The Blubber

Costco Wholesale Corp. is increasing wages for most of its hourly U.S. employees to over $30 per hour as it enters contract negotiations with unionized workers.

In a memo to staff this week, which was reviewed by Bloomberg News, CEO Ron Vachris announced that hourly pay for employees at the top of the pay scale will rise over the next three years. Starting in March, those workers will see a $1 increase, bringing their hourly pay to $30.20, with an additional $1 increase each of the following two years.

Employees at the lower end of the pay scale will receive raises of 50 cents, bringing their pay to $20 per hour, according to the memo. These changes will apply to workers at non-union locations.

Costco, headquartered in Issaquah, Washington, declined to comment further. The company is in negotiations with the union representing thousands of its workers over a new collective bargaining agreement, as the current contract is set to expire on Friday. Costco Teamsters, which represents less than 10% of the company’s approximately 219,000 U.S. employees, has voted to authorize a strike, seeking improved pay and benefits.

Matthew McQuaid, a spokesperson for Costco Teamsters, stated via email that while the union appreciates the wage increase, it was the union's efforts that led to the boost.

Typically, Costco’s hourly U.S. workers start at an entry-level wage and receive periodic raises based on their tenure with the company until they reach the top of the scale. Thanks to its higher wages, Costco enjoys a low turnover rate, with more than half of its hourly workers in the top wage category. As of July, the retailer's starting wage was $19.50 per hour.