Author: Rich Duprey | March 20, 2018
Why settle for less?
The federal minimum wage is $7.25 per hour, and many restaurant and retail workers continue to protest to more than double it to $15 per hour. However, if successful, they could hasten the end of their jobs as companies switch to automation to save money.
If employees used that energy to do a little bit of searching instead, they would find there are plenty of jobs that not only pay well above the minimum wage, but some even pay more than $15 per hour. Here are 20 retailers and restaurant chains that pay at least $10 per hour.
1. Shake Shack
The upscale fast-casual burger joint Shake Shack (NYSE: SHAK) has long been a proponent of paying its workers above the minimum wage. While it has come at a cost to profits for the restaurant and led it to raise prices on its hamburgers as a result, job data website Glassdoor says the average team member at Shake Shack makes $10.89 per hour, and in some locations like its New York City restaurants, the starting pay is $12.50 per hour, or $0.50 more than the city's mandated minimum wage.
Some 90% of Costco (Nasdaq: COST) employees are hourly wage workers, but the big box warehouse retailer has always paid its employees well above the minimum wage. Currently the average pay is $22.50 per hour, a dramatically higher level than most other employers. It's able to pay up because it caters to a more well-to-do clientele who has an average annual income of $85,000.
3. CVS Health
One of the benefits of President Trump's tax reform package is that many employers are passing the gains they're realizing from the law change onto their employees. Pharmacy chain CVS Health (NYSE: CVS) is one of those that said it will use some of that extra cash to raise the starting hourly pay of workers to $11 per hour, a 22% increase from the $9 per hour it currently pays. It also raised its paid parental leave policy to four weeks at 100% compensation for all new parents while promising not to increase health insurance premiums for its workers for the coming year.
Retail king Walmart (NYSE: WMT) is another company that is using the tax reform law as a reason to raise the starting pay at its stores to $11 per hour, with an eye towards raising it to $15 by 2020. But that fails to recognize that although the retailer, which is often excoriated by unions for its worker pay, already pays its part-time employees $10.58 per hour on average while the average hourly pay for full-time workers is $13.38. While that may seem a lot less compared with Costco, the retail giant is orders of magnitude larger than its rival, and its customers skew towards the low- to middle-income level.
Target (NYSE: TGT) also boosted its starting pay to $11 per hour, and like Walmart, says that it will be raising it to $15 per hour by the end of 2020. But unlike its retail rival and CVS, Target actually announced the move last September and applied it even to the seasonal workers it was hiring for the holiday shopping season. It recently announced it would be raising the starting pay to $12 this spring. Yet the retailer has always tried to pay more than the competition, and its average wage rate before the pay hike was $10.14 per hour.
Four years ago Gap (NYSE: GPS) surprised the retail world by announcing it was raising the minimum hourly wage for all of its sales associates to $10. According to job listing site Indeed.com, the average hourly pay for employees of Gap starts at $11.01 per hour for a customer service representative, noting that 71% of the retailers employees think they're fairly paid.
It was, of course, Amazon.com (Nasdaq: AMZN) that sent the retail world reeling as it made price and convenience synonymous with its experience. Despite it being an online platform, it's still run by people behind the scenes and the average hourly wage of one of its warehouse workers is $12.42 per hour, and it says it typically pays 30% more than traditional retail jobs, telling USA Today, "We’ve offered competitive wages since our company was founded in 1995."
8. Whole Foods
Prior to its acquisition by Amazon, organic grocer Whole Foods Market reveled in its image as an exemplary workplace where no executive was allowed to earn more than 19 times the salary of the average worker's salary. That was about the ratio back in the 1950s according to Bloomberg News; today it's 300 times. However, Whole Foods employees remain very well paid, with wages ranging between $11.70 per hour and $17.91 per hour, and the average settling at $14.48, according to PayScale, an employee compensation website.
Like Shake Shack, another fast-casual hamburger restaurant that pays its employees well is In-n-Out, which USA Today pegs at $13 per hour. What's more remarkable is that employees can work their way up the job ladder and become store managers and earn $160,000 a year, all without a college degree. Indeed.com says hourly pay ranges from approximately $11.14 per hour for a server to $17.55 per hour for third key manager.
Aldi might be a deep discount supermarket chain, but as it aggressively spreads its footprint across the country, it is finding it advantageous to pay up for workers. Aldi employees start at $12.25 per hour, and have a chance to earn an additional $4.75 per hour when they're performing managerial duties. The supermarket chain is looking to invest $3.4 billion to expand its U.S. store base to 2,500 by 2022, which would make it the third-largest supermarket chain behind Walmart and Kroger.
11. Trader Joe's
Aldi's pay scale would help explain why Trader Joe's also pays its employees well. Likely unbeknownst to many, the supermarket chain is owned by the same company that owns Aldi. PayScale says hourly wage rates at Trader Joe's range from an average of $11.08 to $23.68 an hour, with Indeed.com putting the position of a simple pallet jack operator at $10.20 per hour. Like Aldi, it's able to pay these higher rates because it relies primarily on private label goods rather than brand names for many, if not most of the items it sells in its stores.
