Costco US Raises Minimum Wage to $16... Will It Spread Across the Industry?

(Source: NPR)

[Asia Economy Reporter Yujin Cho] U.S. offline retail giant Costco's decision to raise its minimum wage to an industry-leading $16 has drawn attention to whether this will have a ripple effect across the sector, CNN reported on the 25th (local time).

Craig Jelinek, President and CEO of Costco, testified before the Senate Budget Committee on the 25th (local time) that the minimum wage will be increased to $16 starting next week. This is higher than the $15 hourly minimum wage proposed by President Joe Biden.

Costco, which employs the second-largest workforce among U.S. offline retailers, raised its minimum wage to $15 last year, lifting the industry average. Costco employs 180,000 workers in the U.S. alone, 90% of whom are part-time employees.

The increased minimum wage at Costco is symbolically significant as it is higher than that of other retail companies such as Walmart, Amazon, Target, and Best Buy. While some retailers have voluntarily raised their minimum wages recently, none pay $15 per hour. Experts predict that Costco's decision, as the second-largest offline retailer in the U.S., could influence other companies pushing for minimum wage hikes.

Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, said, "Costco's move could pressure competing employers like Walmart and Amazon to match the $16 minimum wage." There is growing anticipation that a domino effect of minimum wage increases in the high-employment retail sector could ignite new momentum for the U.S. government's economic stimulus efforts.

The movement to raise the minimum wage in the U.S. is gaining momentum. Walmart, the largest private employer in the U.S., announced on the 18th that it will maintain its current minimum wage of $11 but raise the average wage to over $15.