Costco Announces Plan to Increase Hourly Wages

Update: Costco and its union came to an agreement just before the strike deadline. The Teamsters noted in a tweet, “The Costco Teamsters National Negotiating Committee has reached a tentative agreement for a new contract. Additional details will be shared soon. The tentative agreement will be presented to the membership for a vote. Stay tuned.” Read the original story below.

Costco’s CEO has announced a significant pay increase for most of its workers in the United States, with the highest tier of hourly employees set to earn more than $30 an hour.

Earlier this week, Costco sent a memo to its staff stating that it plans to raise the pay for all of its non-union stores in the United States to a little over $30 an hour. Reuters reported that the increase in hourly pay, which will only impact non-union employees, will happen in a phased approach over the next three years, with an increase of $1 to $30.20 in the first year for workers at the top of the pay scale. Wages will then be raised by an additional dollar in each of the following two years. 

Investing.com also reported that entry-level workers would receive a 50-cent raise, bringing their starting rate to $20 per hour. In the memo, the company’s CEO, Ron Vachris, stated that these increases “will continue to far outpace others in the retail industry.”

The decision to increase pay comes at a crucial time. Members of the International Brotherhood of Teamsters union, representing more than 18,000 Costco workers, say they voted in favor of a nationwide strike if continued attempts to negotiate a contract renewal fail before the end of January 31, when their previous contract expires at midnight. The pay increase outlined in the memo does not apply to union members, who constitute about 8% of Costco’s employees. It remains to be seen if an agreement will be reached before the midnight deadline arrives, and if so what that means for the hourly pay of union workers.

“We’ve told Costco that our members won’t work a day past January 31 without a historic, industry-leading agreement,” Sean M. O’Brien, Teamsters’ general president, shared in a statement with reporters. 

The pay increase isn’t the only move Costco appears to be making to benefit its workers. In January, the company’s shareholders and its board rejected a proposal to halt its diversity, equity, and inclusion (DEI) practices. 

“Our commitment to inclusion … does not and has never included quotas or systematic preferences, nor does it mean compromising merit,” Tony E. James, Costco’s board chair, said at a shareholder meeting, according to CBS. “The demands of our business and our steadfast commitment to serve our members mean that we cannot afford to do anything but hire and promote the most qualified individuals.”

However, the Attorney Generals of 19 states have since sent a letter addressed to CEO Vachris urging him to “end all unlawful discrimination imposed by the company through diversity, equity, and inclusion policies.”

The letter states that, “Although Costco’s motto is ‘do the right thing,’ it appears that the company is doing the wrong thing — clinging to DEI policies that courts and businesses have rejected as illegal. Costco should treat every person equally and based on their merit, rather than based on divisive and discriminatory DEI practices. That reflects President Trump’s executive order encouraging ‘the Private Sector to End Illegal DEI discrimination and Preferences.’” Costco has not yet publicly responded to the letter.