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Costco will bump its minimum wage to $16 next week

The company, which has 12 stores in Minnesota, is pushing ahead of retailers Target and Amazon with its new minimum wage

Costco plans to raise its minimum wage to $16 hourly next week, CEO W. Craig Jelinek said in a Senate hearing Thursday.

The Senate Budget Committee hearing comes as Congress prepares to vote on legislation that would gradually increase the federal minimum hourly wage – which has been $7.25 since 2009 – to $15 by 2025.

Costco raised its hourly pay from $14 to $15 in 2019, and more than half of its U.S. workers are paid above $25 hourly, Jelinek said during the hearing.

"I want to note this isn't altruism," Jelinek said. "At Costco we know that paying employees good wages ... makes sense for our business and constitutes a significant competitive advantage for us. It helps us in the long run by minimizing turnover and maximizing employee productivity."

The move would put Costco slightly ahead of other retailers, such as Target, Best Buy and Amazon, which have raised their wages to $15 hourly in recent years.

Walmart, which has a starting rate of $11 hourly, announced last week it would raise pay for half a million of its employees to between $13 and $19 hourly.

Costco employs about 180,000 workers in the country, including at 12 stores in Minnesota. 

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