What Costco’s New Wages Say About the Health of the American Economy

from The Atlantic

On Thursday, Costco announced that it will be raising wages for both new and current entry-level workers in the U.S. and Canada. The raise is small—$1.50 extra per hour—but it means that Costco will be paying workers at least $13 an hour, up from $11.50. This increase is significant because the company hasn’t raised wages for entry-level of workers in nine years, and its move to do so now might suggest that, as the economy adds jobs, retailers will have to start paying their frontline workers more in order to hold onto them.

Costco, one the nation’s largest employers, has been known to pay its employees much more than its competitors pay theirs. Some of Costco’s employees are unionized and its CEO has been outspoken in supporting a federal minimum wage above $10. As a result of all this, Costco workers tend to be satisfied in a way that’s unusual for the retail industry—in the company’s 30-some-year existence, there haven’t been any major strikes or protests.

Which prompts Costco to be contrasted with Walmart, the U.S.’s largest employer, which has a history of being stingy with compensation in order to keep its prices low. (Walmart employees have found their company to be extremely resistant to unionization efforts.) Costco’s average hourly wage (about $21 an hour) is $8 higher than Walmart’s, and that probably has something to do with the company’s low turnover rate.

More here.

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One Comment

  1. A common issue that has been talked about in this country lately has been minimum wages. Costco and Walmart are great examples of companies that increase their employment wages to keep employees from switching jobs and finding better opportunity. They want to give their employees and incentive to work hard and stay motivated at their job. When reading this article, I learned that Costco’s wages were $11.50 before the recent change. I thought that the wage they gave for their employees was a lot better than other companies give. Some companies stick to the minimum wage law and stick to $8.63 /hour. By increasing employees wages, they want their employees to notice that there is no other competing retail wholesaler that pays the same amount that they do. It is a good things that employees are satisfied in a way thats unusual for the retail industry. Its very good for the company that there has not been any major protests or strikes because this can be harmful for their reputation and company as a whole.
    When comparing the two companies Costco and Walmart, Walmart provides their customers with low prices but a limited amount of it. On the other hand, Costco offers their customers low prices as well as selling their products in a bulk because they are a wholesaler. I can see why Walmart can be hesitant with increasing the wage higher to the extent that Costco did but they have to worry about many more stores and maybe they do not have the money to increase everyone’s wages. Because of Walmart’s low turnover rate, this can explain why they are stingy about increasing wages.
    In my opinion, It is great that Costco is increasing their wages after not doing so for nine years. The unemployment rate has been below .5 percent which this wage increase can have an impact on it.

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