WHAT’S BEING CLAIMED:
- American multinational corporation Costco announced on Thursday that it would increase its minimum wage and raise pay for approximately its 130,000 U.S. workers.
- Costco said it would boost its starting hourly wages by $1 to $14 or $14.50 per hour.
- Other hourly staff will enjoy raises of between 25 cents and 50 cents.
Costco Wholesale Corp., the second-largest U.S. retail company in terms of sales, announced that effective June 11, all of its employees will receive a minimum wage increase. The company retail chain promised to raise pay from $13 to $14 an hour.
Costco executives said the retail chain was using some of its savings from 2017 U.S. tax overhaul to invest in its workforce. The law decreased the corporate tax rate, an advantage for companies like Costco with large U.S. operations.
Richard Galanti, Costco’s finance chief, said that the annual cost of the wage increases will approximately be between $110 million and $120 million pretax. But Costco expects an effective tax rate of 28% this year, in comparison with about 35% in 2017.
U.S. unemployment has dropped to some of the lowest levels since the end of World War II, leaving Costco and other big companies with no choice but to compete for a workforce in an industry with high turnover. According to the Labor Department, the jobless rate fell to 3.9% in April, the lowest since December 2000.
Earlier this year, Walmart increased its starting wage to $11 an hour. It announced on Wednesday that it would pay for online college courses for its U.S. employees, in a strategy to attract and retain talent.
Target Corp. also raised its starting hourly wage to $11 last year and plans to increase it to $15 per hour by 2020.
On Thursday, Costco reported another quarter of strong sales gains, as it benefits from increased spending by its members and recent e-commerce offerings, Market Watch reported. The retail company said sales rose to 7% at established stores in the quarter ending May 13, excluding gas and currency swings. Costco’s quarterly profit soared to $750 million, compared to $700 million in 2017, on total revenue of $32.36 billion.
Source: Market Watch