Costco just gave its employees nationwide a raise and it didn’t take a government mandate for that to happen.
For the first time in nine years, Costco has raised its minimum wage for existing and new employees to $13 or $13.50 per hour beginning in March. The $1.50 increase may not seem like much but continues to establish Costco’s workers as among the highest paid minimum wage workers. Costco also has some of the highest paid workers in general as on average their workers earn $22.50 per hour.
Costco is amoung the country’s largest retailers employing 205,000 people. While it's likely that the company is trying to pre-empt new mandates at the state level, their reasoning may signal that there’s greater competition for low-skill jobs.
Last year, Walmart made headlines for raising its workers' wages. This may have been a contributing factor to the company's subsequent economic woes that were reflected in the price of stock shares.
The Atlantic reports:
The fact that both Costco and Walmart are raising wages for their workers is evidence that the U.S. labor market might be tightening. The last two jobs reports have seen the unemployment rate below 5 percent—as the U.S. economy improves and job opportunities become more abundant, it’s expected that workers will have options to jump from job to job. Many businesses are now reporting that it’s harder to find employees to fill vacant positions, and the competition for low-wage workers is growing as well. As wage growth still remains tepid for most workers in America, Costco workers’ raise is hopefully not just a move consistent with the company’s past treatment of workers, but an encouraging sign that wages will start to rise more generally.
Minimum wage increases are heralded as the means of lifting people out of poverty. However, as we’ve seen recently, it backfired on workers whose wages are reduced and jobs lost when stores closed. Economists also predict that at the federal level it would lead to the loss of three-quarters of a million jobs.
The pace of voluntary change, based on experiments by companies such as Walmart and Costco, may not satisfy legislation-happy politicians, union workers, and protestors, however
Let's hope the Costco experiment is a great success.