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Starbucks to boost US starting wage to $15 per hour, targeting $17 average by 2022

Starbucks (SBUX) on Wednesday became the latest company to hike pay for its workers, announcing plans to increase all U.S. hourly wages to at least $15 per an hour, up from the current $12 rate, by the summer of 2022. Yahoo Fiannce's Brooke DiPalma shares the details with Seana Smith.

Video transcript

SEANA SMITH: Want to get to some breaking news. Starbucks is raising its minimum wage for all employees, hiking it to $15 an hour. Brooke DiPalma has more on this for us. Brooke.

BROOKE DIPALMA: Seana, that's right. Certainly a game changer or perhaps even happening in the fast-food industry. So now all hourly wage employees or what Starbucks likes to call partners will have a minimum wage of $15 an hour. Now that moves the average wage of Starbucks employees-- or baristas they like to call them as well-- up to $17 an hour and [? influxes ?] that range of $15 to $23. Now, that's up from the average hourly wage of $14 per an hour and a minimum of $12 an hour range.

Now, in order to raise the floor, they must also raise the ceiling, and so what this means for employees who have two-plus years is a 5% increase, and for employees that have five or more years at Starbucks, they will get a 10% increase.

Now, I do want to note in an internal memo that employees-- or partners as I said Starbucks likes to call them-- received today from North America's executive vice president. Williams noted, "Our wage increases from December 2020 and to the summer of 2022"-- which is when they're going in [INAUDIBLE]-- will mean at least a 17% increase for partners and at least 20% for tenured partners in two years." She goes on to say, "I share all of this only to reaffirm our belief that investing in our partners is not a cost. It's an opportunity, and we intend to let our shareholders and peers know the same."

Now, this is the third investment over the last 24 months that Starbucks has made in order to raise the minimum wage for its employees. But I do want to note that other companies are doing the exact same thing. Here we have Target, $15 minimum wage. Disney World, $15. Costco, $16. Ben and Jerry's going along with their local Vermont minimum wage of $18.13. McDonald's, $13. Chipotle, we just heard from them $15 earlier this year.

All note that as of today, October 27, the federal minimum wage still lies at $7.25 per an hour. So lots of work to do all across the board, Seana.