Thousands of Costco workers prepared to strike with a midnight deadline drawing closer Friday while the workers’ union and the company negotiated.
The Teamsters union represents 18,000 Costco workers in six states: California, Washington, Maryland, Virginia, New Jersey and New York.
It’s unclear if the strikes would close stores. Costco has 219,000 U.S. employees and 617 U.S. stores. The company said its labor agreement with the Teamsters applies to less than 10% of those stores.
According to UFCW Local 1167 in Bloomington, Costco’s has 27 Teamster-affiliated stores in Southern California. They include locations in Alhambra, Azusa, Burbank, Chino Hills, Coachella Valley, Corona, Fountain Valley, Fullerton, Yorba Linda, Inglewood, Irvine, Montebello, Moreno Valley, Northridge, Norwalk, Oxnard, Rancho Cucamonga, San Juan Capistrano, Santa Clarita and Signal Hill. San Diego County stores include Carlsbad, San Diego (Gateway Center) Chula Vista, Carmel Mountain, Santee, Vista and San Marcos.
On Jan. 20, Teamsters members at Costco voted overwhelmingly in favor of a strike if a new three-year contract agreement wasn’t reached by midnight Friday, when the current contract expires.
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The company on Friday said it is raising pay for most of its hourly US workers to more than $30.
Costco will raise the hourly wage for employees at the top of its pay scale over the next three years, Chief Executive Officer Ron Vachris wrote in a memo to staff this week. In March, these workers’ hourly rate will rise by $1 per hour to $30.20, with additional $1 increases coming in each of the next two years.
Workers at the bottom of the scale will get raises of 50 cents to $20, according to the memo. The changes apply to employees at non-union locations.
Costco, which is based in Issaquah, Washington, declined to comment
Union members say the Issaquah, Washington, company needs to make a contract offer that reflects its sales and profit growth. Costco’s revenue rose 5% to $254 billion in its most recent fiscal year, which ended Sept. 1. The company reported net income of $7.36 billion, double its profit in 2019.
“Costco has two choices: respect the workers who made them a success or face a national strike,” Teamsters General President Sean O’Brien said in a statement. “Costco Teamsters deserve an industry-leading contract that reflects the company’s massive profits. If Costco thinks they can exploit our members while raking in billions, we’ll shut them down.”
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Costco said in a statement that it has had a good relationship with the union for several decades and is negotiating in good faith.
“We have always treated our employees fairly and well throughout the history of our company,” Costco said.
US retailers have been boosting pay and benefits for hourly employees in recent years in an effort to find more workers and boost the reputation of an industry known for low pay, erratic schedules and monotonous tasks. A 2022 McKinsey study found that the quit rate for retail workers is more than 70% higher than in other US industries.
The Covid pandemic made the problem even worse, and while some of the pandemic-era labor shortages have improved, for many chains it’s still tough to hire and retain employees.
Costco’s hourly US employees typically start at an entry rate before getting periodic increases based on their time with the company until they hit the top of the scale. Because of the higher wages it pays, the retailer has a low rate of worker turnover and more than half of Costco’s hourly workers are in the top category. As of July, Costco’s starting wage was $19.50.
The Associated Press, Bloomberg and Samantha Gowen at the Southern California News Group contributed to this report.
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