What: Costco announces significant wage increases for its U.S. workforce, with top-tier hourly workers set to receive annual USD 1 raises over three years, reaching USD 32.20 by 2027.

Why it is important: The strategic timing of this announcement during union negotiations and amid broader retail industry wage adjustments reflects the evolving dynamics of labour relations in retail, where competitive compensation packages are becoming crucial for talent retention and operational excellence.

Costco is implementing a substantial wage increase for its U.S. store workers, with plans to raise hourly rates incrementally over the next three years. Starting in March, employees at the top of the pay scale will receive a USD 1 per hour increase to USD 30.20, followed by additional USD 1 increases in each of the following two years. Entry-level workers will also benefit from a 50-cent increase to USD 20 per hour. This adjustment affects non-union locations and comes during negotiations with the Costco Teamsters union, which represents less than 10% of the company's 219,000 U.S. employees. The move positions Costco ahead of industry competitors in terms of compensation, as the mean hourly wage for U.S. retail workers stands at USD 14.12. The company's approach to employee compensation has historically resulted in low turnover rates, with more than half of its hourly workers already in the top pay category. This latest increase reinforces Costco's reputation for prioritising worker welfare while maintaining operational efficiency.

IADS Notes: Costco's wage increase announcement comes amid significant shifts in retail compensation strategies. In September 2024, Sam's Club raised its entry-level wages to GBP 16 per hour , while Walmart enhanced its management compensation packages in January 2025 . This trend reflects broader industry movements, as evidenced by John Lewis's 10% pay increase and M&S's GBP 94 million staff welfare investment earlier in 2024 . Costco's decision aligns with its consistent approach to employee relations, which has contributed to its strong market position and high employee retention rates.

Costco to raise hourly pay for most US store workers to over USD 30