Business

How Costco keeps the peace with its employees


Stable membership fees and cost savings have helped propel Costco (PRICE) to record membership renewal rates this year, partly due to inflation concerns.

But the Issaquah, Washington-based company has quietly emerged as a leader in another key issue that will dominate retail in 2022 — industrial relations and employee success. unionize.

Meanwhile, rival retailers. struggled to address employees’ demands for higher wages and better benefits while resisting efforts to organize. But Costco, Yahoo Finance’s Company of the Year 2022, has managed to set itself apart from the crowd, building a reputation as one of the friendliest places to work in retail.

According to data from Glassdoor, Costco employees gave the company a 4 out of 5 rating, well ahead of competitors like Sam’s Club and Target (TGT). Longtime CEO Craig Jelinek received an approval rate of 85% from his employees, passing ((AMZN) Andy Jassy and Walmart’s (WMT) Doug McMillon.

“They have offered higher starting salaries, more full-time jobs, more benefits for employees,” said William Brucher, assistant professor of labor studies and employment relations at the University of California. employees and, in general, probably better working conditions.” Rutgers University. “Much of that has to do with Costco’s business model, in that it makes most of its profits from membership.”

That $60 base annual membership fee has taken some of the pressure off Costco, according to Brucher, as a “low-budget employer,” who said the discount retailer has consistently outperformed its competitors. about the number of full-time employees they hire. Costco cashiers make an average of $32,000 a year. Although only one-fifth of the hourly workers at Costco are unionized, they earn wages largely comparable to their non-union workforce.

In addition, employees who work 180 days in a row with more than 23 hours a week are eligible for Costco’s health benefits program, which includes medical care along with dental and vision coverage for a dollar amount. paying low, according to Glassdoor.

“This is aimed at preventing consolidation in union-free warehouses and so far that goal,” said Professor Ruth Milkman, Chair of Labor Studies at the CUNY School of Urban and Labor Studies. achieved. “Lower sales (typically when wages are higher) than companies like Walmart; productivity is also higher – and perhaps morale. So Costco has developed a workable business model, and clearly a superior one for hourly employees.”

That’s in stark contrast to the growing discontent among hourly employees at chains like Starbucks (SBUX) and Amazon. For example, warehouse workers at Amazon’s Staten Island, New York facility helped organization of the company’s first American labor union this spring, but workers say the company has so far refused to come to the bargaining table or recognize the group as the Amazon Labor Union. While more than 300 Starbucks stores in nearly 30 states have held union elections, this coffee chain has continuously push back resist employee efforts, send anti-union messages to employees, and isolate workers by announcing wage and benefit increases for non-union employees.

Costco has historically been easier on labor groups, partly out of necessity. When Costco merged with then-rival Price Club in 1993, the company inherited several stores that had been merged for Teamsters.

“We always want to make sure that our employees are at the top, and we believe they are at the top,” Jelinek said in an interview with Yahoo Finance. “Of course, that starting salary is narrow for everyone. But we also want to pay for longevity. We don’t want to turn people. We want to keep our employees.”

But a tight labor market is beginning to erode Costco’s leadership, as rival retailers raise wages and compensation themselves to ensure worker safety. Amazon, Walmart and Sam’s Club now offer higher wages than Costco to cashiers and sales associates, putting pressure on the company.

Clackamas, OR, USA - June 8, 2021: Entrance to the Costco Wholesale Store in Clackamas, Oregon.

Clackamas, OR, USA – June 8, 2021: Entrance to the Costco Wholesale Store in Clackamas, Oregon.

This summer, about 18,000 Costco workers threatened to go on strike, following contentious negotiations with Teamsters. accuse the company about trying to be “profitable wholesalers”. The dispute was resolved two months later, with Teamsters members overwhelmingly approving the first national contract at Costco. The company has agreed to significant salary improvements, increased pension contributions and higher semiannual bonuses with a more flexible attendance policy.

“Costco is not at war with Teamsters. Brucher said they were able to go back and agree to an offer that was better than what they originally wanted. “They are still owners, they still have different interests. But they were able to negotiate something and that’s very different from what Amazon or Target have done in the past.”

More news on Yahoo’s Financial Company of the Year 2022:

Akiko Fujita is a presenter and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita

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