Costco’s Union Problem Is Reaching a Boiling Point

By: Beth Moreton | Published: May 01, 2024

Costco might be known for giving its employees decent wages, but that hasn’t stopped it from having issues.

An increasing number of Costco employees are starting to unionize, putting pressure on the wholesaler to do something about this before the problem escalates.

Costco Is an Industry Leader With Wages

Costco has long been an industry leader in paying its employees’ wages.

The outside of a Costco Wholesale building. A white car is parked outside it.

Source: Grant Beirute/Unsplash

The Street reports that the warehouse club is known for treating its employees fairly, and no protests were needed to get the warehouse club to pay its employees a minimum of $15 an hour in 2019.

Costco Can Afford the Extra Pay

While many businesses were struggling during the COVID-19 pandemic, Costco was thriving.

The outside of a Costco Wholesale building.

Source: Marcus Reubenstein/Unsplash

The business increased the pay of many of its employees, including the front-line worker premium, which it could afford as sales and productivity were on the rise.

Costco Has a Good Retention Rate

Costco works on the basis that its employees are rewarded well for their service, and the results speak for themselves.

Source: Marcus Reubenstein/Unsplash

In a survey by Comparably, Costco is in the top 10% of similar-sized companies in terms of its ability to retain its employees. 62% of employees feel the company is doing everything it can to ensure they stay on at the company.

Costco Drivers Are the First to Join a Union

Despite Costco’s good scores, Supermarket News reports that Costco drivers in Sumner, Washington, might not be in the 62% of happy employees.

Source: @kirkland_forever/Instagram

They have voted to join Teamsters Local 174 and are the first workers at a Costco distribution center to unionize.

A Shift in Work Culture

Some reasons behind the unionization include unfair pay, retirement issues, and a lack of seniority and grievance procedures.

The outside of a Costco building. People are walking in and out of the store; some are pushing trollies, and others aren’t.

Source: Jacob Blanck/Wikimedia Commons

The benefits that once came with being a Costco employee no longer exist.

Unionization Started in December 2023

These aren’t the first Costco workers to unionize, as Costco workers in Norfolk, Virginia, went through this process in December 2023.

The outside of a Costco store. There is an entrance and exit, and people are outside the store.

Source: Koffermejia/Wikimedia Commons

The Stand reports that these Costco workers became the first to win union representation in over two decades.

Teamsters Approved a National Master Agreement

Before unionizing, Teamsters approved a national master agreement for Costco employees in October 2022, which will expire in January 2025.

A poster showcasing a rally for Costco workers who have unionized. There is an image of a Costco building and some text at the top of the poster that says, “Teamsters solidarity rally for Costco workers.”

Source: @tidewaterdsa/Instagram

The contract included a wage boost, higher employer pension contributions, higher semi-annual bonuses, a flexible attendance policy, and other workplace protections and improvements.

Costco’s CEO Was Disappointed

Upon hearing that Costco employees had chosen to unionize, Costco’s CEO expressed disappointment in their decision.

The Costco response to the union vote. The statement says, “To be honest, we’re disappointed by the result in Norfolk. We’re not disappointed in our employees; we’re disappointed in ourselves as managers and leaders. The fact that most Norfolk employees felt that they wanted or needed a union constitutes a failure on our part.”

Source: NewsNation/YouTube

However, Inc. reports this disappointment was not in their employees but in themselves. They admitted in a statement to their employees that management had failed them.

Costco CEO Makes More Money Than Employees

While it will always be expected that the CEO of a company will make more money than everyone else, Costco’s CEO earns a lot more.

Former Costco CEO Craig Jelinek standing behind a podium giving a talk.

Source: @_Smilewhileudie/X

However, the issue comes from former CEO Craig Jelinek earning a compensation package in 2023 of $16.8 million, which, according to Business Insider, is 336 times the average Costco employee’s annual salary.

Other Companies Tend to Respond Differently

Many noticed, including the Fast Company, how different the Costco CEO’s response to the news of their employees unionizing compared to other companies.

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For example, Starbucks created a website that was anti-union, violating federal law. Trader Joe’s was even found to have threatened its employees when there were talks of unionization.

Costco Still Remains on Top

Despite some of its employees unionizing, Costco’s response shows a caring and compassionate nature that employees at other companies don’t tend to see.

The outside entrance to a Costco building.

Source: Curlyrnd/Wikimedia Commons

Only time will tell whether Costco will take the necessary measures to treat its employees fairly and regain its pre-pandemic levels of satisfaction.