—Costco Wholesale (COST) announced on Thursday it was raising its starting wage for the first time in nine years, becoming just the latest retailer to increase pay in a tightening labor market.
The bulk retailer, the second largest U.S. store chain by revenue, said it will lift its minimum wage by $1.50 in both the United States and Canada, and starting pay will rise to $13-to-$13.50 an hour stateside.
Costco becomes the latest retailer to raise wages as competition for good store workers rises. Walmart (WMT) last year announced a two-step raise for hundreds of thousands of its U.S. workers, the first phase having kicked in last year. Sam’s Club, a unit of Wal-Mart Stores, and Costco’s most direct rival, also raised pay, as has Target (TGT).
“This is a physically challenging job. You’re on your feet, lifting cases, moving carts, and we thought it was time to do it,” Costco CFO Richard Galanti said on an analyst call. Still, he said Costco, widely admired for its benefits, was one of the most generous companies at the top of the pay scale. (The top of the scale at Costco stores is $23 per hour.)
Those workers at the high end of the scale, which on average need four years to get there, will see a 2.5% hike this year.
Last week, retailers from Kohl’s (KSS) to Sears (SHLD) to Lowe’s (LOW) among others warned investors higher wages because of increased competition would hurt profit.
Costco reported earnings yesterday that fell 8.7% to $546 million, or $1.24 a share, below analyst forecasts for $1.28. Same-store sales in the U.S. rose 4% excluding the negative impact of lower gasoline prices and foreign-exchange rates.