Starbucks and Costco are raising the hourly wage for their employees across the United States in an effort to recruit more workers amid a nationwide labor shortage.
The Seattle-based multinational chain of coffeehouses will also introduce a slew of new incentives including training and recruiting programs, enhanced referral bonuses for store partners, as well as updated equipment and technology in its restaurants, which it hopes will improve workers’ connection with customers.
“As Starbucks celebrates our 50th anniversary, we are reminded that our heritage is based on the simple concept that our green apron partners are the heartbeat of Starbucks and that success is best when it’s shared,” Starbucks President and Chief Executive Kevin Johnson said. “Today, we are announcing another historic investment in our partners, knowing that when we take care of our partners, they take care of our customers, and all stakeholders benefit.”
The wage increase comes amid worker unrest within the company, as employees at three Starbucks stores in Buffalo, New York, are attempting to form a union to tackle issues such as chronic understaffing and a lack of worker training.
“Effective October 25, 2021, we will adjust the starting hourly wages for new employees in the U.S. to $17.00/hour for Service Assistants, $18.00/hour for Service Clerks and $18.50/hour for Meat Cutters,” the memo reads. “Current U.S. employees making less than these rates will be moved up to these rates on their scales, and their goal hours will be reset. Please contact your GM or Payroll Clerk with any questions.”
The company added that the wage increases are “part of Costco’s continuing efforts to ensure our hourly wages remain extremely competitive in the retail industry.”
“We remain proud to be able to pay employees well and provide excellent benefits. As in the past, we will review hourly wage scales in connection with the upcoming Employee Agreement,” the memo reads.
The move comes as numerous companies, particularly those in the dining and hospitality sector, as well as small business owners, are increasing pay for employees in an effort to counteract shortages and attract workers amid hiring difficulties because of the COVID-19 pandemic.
Low-price retailer Dollar General Corp. announced it’s offering a $5,000 sign-on bonus to drivers as it expands its private fleet, while rival Dollar Tree is offering a $1,000 sign-on bonus to ensure that its distribution centers are sufficiently staffed ahead of the holiday season.
Target, CVS Health, and Walgreens Boots Alliance are just a handful of other companies that have all said they are boosting starting wages to $15 an hour, in line with President Joe Biden’s push to raise the minimum wage to the same amount.
However, economists fear that the sharp rise in wages versus a declining employment rate could contribute to increased levels of inflation, adding extra pressure on central bankers trying to steer their countries out of economic turmoil.
Meanwhile, employers laid off approximately 1.3 million workers in August, according to the agency.
“The 5.2 percent unemployment rate and rapidly rising wages suggest building inflationary pressure that will ultimately lead to more hawkish policy,” Citigroup economist Andrew Hollenhorst wrote in a detailed analysis of the current jobs situation at the time.
