Unless an 11th-hour agreement is reached, around 18,000 Teamsters are scheduled to go on strike at 56 Costco stores across six states early Saturday, making it the biggest retail walkout in US history.
There have been no updates on the negotiations since the two parties’ talks resumed on Thursday. The union claimed that in addition to wage and benefit disputes, Costco has turned down proposals pertaining to paid family leave, seniority pay, mourning rules, sick leave, and surveillance protections.
According to business papers, 8% of Costco’s 219,000 employees throughout 616 US locations are Teamsters members. However, for the mostly nonunion industry, a strike by that many workers would be noteworthy. According to data from the Labor Department, fewer than 5% of retail employees are unionized. The grocery store industry employs the majority of those unionized retail workers.
California, Maryland, New Jersey, New York, Virginia, and Washington are the sites of the unionized stores, which neither the union nor the firm have disclosed. In a sign that it plans to deploy management and nonunion employees to keep stores open, Costco announced on Friday that all of its locations will be open for business this weekend, even if unionized workers do not show up for work due to a strike.
Although the Teamsters only represent employees at a small percentage of Costco locations countrywide, the union is willing to erect picket lines at an unspecified number of nonunion Costco locations, even if those employees continue to work there. A move like that might put the corporation under a lot more financial strain. The union may call on more than 1 million US members for those additional picket lines, even though there are only 18,000 Teamsters at Costco.
History of above-market wages
When compared to other retail companies, Costco is known for offering comparatively good compensation and perks. According to its yearly corporate filing, we don’t want to reduce their pay and benefits. Instead, we think that keeping pay levels above the industry norm is necessary to meet our longer-term goals of lowering employee turnover, raising productivity, and improving employee happiness.
The then-outgoing and incoming Costco CEOs, Craig Jelinek and Ron Vachris, sent a letter to employees in late 2023 after they voted to join the Teamsters at a Costco store in Roanoke, Virginia.
The letter said, “We’re disappointed in the results in Norfolk.” Our disappointment is with ourselves as managers and leaders, not with our staff. We failed because the vast majority of Norfolk workers believed that they needed or want a union.
It was rather an unusual letter. Jane Jacobs, a lawyer at Tarter Krinsky & Drogin who usually defends employers in labor issues, said CNN, “I’ve never seen management take that position.”
The Teamsters have argued for a better pay and benefits package by citing Costco’s impressive financial accomplishments. In the most recent fiscal year, Costco recorded record yearly net profits of $7.4 billion, up 17% from the previous year and almost double what it made in 2019 before the Covid-19 pandemic. Members of the union carried banners that said, “Pro worker?” during a recent union rally outside Costco’s annual meeting. Show that big profits translate into record contracts.
In a statement earlier this month, Teamsters President Sean O. Brien stated that Costco has two options: either honor the employees who helped make them successful or risk a nationwide strike. We will shut down Costco if they believe they can take advantage of our members and make billions of dollars.
There doesn’t seem to be a significant difference in the overall cost between their bargaining positions, according to Jacobs, despite the disagreements at the negotiating table. According to a Reuters article, Costco recently sent a letter to all nonunion store employees informing them that they would be increasing their compensation by $1 per hour this year to $30.20 and by an additional $1 per hour over the next two years. The starting salary would increase to $20, an increase of 50 cents per hour.
According to Jacobs, a smart tactic for any company is to eliminate the incentive for nonunion workers to join a union by offering them the same compensation and benefits as unionized workers. However, she stated that the Teamsters might go on strike in order to maintain their present political edge.
According to Jacobs, O Brien has become more intimate with President Donald Trump than many other labor leaders. He did not support Democratic contender Kamala Harris during his speech at the Republican National Convention.
Costco, meanwhile, has not backed down from its diversity, equity, and inclusion (DEI) initiatives, which have been the target of Trump’s criticism in the first few days of the new administration. If the Teamsters go on strike at Costco, Jacobs said she could see Trump openly supporting them in order to put pressure on the business.
“This union is set up to go on strike, just like any other union,” she stated. We do know that this government will reward its supporters while punishing its detractors.
Although a strike at just 8% of Costco locations is unlikely to result in a major financial loss for the company, an agreement that is viewed as a victory for the union may encourage organizing attempts at other locations around the network, according to Michael Baker, retail analyst at DA Davidson.
A walkout would probably not last more than a week, Katherine Black, a partner in the management consulting firm Kearney’s food, pharmaceuticals, and mass market retail area, said CNN.
She stated that strikes lasting longer than a few days are extremely uncommon in this industry. The longest I’m aware of was an 11-day event at Stop & Shop in 2019.
The Teamsters’ five-day walkout at Amazon last year concluded the day after Christmas. However, in contrast to Costco, Amazon has refused to engage in negotiations, much less accept the provisions of a contract, and does not acknowledge the union as representing any of its employees. Many of the strikers are drivers for third-party delivery businesses with exclusive contracts with Amazon, but the online store doesn’t even acknowledge that they are its employees.
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