Costco Will Raise Minimum Wage as Competition for Workers Growsby
Costco Wholesale Corp. will lift its minimum wage for the first time in nine years, by a $1.50 an hour, as the labor market tightens and competitors start giving workers a raise.
The second-largest U.S. retailer will start paying at least $13-to-$13.50 an hour, up from $11.50-to-$12 an hour, the company said Thursday in a conference call with analysts. The increase will cut its earnings per share in the next three months by 1 cent, and by 2 cents in the following three quarters, the Issaquah, Washington-based company said.
Retailers are under pressure to boost wages as unemployment falls below 5 percent and 14 states have raised their minimum wage this year. Wal-Mart Stores Inc., which operates the Sam’s Club warehouse-style chain, a Costco competitor, lifted its pay floor to $10 an hour this year and gave an increase to more than 1 million workers. Costco didn’t say how many of its 117,000 employees would get a raise.
“It will help, and it is important to do,” said Richard Galanti, Costco’s chief financial officer. “This is a physically challenging job. You’re on your feet, lifting cases, moving carts, and we thought it was time to do it.”
Costco’s highest hourly pay is about $22.50, and the company plans to give those workers about a 2.5 percent raise this year, Galanti said. It takes a full-time Costco employee about four years to reach the top of the pay scale, he said.
Costco reported earnings yesterday that fell 8.7 percent to $546 million, or $1.24 a share. Analysts had estimated $1.28 a share, on average. Same-store sales in the U.S., a closely watched measure by investors, increased 4 percent, excluding the negative impact of lower gasoline prices and foreign-exchange rates. That compared with an estimate of 4.9 percent.