Starting this year, Costco is raising its minimum wage for hourly workers in the United States to $16 an hour.

Costco's current workforce is comprised of 180,000 employees with 90 percent of them being hourly. Chief Executive Craig Jelinek made the announcement last week before the US Senate Budget Committee. The move comes as Democrats push for a massive federal minimum wage hike. The current value is at $7.25 and has been stagnant since 2009, but there is growing support to raise it.

Costco has been raising its minimum wage frequently. In 2018, it raised it to $14 and in 2019 to $15. President Joe Biden has been vocal about his support of a $15 minimum wage. Currently, 20 percent of Costco employees make the minimum wage. Costco's average wage per hourly employee is around $24 an hour. In addition, Costco employees have been receiving an additional $2 an hour in hazard pay since March.

Arindrajit Dube, a professor of economics at the University of Massachusetts Amherst who studies the minimum wage, believes that the move by Costco will force the hand of other popular retailers. Other large retailers have followed in Costco's footsteps. Amazon, Target, and Best Buy have all increased their minimum wage to $15.

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Economics, Finance and Investing