Retailer Costco Wholesale (COST) is increasing wages for most of its hourly U.S. store workers over the next three years. This decision follows pressure from the Teamsters union, which represents over 18,000 or less than 10% of Costco’s U.S. employees. The union has recently voted to go on a nationwide strike.
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As part of the new compensation plan, the hourly wage for most U.S. store workers will exceed $30. Starting in March, employees at the top of the pay scale will see their hourly rate increase by $1 to $30.20, with an additional $1 raise each of the following two years. Employees in lower-paying roles will receive a $0.50 per hour increase.
Costco and Union Engage in Negotiations
Despite the pay raise, negotiations between Costco and the union are ongoing, and an agreement is yet to be reached. The union has authorized a strike, and it could start as soon as February 1 if a fair contract is not agreed upon.
The Teamsters union is seeking higher wages, better benefits, and improved workplace policies for the employees. They argue that the proposed pay raise does not reflect Costco’s recent financial success. The strike could potentially affect Costco stores in several states, including New Jersey, New York, Virginia, and Washington.
Costco Faces Challenges over DEI Policies
Apart from the potential strike, Costco is also facing other challenges. The company is under fire from 19 Republican attorneys general for its diversity, equity, and inclusion (DEI) policies.
These attorneys general argue that Costco’s DEI practices are discriminatory and have asked the company to end these policies. Additionally, Costco’s shareholders recently rejected a proposal to evaluate the risks of maintaining these DEI practices.
What Is the Prediction for Costco Stock?
Turning to Wall Street, COST stock has a Moderate Buy consensus rating based on 16 Buys and eight Holds assigned in the last three months. At $1,058.58, the average Costco price target implies 8.13% upside potential. Shares of the company have gained 19.3% over the past six months.