Many people might look on McDonald's (NYSE: MCD) as a simple fast-food restaurant, serving billions of hamburgers every year, but not only has it raised the quality of the food it offers as well as caring about the animals that go into preparing a meal, but it is taking care of its employees too. The burger palace was one of the first fast-food chains to commit to raising hourly wages and announced back in 2015 it would be increasing starting pay to $10 per hour at its company-owned restaurants. Various job listing sites today, though, show average hourly rates below that threshold, and that's likely because most McDonald's employees work at one of its tens of thousands of franchised restaurants, which are not required to follow the lead of headquarters. Still Indeed.com shows the average crew member earning $9.47 per hour, which is closing in on that threshold.
Fast-fashion leader H&M Hennes & Mauritz (Nasdaqoth: HNNMY) turned the apparel world around by popularizing low-cost clothes that were on-trend with designs taken from the runways and put onto store racks within a matter of weeks. While it hasn't blazed quite the same trail in employee wages, H&M has typically paid above the retail industry's averages, with full-time employees earning $12.03 per hour and part-time workers earning $10.29 per hour. Indeed.com says the average is about $11.28 per hour.
Home improvement big box store Lowe's (NYSE: LOW) has said in the past that its pay rates for hourly employees are typically higher than the marketplace, which helps it avoid the wage pressures others might feel. According to PayScale, that rate is around $11.38 per hour for the typical sales associate. While the Trump tax reform plan didn't induce the DIY chain to raise wages, it did allow them to give employees a $1,000 bonus along with new benefits like parental leave.
15. Home Depot
Like its rival, Home Depot (NYSE: HD) also didn't raise the hourly wage rate for employees after tax reform was signed into law, but did give them bonuses up to $1,000 based on length of service with the company. Glassdoor puts the average pay rate at Big Orange at a similar range as Lowe's, with cashiers earning around $10 per hour and sales associates earning $11 per hour.
If there's one thing upscale department store chain Nordstrom (NYSE: JWN) is known for it's customer service. It is the gold standard to which almost every other retailer strives to imitate. It also does well by its employees, paying them on average $14.96 per hour. Of course the chain is struggling with sales like many in the industry, and the Nordstrom family is trying to take the chain private to deal with the issue out of the glare of the public spotlight, which, if ultimately successful, likely won't change how it deals with its employees or the public.
17. Best Buy
There was a time when electronics superstore Best Buy (NYSE: BBY) was seen as the next casualty of Amazon.com, as people used Best Buy's stores to test out equipment before turning around and buying the items online. It introduced a risky strategy to match online pricing and managed to not only forestall bankruptcy, but to successfully rise in competitive standing. It's also become the third largest appliance retailer in the process, behind Lowe's and Home Depot, after leapfrogging over Sears Holdings. Yet for all its difficulties, it pays it employees well above the minimum wage, with the average rate being $11.38 per hour.
18. Big Lots
Just because Big Lots (NYSE: BIG) deals with closeout items doesn't mean it pays discounted wages to its employees. It might not be at the high-end of the scale, but the retailer's $11.17 per hour rate makes it competitive with other retailers, and also puts it ahead of other deep discount retailers like Dollar Tree and Dollar General, which pay somewhat less than $10 per hour, albeit still above the minimum wage threshold.
You're not just pouring a cup of coffee at Starbucks (Nasdaq: SBUX), you're creating a unique beverage with every order, and the leading coffeehouse is paying $10 an hour on average, according to Glassdoor, for the opportunity to get people going. With over 16,800 stores in the Americas, Starbucks has hundreds of thousands of employees, making them one of the most significant jobs providers in the country.
Apple (Nasdaq: AAPL) is the most valuable company, closing in on a trillion-dollar valuation, and has one of the most recognizable brands in the world. That sort of preeminent position almost necessitates that it pay its employees well, which it does. According to PayScale, customer service advisors earn $16.97 per hour, though a technical service specialist can see that rise to $17.90 per hour. An Apple Genius, however, can earn more than $20 per hour.
Closing the gap
The fact remains many minimum wage jobs aren't worth paying $10 per hour, let alone the $15 many activists demand. The positions that garner the $7.25 rate are low-skill jobs that are meant for entry level workers, not a means for sustaining a family. Minimum wage jobs were intended for workers just starting out, and were designed to teach the skills necessary to climb the ladder to higher paying positions.
Many retailers and restaurants are already operating at razor thin profit margins and arbitrarily doubling the minimum wage will be devastating to them and their employees. And pay alone isn't the only thing workers look for in a job; benefits also rank highly. Fortunately for those willing to invest time in looking, there are plenty of companies that pay above the minimum wage, sometimes even well above it.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, and Starbucks. The Motley Fool is short shares of Shake Shack and has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, short May 2018 $175 calls on Home Depot, and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Costco Wholesale, CVS Health, Home Depot, Lowe's, and Nordstrom. The Motley Fool has a disclosure policy.