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

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.