Close to 20,000 Costco Wholesale employees are poised to go on strike at the end of the month.
The contract between the company and the union representing the workers, Costco Teamsters, expires Jan. 31. If an agreement isn’t reached by then, more than 18,000 union members across six states are prepared to go on strike, Costco Teamsters said.
The strike authorization vote passed with an 85% margin, the union said.
Costco Teamsters is asking the company to improve wages and benefits such as pensions and job security. A spokesman for the union declined to say how much of a wage increase workers were asking the company for, noting that negotiations were continuing and “fluid.”
Costco’s average hourly rate was approximately $31 an hour at the close of the fiscal year ended Sept. 1, according to the company’s latest annual 10-k filing with the Securities and Exchange Commission. That is some $64,000 a year for full-time employees, based on back-of-the-envelope calculations by Barron’s. Wages for entry-level jobs start at $19.50 an hour in the U.S. and Canada.
Costco didn’t immediately respond to a request for comment. But in its 10-K published in early October, the company said its philosophy was “not to seek to minimize their wages and benefits.” Instead, Costco said it believes in maintaining compensation levels that are better than the industry average to help the company achieve longer-term objectives of reducing employee turnover, increasing productivity, and enhancing employee satisfaction. Costco’s employee retention rate was about 93% in the U.S. and Canada for employees who stay with the company for at least a year.
Walmart’s starting wage is $14, while Target’s is $15, although it can be as high as $24 depending on the market.
Investors didn’t seem concerned, however. Costco stock was up 0.6% to $949.12 in mid-afternoon trading Tuesday, while the S&P 500 was 0.8% higher. For one, the 18,000 employees represent about 8% of Costco’s U.S. employee base, according to the 10-K filing, meaning a relatively small number of the company’s total operations would be affected. The market may also be betting that even if negotiations break down, it may not lead to a drawn-out strike.
“I would argue that there’s a long line-up of employees, or potential employees, who would die for a Costco job,” said Karen Short, an analyst at Melius Research. Costco’s pay scales are “absolutely best-in-class in retail,” she added, while benefits — such as health plans, flexible scheduling, and added perks such as employee discounts — are “significantly better than most.”
“They consider their employees as their best asset, so I’m not saying they [Costco] would be dismissive of this, but I just don’t know the particulars of their demands and whether or not they’re realistic,” Short said.
The Costco union argues that current wages and benefits don’t reflect the company’s “enormous success” over the past couple of years and are well below executive wages. Costco raked in nearly $250 billion in annual revenue in 2024 and $7.4 billion in net income.
“Costco claims to treat workers better than the competition, but right now, it’s failing to live up to that reputation,” said Tom Erickson, director of the Teamsters warehouse division.
In fiscal 2024, CEO Ron Vachris’ take-home pay was a little over $12.2 million, while CFO Gary Millerchip was paid about $14.3 million, per the company’s 2024 proxy statement. Costco calculates that in 2024, Vachris made 262 times more than the median worker, including both full- and part-time staff. His pay was 192 times what the median full-time employee receives. According to the Economic Policy Institute, the average CEO of the 350 largest public companies was paid 290 times more than the typical worker.