Costco to raise its minimum wage to $16 an hour

Photo (c) Steve Heap - Getty Images

Who pays the best? It all depends on what the job is and how companies value their compensation

Wholesale giant Costco isn’t waiting around for Democrats to get their plan to raise the minimum wage to $15 out of the hold bin. It’s decided to proceed on its own, raising its employees minimum wage to $16 an hour.

At a Senate panel hearing on Thursday, Costco CEO Craig Jelinek said that the increase will go into effect next week.

"Two years ago, we moved our starting hourly wage to $15 everywhere in the U.S. Effective next week, the starting wage will go to $16,” Jelinek said in testimony before the Senate Budget Committee.

Companies call each other out

While $16 an hour may sound like a nice bump for Costco workers, the chief executive noted that the majority of the retailer’s in-store workers already make more than $25 an hour.

Minimum wages have created quite a brouhaha between large retailers, and companies are calling out their competitors over employee pay. Earlier this week, Walmart said it will also raise many workers' wages, but Kroger said the company is late to the game.

"We welcome Walmart's announcement to bring their average wage up to $15 an hour," a company representative told Insider. "At Kroger, our average hourly wage has been $15 an hour since 2019."

Kroger then brought up an interesting point about the total value of what an employee earns when benefits are added in. 

"In fact, our average hourly associate rate reaches over $20 an hour when accounting for healthcare, 401(K) and pensions that so many of our competitors choose not to offer," Kroger’s spokesperson added. 

Comparing wages

So, who does pay the best minimum wage (not including the value of benefits) among retailers? Besides Costco, Insider’s research on the subject found the following:

Walmart: While its recently announced wage increase will raise 425,000 associates’ pay to between $13 and $19 per hour, the average pay for nearly half of Walmart’s hourly workers in the U.S. will reach $15 per hour. However, the minimum wage remains at $11 an hour. 

Target: Last June, Target raised its minimum wage to $15, up from $13. 

Kroger: The grocery giant’s minimum wage is not set in stone and varies by region. “While Kroger says its average hourly wage has been $15 since 2019, some workers make less than that. Entry-level pay varies by region and job position,” Insider found.

Amazon: Amazon’s minimum wage is $15 an hour and has been since 2018.

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