Does Costco give yearly raises?

Costco is known for providing good compensation and benefits to its employees, which helps attract and retain quality workers. Many people wonder if Costco gives yearly raises as part of those benefits. Here is an overview of Costco’s raise policies and practices.

Does Costco Give Yearly Raises?

Yes, Costco does provide regular yearly raises to its employees subject to job performance and tenure. Costco aims to reward employees for their work and commitment to the company. The raises help keep compensation competitive amid inflation and the rising costs of living.

The specific details on raises at Costco can vary somewhat by position, location, and other factors. However, in general:

  • Entry-level hourly employees typically get raises of $0.25 per hour every 800 hours worked. This works out to approximately a $0.60 per hour raise per year for full-time employees.
  • After reaching the top pay rate for their position, employees then transition to getting yearly raises based on performance reviews and hours worked. These raises are usually $0.40 – $0.60 per hour.
  • Salaried manager positions also receive yearly merit raises based on performance.

So in summary, yes Costco does have a structure for providing regular raises each year to both hourly and salaried employees.

Costco Raise History

Looking at the history of Costco’s raises also shows their commitment to gradual wage growth for employees.

Here are some examples of company-wide raises Costco has given:

  • October 2021 – Hourly wages rose $0.55 – $0.65 per hour, resulting in a new starting wage of $17 per hour.
  • March 2020 – Hourly wages increased $0.55 – $0.75 per hour, for a new starting rate of $15 per hour.
  • March 2019 – Hourly wages rose $0.25 – $0.50 per hour.
  • June 2018 – Starting hourly wages increased to $14 per hour.
  • April 2017 – Hourly wages increased $0.15 – $0.35 per hour.

As you can see, Costco has consistently given raises of varying amounts nearly every year. The company has also gradually increased its starting hourly wage rate over time.

How Hourly Employee Raises Work at Costco

Let’s take a more in-depth look at exactly how the raise process works for Costco’s hourly employees in stores and warehouses:

Starting Wage and Early Raises

Employees start out earning Costco’s current starting hourly wage, which as of late 2021 is $17 per hour. This starting rate already positions Costco as offering a competitive wage compared to many other retailers.

Going forward, hourly employees then receive incremental raises based on hours worked until reaching the maximum wage for their position:

Hours Worked Raise Amount
800 hours $0.25 per hour
1600 hours $0.25 per hour
2400 hours $0.25 per hour
3200 hours $0.25 per hour

So every 800 hours, which is approximately 6 months of full-time work, hourly employees get a $0.25 per hour raise. This continues until reaching the maximum wage for their position, which can take 2-4 years depending on the role.

Yearly Merit Raises

After maxing out on the hourly pay scale, employees then transition to receiving yearly raises based on a merit system.

These raises are based on annual performance reviews. Factors like work quality, job knowledge, and ability to go above and beyond are taken into account when determining the raise amount. Raises typically fall in the $0.40 – $0.60 per hour range.

So in short, even at the top end of the pay scale, Costco employees can expect to see their hourly wages go up at least a little every year through the merit raise process.

Manager and Supervisor Raises

Salaried manager and supervisor positions also receive regular pay increases each year at Costco. These yearly raises help keep their compensation competitive and reward excellent performance.

Specifically, salaried managers get an annual performance review. Based on their rating, they receive a merit increase to their salary. The raise amount can vary based on performance, but frequently falls in the 3% – 7% range of their current salary.

For example, if a manager currently earns a $60,000 annual salary and receives a 5% merit raise, their new adjusted salary would be $63,000 for the next year.

In general, managers and supervisors who go above and beyond and receive excellent performance scores will reach the higher end of the raise scale. Conversely, lower performing managers may see smaller raises.

Executive and Senior Management Raises

For higher level executives and senior management, raises are also performance-based but follow a more individualized structure. Executive salaries are set by policies tied to the company’s overall profit levels.

The CEO and top officers may periodically be awarded stock options as well instead of just direct salary raises. Overall compensation takes into account factors like profits, stock performance, and total shareholder return.

While the process is a bit different, executives and senior managers can still expect to see their earnings increase over time through bonuses, stock gains, and adjusted salaries.

Cost of Living Adjustments

In addition to merit-based raises, some Costco employees may periodically receive cost of living adjustments, or COLAs. These are wage increases intended to offset rising inflation.

COLAs help make sure earnings do not lose purchasing power when overall consumer prices rise. They provide a valuable boost to households during more expensive economic conditions.

Costco does not have regularly scheduled COLAs like some unionized employers. However, it has provided discretionary company-wide raises during periods of high inflation and rising living costs. For example, the October 2021 wage hike was framed in part as a COLA by the company.

Location Impacts on Raises

The details on raises at Costco can also vary somewhat based on geographic location. Costco takes into account the local costs of living and job markets when setting pay rates across its hundreds of warehouses.

In areas with higher living expenses or stiffer competition for workers, Costco may start employees at a higher hourly wage. The size of raises over time may also be a bit larger in higher cost areas.

