Costco made a shocking announcement Thursday, March 3rd, that it will be increasing for both new and current workers in both the U.S. and Canada. Although the raise isn’t huge ($1.50 per hour) it means that Costco will now be paying workers a minimum of $13 per hour, up from their former base of $11.50. The company has not raised their minimum starting wage for almost 9 years. Why now? Possibly because, despite what some doom and gloom economists are saying, companies such as Costco are doing well and they realize that, to hold on to good employees, they will have to pay them more.
This company is one of America’s largest employers and it is well-known for paying much more than their competitors. Some stores have unionized employees and the CEO of Costco, W. Craig Jelinek, has been quite outspoken about supporting a federal minimum wage of at least $10. Higher wages mean happier employees and in the company’s more than 30 year history, they have yet to experience a major strike, sick-in, or protests. Walmart wishes they could claim this!
In fact, speaking of Walmart, the company itself is not only very resistant to unions, but also known for their stingy pay scale. On average, Costco employees earn $21 per hour. Compare that to Walmarts $12 an hour average. Although Walmart did raise the pay of some workers last year, it averaged out to no more than $0.38 per hour. This might explain Costco’s low employee turnover rate and Walmarts revolving door.
However, with both Costco and Walmart raising hourly wages, one thing is clear; the employment market must be tightening. The last two jobs reports out of Washington list the unemployment rate at less than 5%. As the economy slowly but surely continues to improve, job opportunities become more abundant and employees can become more selective in where they want to work and for how much.
Many American businesses are stating that it is already becoming more difficult to find employees to fill certain positions and the competition for low wage, non-skilled workers is also becoming larger. Costco’s recent raise in their employees wages not only means good things for the company, but is a sign that wages, overall, will also begin to rise.
Source: The Atlantic