Costco (NASDAQ: COST) announced hourly pay increases this week ahead of a potential labor union strike that could disrupt operations in some of its biggest U.S. markets.
The retailer sent a memo to employees this week stating that it will increase pay for both entry-level and experienced workers, according to a report by Reuters.
The move addresses a key demand of the Costco Teamsters union, which voted earlier this month in favor of a strike that could begin as early as February 1.
Costco and the Teamsters Go Down to the Final Stretch
Costco and its Teamsters-represented employees are in the final round of negotiations over their collective bargaining agreement, known as the Costco Teamsters National Master Agreement, which expires on January 31.
Costco Teamsters say their demands include concessions on seniority, paid family leave, and “safeguards against surveillance.”
They argue that the big-box retailer’s reputation for treating its workers well is no longer deserved, as wages for experienced hourly employees have not kept pace with the rising cost of living and the company’s soaring profits.
The labor union represents only a fraction of Costco’s workforce. Fifty-six out of Costco’s 616 U.S. warehouses — or roughly 18,000 of its 219,000 domestic workforce — are unionized.
A strike would directly affect locations in six states, with California being the hardest hit. The state has 40 unionized warehouses.
Costco’s New Pay Scale
In the memo sent this week, Costco said it will raise hourly pay for those at the top of its pay scale by $1 to $30.20, followed by additional $1 annual increases over the two following years.
Entry-level employees will receive a 50-cent wage increase to $20.00 per hour, which follows a raise last July.
Costco said last year that after the summer wage hike, its average hourly wage would rise to $31, equating to an annual salary of over $60,000.
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