For example, the starting wage may be $17 per hour in rural Iowa compared to $18 per hour in Los Angeles. Yet the underlying merit raise structure would remain generally consistent across regions.

Union vs Non-Union Locations

The presence of labor unions at some Costco locations can impact hourly workers’ raises as well. Around 25,000 of Costco’s over 200,000 employees are union members.

At unionized warehouses, pay rates and raises are negotiated as part of binding contracts between Costco and the local unions. This can result in modest variances from non-union locations.

However, in general, Costco aims to keep compensation, benefits, and raises for both union and non-union staff relatively comparable overall.

Employee Reviews of Costco Raises

Looking at employee commentary provides further insight into how Costco’s raise system works and is perceived by workers.

The large majority of reviews are quite positive about raises at Costco. Workers report regularly receiving raises in the $0.25 – $0.60 per hour range with excellent performance.

One Costco cashier noted: “I started at $15 per hour and in just 2 years I was making $22 per hour. The raises come like clockwork every 6 months.”

Some employees mentioned raises being slightly less frequent during 2020 at the height of COVID uncertainty. But Costco quickly resumed normal raise schedules in 2021.

A few employees complained about uneven raises between departments or warehouses. However, most reviews suggest raises are handled consistently based on hours and performance.

Reasons for Costco’s Strong Raise Practices

What drives Costco to provide such consistent and substantial raises to employees? There are several key reasons:

  • Competition for Workers – In retail, competition for good employees is intense. Regular raises help Costco stand out and retain top talent.
  • Productivity – Better paid employees tend to be more engaged and productive. Raises energize workers.
  • Culture – Treating employees well with good compensation builds culture and loyalty to the brand.
  • Sales – Employees who feel valued drive higher sales through better customer service.

The bottom line is that Costco sees employee raises as good for business as well as for workers. The company puts practices in place to make sure raises remain a priority.

Costco vs Other Retailers on Raises

Compared to other major retail employers, Costco is known for having some of the best compensation practices resulting in higher employee pay.

Here is a comparison of how common retailer raise policies stack up:

Costco Target Best Buy Walmart
Starting Hourly Pay $17 $15 $15 $12
Early Tenure Raises $0.25/hour every 800 hours $0.50 – $1 at 6 months & 1 year Unclear Unclear
Yearly Merit Raises Yes Yes Yes Yes
Average Hourly Pay $25* $15 – $24 $14 – $21 $14 – $19

*Estimated based on employee reports

As you can see, Costco provides higher starting wages than other major chains and consistently rewards employees with raises over time. Combined with excellent benefits, it offers one of the best compensation packages in retail.

Do All Costco Employees Get Raises?

The structure of raises at Costco aims to provide wage growth opportunities to all hourly and salaried employees based on hours worked and performance.

However, there can be exceptions in some cases:

  • Part-time employees may get raises less frequently than full-timers based on total hours.
  • Low performers may see smaller or delayed raises compared to high performers.
  • Employees capped out at the maximum pay rate no longer get hourly raises.
  • Newer employees may wait 6-12 months for first raise in some departments.

But in general, the overwhelming majority of employees do receive regular wage increases each year they remain with Costco.

Can You Negotiate Raises at Costco?

Because hourly pay rates and raises are very structured, there is not much ability to negotiate your wage directly as an individual employee.

However, high performing workers can maximize raises by excelling during their performance reviews. Good supervisors may also be able to bump up raise amounts by a few cents for top employees.

If taking on an expanded role or seeking promotion, you may have more flexibility to negotiate a higher hourly pay rate or salary. But in general, Costco’s set raise schedules limit individual negotiation ability.

How Often Do Costco Raises Occur?

For hourly employees, raises are awarded very consistently based on hours worked:

  • Every 800 hours = $0.25 raise
  • Yearly merit raises after reaching top hourly rate

This works out to a raise approximately every 6 months for the average full-time worker during the first 2-4 years. After that, raises shift to once per year.

Managers and supervisors receive one annual merit raise review.

So in summary, raises are awarded on a very consistent and predictable schedule for most employees.

Does Costco Give Christmas Bonuses?

Yes, Costco provides an extra financial bonus to employees before Christmas. The winter holiday season is an important sales period, and the bonus recognizes employees’ hard work.

In 2021, the Christmas bonus provided:

  • $250 for part-time employees
  • $500 for full-time employees
  • An additional $3.50 per hour worked during Thanksgiving week

The holiday bonus is not technically considered a raise since it is a one-time end of year payment. But it provides a nice boost and incentive during the busy holiday sales season.


Costco provides some of the best compensation practices in retail, with consistent raises for hourly and salaried employees. Workers can expect a $0.25 per hour raise every 800 hours worked initially. After reaching the top of the pay scale, yearly merit raises take effect based on performance.

These raises reward employees for their hard work while keeping pay competitive. Combined with bonuses and solid benefits, it’s no surprise Costco earns very high marks for employee satisfaction and retention compared to other major retailers.

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