Feb. 25 (UPI) -- Costco will raise its hourly minimum wage to $16 for U.S. employees amid ongoing debate among lawmakers on raising federal hourly minimum wage to $15.
"Two years ago, we moved our starting hourly wage to $15 everywhere in the U.S. Effective next week, the starting wage will go to $16," Costco CEO Craig Jelinek said during a Senate budget hearing committee Thursday.
Jelinek added that Costco has 180,000 employees across the United States. Employees have the opportunity to receive annual wage increases. The average wage is around $24, which doesn't take into account $2 premium pay employees received during the COVID-19 pandemic and healthcare benefits.
The move puts Costco's starting wage above rivals such as Amazon, Target and Walmart.
Amazon raised its starting wage to $15 in 2018, and Target raised its minimum wage to $15 last year. Walmart, which has an $11 minimum wage, announced last week it would raise its minimum wage for 425,000 store associates working in frontline roles to $13 an hour.
University of Massachusetts economics professor Arindrajit Dube told CNN Business Costco's wage increase would put pressure on rival employers to match it.
The Senate budget hearing -- titled "Should Taxpayers Subsidize Poverty Wages at Large Profitable Corporations?" -- comes amid lawmakers debating a provision to raise the national minimum wage to $15 per hour.
The House plans to vote Friday on President Joe Biden's $1.9 trillion coronavirus relief package, and while it has enough support to pass in the House, Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have threatened to oppose the stimulus plan over the provision to raise the minimum wage.
Biden has pushed to raise the federal minimum wage for all workers, which has been $7.25 since 2009, and has already raised the federal worker minimum wage to $15 by executive order.
Earlier this month, the Congressional Budget Office said raising the minimum wage to $15 an hour would boost wages for some 17 million people and raise 900,000 U.S. workers out of poverty, but cost the United States 1.4 million jobs by 2025.
Proponents have said unemployment rates were unaffected by minimum wage hikes in cities such as New York City and Seattle. Opponents, such as the U.S. Chamber of Commerce, said in a statement prior to the pandemic, raising the minimum wage would cause economic disruption for employers, especially small businesses, and have "negative effects on the job opportunities for first time and lower-skilled workers."