Costco to raise wages of 130000 US employees due to tax cuts

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https://www.seattletimes.com/busine...nefits-news-with-quarterly-earnings-thursday/

Costco’s hourly employees are the latest U.S. retail workers to get a boost from the Trump tax cuts.

On June 11, Costco will increase the starting wage for its U.S. employees by $1 to as much as $14.50 an hour, while other hourly wage rates will increase 25 to 50 cents an hour.

The raise, to be paid for with part of Costco’s savings from U.S. federal corporate tax cuts that took effect this year, will go to upwards of 130,000 U.S. employees, costing the company about $110 million to $120 million a year before taxes, Costco chief financial officer Richard Galanti said during the company’s fiscal third quarter earnings report Thursday.

The warehouse club retailer hauled in $32.36 billion in sales and membership revenue in the 12-weeks ended May 13, a 12.1 percent increase over the same period in 2017. It was the company’s fourth consecutive quarter of double-digit sales growth.

Costco profit jumped about 7 percent in its fiscal third quarter to $750 million or $1.70 a share, matching analyst expectations. But investors bid down Costco shares 2 percent in after-hours trading, where they finished at $194.23. The company’s profit margins were slightly slimmer than expected as rising freight costs took a toll.

The wage increases will help Costco keep to its strategy of offering employees total compensation that executive say leads the retail industry. Costco competitors including Target and Walmart announced wage increases and bonuses for their employees tied to the tax cuts earlier this year.

Galanti said that many companies, not just retailers, have “a desire to use some of this (tax windfall) to help employees, to share that wealth if you will, to drive their business.”

But not everyone at Costco is happy. Some salaried employees, including some in the company’s Issaquah corporate headquarters, say they’re being left out of the equation as Costco spreads around the tax benefit. One person, who asked not to be named for fear of retaliation, said after the wage increase announcement, “I would make a considerable amount more going back and gathering carts for the warehouse in the parking lot.”

Galanti did not respond to a request for comment on the benefits, if any, planned for salaried employees.

About 90 percent of Costco’s employees are paid hourly, and earn $22.50 an hour, on average, with access to health insurance benefits for which the company pays 90 percent of annual costs, Galanti said in March.

Costco reported 231,000 employees in its 2017 annual report – 133,000 full-time and 98,000 part-time – numbers that have surely increased as it continues opening new warehouses. It had 750 at the end of the last quarter and planned to open a net 15 new locations in the current quarter.

Some 54 percent of Costco employees in a recent PayScale survey thought their compensation was fair, compared to 21 percent of all employees in the survey. That level was enough to rank Costco 18th on PayScale’s list of fair payers.

PayScale notes that perception is reality when it comes to pay, particularly in a tight job market. “Investing in how you pay and how you communicate pay is more important than it’s ever been for your organization,” the company said as part of its pay fairness report.

Costco is indeed trying to communicate its pay practices, and relative compensation, more clearly to employees.

In an April internal Costco newsletter, Pat Callans, senior vice president of human resources and risk management, addressed the announcements from Target and Walmart – though he didn’t mention them by name.

“At Costco, we’re not in the habit of issuing press releases about our compensation, but we have always looked for ways to pay our hourly employees well, and we’ll continue to do so,” Callans wrote in the newsletter for store management teams. “Our annual increases to the top of our wage scales, and regular increases throughout the scale, are evidence of this.”

Callans said that in addition to a 60-cent-per-hour increase in March – part of the company’s regular cadence of increases – Costco gave long-term employees their biannual extra checks and “made discretionary company contributions to employees’ 401(k) accounts.”

Callans mentioned these and other benefits, including health care, and suggested that newer employees who don’t realize their value or are not yet eligible for them should be reminded by management teams.

“It is our total compensation, not just our starting wage, that sets us apart from our retail competition,” he wrote.

On Thursday, Galanti suggested that the tax-cut related wage increase would likely be an addition to, rather than a replacement of, the company’s regular wage increases. Despite having a small union-represented workforce of about 15,600 people, Costco regularly negotiates a new agreement with employees every three years with prescribed annual wage increases. The next such agreement is due in March 2019.

“We looked at it independent of that,” Galanti said of the June 11 increases.

