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Costco Wholesale Corporation

costco.jpg By providing wages and benefits above industry standards, this retail membership warehouse chain demonstrates that treating employees well is good for business.

In Partnership With: International Brotherhood of Teamsters (IBT)

Treating employees well is good for business

At a Glance

Costco Wholesale operates a chain of international membership warehouses.  Costco is only open to individual and business members.

Headquarters
Issaquah,WA

Website
www.costco.com

Industry
Retail & Wholesale

Union Employees
13,600 hourly employees in CA,MD, NJ,NY, and VA

Total Employees
83,600 (U.S.)

Annual Revenues
$48 billion

Outlets
327 U.S. warehouses

Customers

44 million members

Warehouse retailer Costco has recently received an outpouring of favorable press from journalists choosing to contrast the company with retail giant Wal-Mart. Casting Costco as “the anti-Wal-Mart,” business writers make note of high wages, extensive benefits, the presence of unions, and relatively low executive pay at the company. The overall picture is one of an employer that values its workers and reaps the benefits through a loyal, productive, and efficient cadre of employees.

International Brotherhood of Teamsters members working at Costco have negotiated wage and benefits packages that are among the best in the retail industry.  According to the Labor Research Association, Costco employees who belong to unions enjoy seniority-based promotions, a grievance procedure, and minimum hours for part-time workers.

The excellent compensation of Costco’s union-represented employees is a testament to the company’s belief that treating employees well is good for business. A 2004 Business Week study confirmed the wisdom of this approach. Findings indicated that Costco employees sell 50 percent more per square foot of sales space than Wal-Mart’s rival warehouse chain Sam’s Club. They bring in profits that are about 25 percent higher than those at Sam’s Club, despite the fact that Costco’s hourly employees average $16 per hour and employees pay only eight percent of their health insurance costs.

Costco’s corporate philosophy that workers should share in the profits they generate is the key to its high rate of employee retention—a cornerstone of productivity. Chief Executive Officer Jim Sinegal’s $350,000 salary, plus bonuses, is 10 times that earned by the typical Costco employee—a far lower income gap than that between CEOs and employees at comparable businesses.

In an interview with The New York Times, Sinegal defended his company’s practices against Wall Street criticism that shareholders could earn more if Costco lowered its compensation and benefits package to match that of other retailers.  Sinegal asserted his belief that customers like shopping at a store where they know workers are treated fairly and paid a living wage. His comments are bolstered by Costco’s share price, which is steadily increasing.

Selection Criteria

> Providing sustainable wages or progressive increases and worker-friendly benefits