Costco to hike starting wage to US$14

Labour shortages driving compensation changes in United States
June 13, 2018


Costco Wholesale shares fell Friday morning as investors grew concerned about its plan to hike wages.

The discount retailer's pre-tax costs could rise further, now that it'll raise the starting wage for workers in the U.S. by $1 to as much as US$14.50 an hour and boost pay for its other hourly workers.

The move comes amid a tight job market. The Labor Department recently reported that average wage growth accelerated, rising 0.3 per cent in May as the unemployment rate dipped to an 18-year-low of 3.8 per cent.


"In the skilled labour sector, there is a shortage. And if this continues, obviously, even the lower end of the service sector is going to wind up with shortages."

Partly covering the cost of the wage hikes: the savings Costco got from the federal tax cuts.

Costco is just the latest retailer to boost wages. In February, Walmart, the largest retail chain, hiked entry-level wages to US$11 an hour.

Target, which also raised wages in October to $11, plans to raise them again to $15 by the end of 2020.

Last week, Dollar General cited higher driver wages in its earnings results.

— Fred Katayama, Reuters