said at the hearing, referring to the founding family behind the publicly traded Walmart. He added that the CEOs of Walmart and McDonald’s “declined my invitation to be here today”.
McDonald’s Terrence Wise worker told lawmakers at the hearing that he struggled to support his three daughters even before the pandemic and, when the crisis hit, the chain reduced its weekly hours from 40 to 28 hours. Wise and his family were expelled and moved with another family, and he said he still depends on food stamps and Medicaid.
“You shouldn’t have to work in the richest nation in the world and be homeless,” said Wise. “People think, ‘You work full time, life must be great.’ Well, it isn’t. “
“Unfathomable to me”
Republican lawmakers are resisting the effort to raise the minimum wage to $ 15 an hour, arguing that the effort would hurt small businesses struggling to escape the pandemic’s economic blow. A restaurant owner told the committee that raising the base salary to $ 15 an hour would hurt his operations.
“It is incomprehensible to me that Congress considers the Raise the Wage Act in the middle of the pandemic,” said Carl Sobocinski, president of Table 301, a company that owns several restaurants in South Carolina.
He estimated that his payroll costs would increase 33% if the base salary was $ 15 an hour and predicted that companies would close as a result. Even so, he added that he is not opposed to an increase in the minimum wage, but noted that small businesses may not be able to handle it in the same way as large corporations.