With other retailers raising pay rates, Costco is hiking its wages even higher.
On its first-quarter conference call, Richard Galanti, Costco's CFO, revealed that the warehouse club is raising its entry level pay to a minimum of $13 or $13.50 per hour, up from $11.50 or $12.
The $1.50 entry-level raise, the first since 2007, will cost eight cents a share on a full-year basis.
The increase comes as some retailers are raising wages due to mandated increases in minimum wage in some areas, but also because finding employees has become more competitive with the improving economy. Other retailers claim to be raising wages as part of a bigger investment in customer service.
The minimum pay scale for Walmart's lowest-paid employees was raised to $9.00 per hour in April 2015 and to $10.00 last month. With the February lift, Walmart's average full-time hourly wage is $13.38 an hour and $10.58 on average for part-timers.
Costco has a reputation for paying attractive wages. At the top level, hourly pay is about $22.50, which represents a "huge premium" to the marketplace, said Mr. Galanti. The upper range generally sees annual increases of 50 to 60 cents.
At the bottom range, entry-level rates were becoming less of a premium as other retailer raised their wages, Mr. Galanti implied. He also said it's not easy work.
"You're on your feet, you're lifting cases, you're pushing carts at these entry-level jobs," he said on the call.
Raises at Costco are also frequent. On a full-time basis, workers can go from the entry level pay average to top pay in four-and-a-half years, said Mr. Galanti.
For Costco, the premium pay is more about maintaining its top-notch service than raising it. Mr. Galanti elaborated, "I would like to think that we're not going to have less shrink or employee shrink because of it, or they're going to be better service providers to our members. I think it reinforces what they already feel. And that's what we're all about."
- Costco Wholesale Corporation Reports Second Quarter And Year-To-Date Operating Results For Fiscal Year 2016 And February Sales Results - Costco
- Costco Wholesale (COST) Q2 2016 Results - Earnings Call Transcript - Seeking Alpha
- Costco Will Raise Minimum Wage as Competition for Workers Grows - Bloomberg
- Costco Hikes Entry Level Wages for First Time Since 2007 - The Associate Press/ABC News
- More Than One Million Walmart Associates to Receive Pay Increase in 2016 - Walmart
- Why Costco is raising its minimum wage for the first time in nearly a decade - The Washington Post (tiered sub.)