Costco isn’t concerned about attracting workers in the wake of Amazon’s minimum wage hike.
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The warehouse retailer’s chief financial officer, Richard Galanti, told Wall Street analysts that pay and benefits offered by Costco still remain ahead of the competition. Costco raised its minimum wage to $14 from $13 following a tax-cut bill signed by President Trump in late 2017, and the company provides raises every year, unlike many other retailers.
“Even though our starting wage is $14 to $14.50, an employee who’s been here over a number of years can get up into the equivalent of the mid-$40s to the mid-$50s on an hourly basis over time, on top of great health benefits,” Galanti said during an earnings call, responding to a question about Amazon’s wage increase.
He added that Costco’s average U.S. hourly wage is roughly $22.50, “which we believe dwarfs any other retail or retail-type entity out there on a base scale.”
Earlier this week, Amazon announced that it will raise its minimum hourly wage to $15. The company later confirmed that it will also cut stock options and incentive-based bonuses for warehouse employees, though a spokesperson said hourly workers will still receive an increase in total compensation as a result of the changes.
Amazon’s wage hike came amid public criticism from Sen. Bernie Sanders (I-Vermont), who introduced a bill, the Stop BEZOS Act, that would slap a welfare tax on large companies.
Costco, Walmart and other employers offered pay raises, bonuses and other benefits such as improved 401(k) plans in response to the Tax Cuts and Jobs Act, which reduced the corporate tax rate to 21 percent from 35 percent.
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Galanti acknowledged that wages will continue to face upward pressure but noted that in some areas of the country, Costco was already paying entry-level workers more than $14.50 an hour before raising its minimum wage this year.
Costco on Thursday reported quarterly sales growth amid strong consumer spending. The company said its comparable sales rose 9.5 percent in its fiscal fourth quarter, and store traffic was “as strong as it’s ever been,” Galanti said.