Thanks to savings from the nation’s new tax plan, Costco pay is about to go up as the warehouse club seeks to retain workers in a low unemployment-rate environment.
The nation’s second-largest retailer announced it will begin paying employees a starting hourly wage of $14 to $14.50, which is up from $13 to $13.50.
The new starting wage takes effect June 11.
Costco pay rises as competition for workers grows
The company announced the pay raise Thursday on a conference call with analysts.
Costco’s chief financial officer, Richard Galanti, recognizes the importance of a raise like this for many of the company’s employees.
“Given that the income tax changes were unique and don’t happen every day, we certainly felt the right thing to do was to allow it certainly to help our employees, as well as [to] drive our business and improve the member value,” Galanti said.
The CFO added that some of the tax savings will be funneled to “investing in price,” too. That means customers can continue to expect the low prices they’ve come to love.
In addition to more money for new hires, current warehouse employees will receive an hourly increase of anywhere from 25 cents to 50 cents per hour.
The highest hourly pay for a Costco employee is currently in the $23 range. It usually takes about four years for a full-time employee to get to the top of the Costco pay scale.
Many other U.S. retailers are also feeling the pressure to boost wages as unemployment falls to a near 20-year low of 3.8%. Meanwhile, 19 states raised their minimum wage last year.
Walmart, which operates the competing Sam’s Club chain, increased its minimum pay to $11 an hour this year and also gave a one-time pay raise to more than 1 million employees.