Galanti said Costco’s third-quarter effective U.S. tax rate was 28.8 percent down from what would have been a rate of 35.3 percent a year earlier, but for an $82 million tax benefit the company realized as part of a $7 a share special dividend. Galanti said he expects Costco’s tax rate in its 2019 fiscal year to be about 28 percent.

The tax cut will save Costco in the low $300 million range a year, Galanti said.

“I don’t think it’s been life-changing for any company,” he said, noting that the cost of the company’s special dividends has been in the range of $2 billion to $3 billion.

Costco continues to return cash to shareholders through stock repurchases totaling $55 million in the third quarter and dividends. The company announced a quarterly dividend of 57 cents a share in April, up from the 50 cent per share dividends it had issued each of the previous four quarters.

Might be completely shocking news to some, but tax cuts can actually lead to economic growth. It's almost like there's an entire area of study revolving around how markets react to things like this.
 
A good idea, especially considering the low unemployment rate and the competition for worker bees.
 
Queen-Nancy.jpg
 
Only really works when compared to whatever losses they may receive from cuts to social spending -- however no one has really shown the dollar value people who get pay bumps get compared to whatever they may lose to social cuts. I'm betting since Costco was named best employer in 2017 that this will be a gain for their employees.
 
Cue the folks who hate American success...
 
And the best part is they already paid their employees good wages.
 
Might be completely shocking news to some, but tax cuts can actually lead to economic growth. It's almost like there's an entire area of study revolving around how markets react to things like this.

There is an entire area of study revolving around this and that's how we know that regressive tax cuts don't lead to growth. It's a settled issur.
 
Costco was a good company before the tax cuts. It would be weird if Costco all of a sudden decided to hoard tax cut money. People who are acting surprised by this probably found out about Costco in this very thread. They're not doing the good thing because of the tax cuts. They've been doing the good thing for a while.
 
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But...but....I was told these tax cuts only helped the rich.
 
Costco has always been good about wages and prices. It's my favorite store makes sam's look like a swap meet.

Workers always made like twice what Sam's counterparts did.
Better Quality Items
Cleaner
Cheaper

You have good leadership is the main reason.
 
Costco has always been good about wages and prices. It's my favorite store makes sam's look like a swap meet.

Workers always made like twice what Sam's counterparts did.
Better Quality Items
Cleaner
Cheaper

And they give more samples.
 
lol @ Trumptard sheep chiming in on Costco whilst ignoring Harley Davidson, Pfizer, Comcast, Walmart, Microsoft, Tenet, Coca-Cola job cuts, or Cisco's (and many others) buying back stock.

Costco has always been a great and ethical company. They're known for this. You only become known for something like this when you continually operate different than most companies. They are the exception.
 
lol @ Trumptard sheep chiming in on Costco whilst ignoring Harley Davidson, Pfizer, Comcast, Walmart, Microsoft, Tenet, Coca-Cola job cuts, or Cisco's (and many others) buying back stock.

Costco has always been a great and ethical company. They're known for this. You only become known for something like this when you continually operate different than most companies. They are the exception.

Not a trump fan by any means -- but the job market added 223k jobs in May. And some of those company layoffs are not to do with anything trump did or didnt do -- 75% of the MS layoffs were overseas in sales jobs which is a dying market regardless of tax cuts or hikes.
 
Not a trump fan by any means -- but the job market added 223k jobs in May. And some of those company layoffs are not to do with anything trump did or didnt do -- 75% of the MS layoffs were overseas in sales jobs which is a dying market regardless of tax cuts or hikes.

And some of those jobs added had nothing to do with anything Trump did or did not do, yet Trumptards associate anything positive that happens with Trump and ignore anything that bad that happens. Costco, a highly ethical company invests in its employees per usual and its all about Trump. Harley Davidson closes a factory, lays off hundreds, and buys back stock --- something directly associated w/ Trump's policies and crickets or reverence for some other reason.
 
Costco is probably one of only two companies universally loved by employees and customers alike. This is just extra icing on the cake.

In case you're wondering, the other company is In-n-Out Burger.
 
Sams club member here. I will now be joining Costco thanks to the poster of this thread.
 
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