Costco’s surprising response to workers’ union win: It’s not you, it’s us
Costco had an interesting response to the workers' union.
New York (CNN) — In December, Costco workers in Norfolk, Virginia voted to unionize in what they said was a bid to improve working conditions at the wholesale retail chain.
Most companies tend to respond aggressively to organizing efforts, but Costco delivered a surprising response to the union win.
The group of 238 workers in Norfolk are set to join 18,000 Teamsters at Costco nationwide, according to the union. Specially, the workers said their hope in becoming Teamsters is to have a voice asking for higher wages, pension contributions, bonuses and more flexible attendance policy, among other workplace improvements.
While many other companies have adopted an antagonistic approach to their unionizing workers, Costco’s former CEO Craig Jelinek and current CEO Ron Vachris tag teamed on a memo sent to employees in late December in which they said they were “not disappointed in our employees; we’re disappointed in ourselves as managers and leaders.”
“The fact that a majority of Norfolk employees felt that they wanted or needed a union constitutes a failure on our part,” they wrote in a memo dated Dec. 29, and sent to all US employees. CNN obtained a copy of the memo.
Jelinek stepped down as CEO on Jan. 1 after being in that role since 2012. Vachris is a 40-year Costco veteran who began working at the retailer as a forklift driver.
The Teamsters Local 822 said it was the union’s first organizing victory at Costco in two decades.
The longtime lag in such efforts, particularly at Costco, might be because the company is often touted as a worker-friendly employer.
While its discount shoppers love its low-priced everyday offering such as the popular $4.99 rotisserie chicken and the $1.50 hot dogs among other pantry staples such as cartons of canned beans and multipacks of toilet paper, Costco has also been applauded over the years for its worker-friendly policies, such as higher starting hourly wage and affordable healthcare benefits, which kick in after 180 days of employment for new hires.
The retailer is touted as having among the lowest turnover rates in the retailing industry.
In stark contract to Costco’s response, other companies such as Starbucks have pushed back hard against union organizing.
Nearly two years ago, the first Starbucks location voted to unionize, setting off a national campaign to organize. In that period, Starbucks has been fighting the effort, in some cases acting illegally, according to preliminary findings from the National Labor Relations Board. Starbucks is currently facing hundreds of unfair labor practice charges.
Elsewhere, the rise of organizing activity has prompted a range of responses from top tech companies. Amazon has so far refused to recognize its first union and engage in negotiations after a landmark union win last spring and continues to fight its legitimacy.
But another tech giant, Microsoft, has publicly embraced its first union and said last January that it looked “forward to engaging in good faith negotiations as we work towards a collective bargaining agreement.”
Unionized activity in retailing is not very common, said Burt Flickinger, retail industry analyst and managing director of retail consultancy Strategic Resource Group. “It’s between 6% to 10%,” he said, adding that that compares with as much as 20% to 40% in the public sector.
At the same time, he said the Costco workers’ win in Norfolk could become the harbinger of Teamsters and UFCW unions’ push to organize more of retail.
“Their number one target by far is Amazon followed by Walmart,” Flickinger said.
CNN’s Danielle Wiener-Bronner and Catherine Thorbecke contributed to this story.
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