Costco is raising its minimum wage to $16 an hour, leapfrogging competitors including Target, Best Buy and Amazon.
Costco CEO Craig Jelinek announced the increase Thursday at a U.S. Senate Budget Committee hearing on worker wages at large companies. Democrat lawmakers and President Joe Biden are pushing to raise the federal minimum wage to $15 from $7.25.
"Since Costco's inception, the company has been committed to paying the employees very competitive retail wages and providing them broad and affordable health care benefits," Jelinek said. "Two years ago, we moved our starting hourly wage to $15 everywhere in the U.S. Effective next week, the starting wage will go to $16."
But the membership-based wholesale chain already is paying many of its 180,000 U.S. workers a much higher rate. Jelinek said the average wage for hourly workers is around $24 per hour.
Local pharmacies: We need more COVID vaccines as CVS, Walgreens ramp up shots
Best Buy store closings: Best Buy expected to close even more stores in 2021 than usual as consumers buy more online
Costco has 558 clubs in 45 states, Washington D.C., and Puerto Rico.
"We try to take care of our employees because they play such a significant role in our success," Jelinek said, who noted the longevity of employees and that Costco pays regular bonuses and offers vacation time.
Sen. Bernie Sanders, I-Vt., convened Thursday's hearing titled "Should Taxpayers Subsidize Poverty Wages at Large Profitable Corporations?" to discuss proposals to change the minimum wage.
The Vermont independent railed against corporations like Walmart and McDonald's, saying hundreds of thousands of workers were being left behind.
Target raised the minimum wage for all of its U.S. hourly employees to $15 an hour in July 2020 and Best Buy raised its minimum to $15 in August. Amazon also increased the starting wage in 2018 to $15.
"While Costco, Amazon, Target, Best Buy, and other large corporations have all raised their minimum wage in recent years to at least $15 an hour, the minimum wage at Walmart has remained stuck at $11 an hour for three years," he said. "The result: 760,000 workers at Walmart, about half of their U.S. workforce, are paid less than $15 an hour."
Walmart announced last week it was raising pay for 425,000 employees starting March 13. The nation’s largest employer said the raise for store workers in its digital and stocking workgroups and would bring their average pay above $15 an hour. Starting pay rates for these employees move from $13 to $19 per hour based on the store location and market, Walmart said.
Walmart CEO Doug McMillon said the company has increased starting wages by more than 50% since 2015 and that the average wage in the U.S. will be at least $15.25 per hour. The retailer has about 1.5 million employees in the U.S. at more than 5,000 stores and Sam's Club locations.
Hobby Lobby's rate is even higher than Costco's at $17 an hour, an increase that went into effect in October. In 2014, the chain raised its full-time minimum wage to $15 and says that was "well before it became fashionable with other retailers."
The Costco CEO just said at the Senate Budget hearing they'd be upping the minimum wage at Costco to $16/hr next week
"Effective next week, the starting wage will go to $16."
— Nicholas Wu (@nicholaswu12) February 25, 2021
A recent report released by the nonpartisan Congressional Budget Office said boosting the minimum wage to $15 per hour would raise income for millions of Americans and lift 900,000 people out of poverty.
But by 2025, when the hourly rate would hit $15 under a proposal before Congress, some 1.4 million fewer Americans would be working, the report concluded. That is because higher wages would increase the cost of producing goods and services and, in response, many employers would reduce their workforce or hire fewer employees, the report said.
Target's tech upgrade: Target to open 'mini Apple shops' in select stores, offer more products online
Victoria's Secret store closings 2021: Retailer to close up to 50 stores while Bath & Body Works opens new locations
Contributing: Nicholas Wu, Michael Collins and Paul Davidson, USA TODAY
Follow USA TODAY reporter Kelly Tyko on Twitter: @KellyTyko
This article originally appeared on USA TODAY: Costco minimum wage: Pay increase to $16 an hour starts next week