Costco is raising its minimum wage above its competitors

Costco has approximately 180,000 US employees and 90% of them work hourly. It will increase its minimum wage to $ 16 from next week, chief executive Craig Jelinek said Thursday at a US Senate Committee on Budgets hearing on employee compensation at large corporations.

The move comes as Democrats in Congress seek to rally support for a $ 15 federal minimum wage. Senator Bernie Sanders is the driving force behind Congress’ current push to raise the federal minimum wage by passing a bill last month. to increase it to $ 15 by 2025. President Joe Biden has also backed a $ 15 minimum wage. The federal minimum wage has been at $ 7.25 an hour since 2009, but a growing number of cities and states are raising their minimum wages.

Costco COST, based in Issaquah, Washington, raised the minimum wage to $ 14 in 2018 and $ 15 in 2019. The company says 20% of its hourly wage workers earn the minimum wage.

More retailers and restaurant chains have also moved to a minimum rate of $ 15 an hour. Amazon AMZN raised the starting pay to $ 15 in 2018, while Target TGT and Best Buy BBY last year increased their minimum to $ 15. Walmart WMT, the largest US retailer, has a minimum wage of $ 11 and said last week that it planned to increase wages for approximately 425,000 employees, a quarter of its workforce, to at least $ 13 an hour.

Arindrajit Dube, an economics professor at the University of Massachusetts Amherst who studies the minimum wage, said Costco’s move would put pressure on rival employers like Amazon to match the $ 16 minimum.

While some businesses have moved to $ 15 an hour or more, many business leaders are against a $ 15 federal minimum wage. Some employers, especially small businesses, have fought against raising the minimum wage to $ 15, as it could lead to layoffs and even closings.

In a letter to Congressional leaders on Wednesday, the Business Roundtable first suggested that the minimum wage hike should be linked to progress in beating the coronavirus pandemic.

Also on Wednesday, Matthew Shay, president of the National Retail Federation, a retailer lobby group, said during a phone call with reporters that “ it makes no sense for the federal government to dictate wages in an economy as broad and diverse as this one is … It is best to let market conditions dictate ‘wages’.

—CNN’s Tami Luhby and Matt Egan contributed to this article.