As retailers have beefed up pay and other benefits to woo and keep employees, Costco has become the latest company to announce pay raises for its hourly workers.
The warehouse club chain is giving hourly workers a $1-per-hour pay bump starting July 22, Costco announced in a company memo.
Although various data has shown that employers are beginning to slow down pay raises after recent competitive pay bumps, raises overall remain elevated compared to pre-pandemic levels.
We've gathered additional news on Costco’s compensation changes, as well as the general state of pay in the workplace.
Costco Wants 'Highly Competitive' Wages
Costco CEO Ron Vachris said the starting pay and highest pay for all of the retailer’s service assistants, service clerks, and meat cutters will increase by $1 an hour, according to a memo to employees that was obtained by Business Insider.
This brings the starting wage for these roles to $19.50 an hour—an increase of 5.4% for the lowest earners. Vachris said in the memo that incremental steps on the wage scale, determined by seniority, would increase by $0.50.
The raises are part of Costco’s “efforts to ensure our hourly wages remain highly competitive in the industry,” Vachris said.
Walmart Gave Hourly Workers, Managers a Raise
One of Costco’s major competitors, Walmart, also boosted pay for hourly workers, as well as store managers, earlier this year.
In January, the nation’s largest private employer announced it was boosting the average hourly wage for front-line hourly employees to $18, up from $17.50. About 75% of Walmart's store, club, and supply chain management employees started as hourly associates, the company said.
Walmart also said it would raise the average salary for store managers by roughly 9.4%—to $128,000 a year, up from $117,000.
(Axios and SHRM Online)
The State of Pay Raises
Costco’s pay increase of more than 5% for its lowest-earning hourly workers is higher than the average salary hike most workers are getting.
Various reports have found that pay raises for 2024 have been around 4% to 4.5% on average.
A survey of chief financial officers (CFOs) by Gartner found that the vast majority of senior finance leaders (71%) plan to give raises of at least 4% in 2024.
Payscale similarly found that organizations predict an average base pay increase of 4.5% in 2024, compared to the average increase of 4.8% actually given in 2023. Some industries may increase pay as much as 6%, Payscale researchers noted. Although amounts are cooling, Payscale noted that pay increases are still elevated compared to pre-pandemic levels and are viewed as an essential talent management strategy—especially as employee expectations have increased in regard not only to meaningful salary hikes, but also transparency about pay practices.
“Employers know that pay is critical and must be competitive and keep pace with the rising cost of living,” said Lexi Clarke, vice president of people at Payscale.
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