Costco Will Increase Minimal Wage to $16 an Hour, C.E.O. Says

The Costco chief executive plunged into the political debate over the federal minimum wage, testifying at a Senate hearing Thursday that the retailer is increasing its starting salary to $ 16 an hour.

W. Craig Jelinek, the general manager, said Costco, which is already paying at least $ 15 an hour, had some of the highest employee retention rates of any retailer.

“This is not altruism,” Jelinek told the Senate budget committee. “At Costco, we know that it makes sense for our company to pay employees well and provide affordable services, and that this is a significant competitive advantage for us.”

Jelinek was asked to testify by the chairman of the committee, Bernie Sanders, an independent Vermonter who supports raising the federal minimum wage to $ 15 an hour over the next four years. Mr Jelinek said he was not there to support the proposed increase in the federal minimum wage, but rather to discuss how his company’s above-average wages had affected his business.

Republicans on the committee, including South Carolina’s Lindsey Graham, asked if Costco, which had sales of $ 150 billion last year, could absorb the higher wages because of its size, and whether a $ 15 an hour mandate was likely a lower order would result in retailers closing.

“In my experience, they don’t usually put wages out of business,” said Jelinek. “This is how you run your business.”

Mr. Jelinek said the average wage at Costco, which employs 180,000 people in the United States, is $ 24 an hour.

Costco’s pay contrasts with Walmart’s, whose managing director Doug McMillon was invited by Mr. Sanders to testify but refused to appear. Walmart’s average wage is over $ 15 an hour and the company’s minimum wage is $ 11 an hour.

Pointing to research by the Government Accountability Office showing that some Walmart employees rely on grocery brands and Medicaid to get by on such low wages, Mr Sanders called it a subsidy for the giant company.

Last week, Walmart said it would raise the wages of 425,000 workers and that roughly half of its workforce in the United States would make at least $ 15 an hour. But Mr. McMillon went on to say whether the company would ultimately give a minimum of $ 15 to all employees.

McDonald’s managing director Christopher Kempczinski also declined an invitation to testify on Thursday. The average fast food chain wage is $ 12 an hour.

Terrence Wise, a McDonald’s worker in Kansas City, told the committee that he relied on food stamps to raise his three children and had to live out of a minivan after his family was evicted from their home.

“I work for McDonald’s, one of the richest companies in America,” said Wise. “This is what generation poverty looks like. That’s what I’m fighting for. “

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