Costco is Set to Raises Wages for 130,000 Employees
Nearly 130,000 Costco employees are poised to get a pay raise starting on June 11. According to the Seattle Times, in a May 31 call with investors, CFO Richard Galanti said that the starting wage for Costco employees would go up $1 to $14 or $14.50 per hour, while other warehouse employees would see hourly raises of $.25 to $.50. The wage increase is “independent” of the regular wage increases implemented by the company, the Seattle Times said. The raises are a windfall from Costco’s savings due to U.S. federal corporate tax cuts that took effect this year, which lowered the corporate tax rate and provided a windfall for large corporations. The raises are expected to cost the wholesale retail company $110 to $120 million before taxes. During the call, Galanti also reported a third quarter profit of $750 million, up from last year’s $700 million for the quarter. The company brought in $32.36 billion in both sales and membership revenue in the quarter that ended on May 13, a slightly over 12% increase from last year.
Total Retail's Take: Costco is not the only company to give out raises or bonuses that they attributed to the tax bill: Costco’s competitors have as well. In January, for example, Walmart raised its starting hourly wage to $11. And, earlier this year target said it would raise its wages to $12 per hour by the spring and $15 hourly by 2020. And, other retailers, such as Home Depot, Starbucks, and Disney, have passed their windfalls to their employees via bonuses Hall distributed bonuses of up to $1,000 in cash this year. The raises and bonuses are great for employees but also great for retailers in that they can help to attract employees in a tight job market. Overall, the news is not that surprising to close Costco watchers. After all, Costco has a positive reputation for how it treats workers. Forbes and Statista named it, for example, America’s best employer in 2017, just ahead of Google, due to providing healthcare benefits for part-time employees and other perks.