Taking a closer look at Costco

The latest discussions in Toledo has revolved around the plans for a Costco to come to the Westgate Shopping Center. Alot of misinformation has been stated as to the starting wages, benefits and union information on Costco.

While I support the idea of new stores in an area, I have some concerns. First is the issue of the job numbers touted. First it was 180 "new" jobs, now it is being stated as "close to 200" because that of course sounds better. These do not appear to take into consideration jobs that will be lost from many of the current smaller stores that will not be invited to return to Westgate once construction is completed. While some of the stores will move to secondary locations, not every job that is currently at Westgate will be retained. So far no one seems to have a clear picture as to that issue. Second is the wages offered. The Toledo Blade and several other media sources have stated these jobs are $17 to $18 dollar an hour jobs with a possible $35,000 a year salary (that would be close to $17.00 an hour). However that is not the starting wage at Costco. The starting wage is $10.00 or 4 cents more an hour than Sam's club for a starting wage, $20,800 a year. After between three to four years of employment depending on various factors, a person could make between $35,000 to $40,000 a year at Costco. Next the union theme, only 18% of all Costco stores are union. Realistically with a starting wage of $10.00 that is a good thing. The 18% most of which are Teamsters enables the union contract that they negotiate to be passed on to all other non-union employees. The majority of the Union jobs came from the merger with Price Club over 12 years ago so that demonstrates the union aspect of Costco has not grown.

A positive for Costco is they do have a higher employee retention rate, around 25% compared to the industry standard of 65% and Wal-mart's 50%. That saves Costco between $2,000 to $3,000 in employee training costs per employee retained.

Costco currently pays about 92% of employee insurance costs, 84% of their employees have health insurance.

However Costco is not a garden of eden, it depends on the store management as in most retail locations. Costco's that are not union (of which the majority are not) have had issues with complaints of bonuses being unfairly handed out as well as unreasonable terminations. I don't believe given the over all turnover rate that is a huge issue but one worth pointing out. Costco has also not fared well in discrimination cases, especially sexual harrassment cases.

In August, an assistant warehouse manager in Colorado filed a sex discrimination lawsuit against Costco claiming that she and other women have been denied promotions. Costco has no job posting or application process for manager and assistant manager jobs, which acts as "an invisible glass ceiling" for women, says Brad Seligman, executive director of the Impact Fund, the nonprofit group representing the plaintiff. Only 16.2% of all managers and 17% of all assistant managers are women.

"They’re not union-friendly," says Rome Aloise, a union representative for the Teamsters, which represents Costco’s union workers. "They’re just as bad as any other employer trying to prevent people from joining the union."

So while as I said, new jobs are good, I think we should look at this realistically and expect honesty from not only those who are promoting Costco but those who oppose it. I also think it's important if we are going to hear alot of talk about a "living wage" people understand what that is. The federal poverty level in 2001 was $17,650 for a family of four, equating to about $8.50 an hour for a full-time, year-round worker. The current federally mandated minimum wage is $5.15 an hour. Nineteen point 4% of Toledoans are currently living under the federal poverty level as stated in 2002, 36% of all children in Toledo are living under the federal poverty level.

Toledo does need more employers, but Toledo also has to balance how much they can offer as far as tax abatements and other financial incentives. $800,000.00 is the figure being stated but others claim estimates of tax-dollars for the project range between $2.1 and $2.5 million. So it's safe to say given these things almost always end up costing more that it will be close to two years after Costco begins operation before Toledo taxpayers see a "profit". Is it worth it? Yes, but some honesty would be refreshing....

I'd also like to thank Bob Frantz for taking my phone call tonight and look forward to hearing Liz Holland on his show tomorrow night.

Sources used for this: Sexual Discrimination suit, Welcome to the Club, Costco's Dilemma, Universal Living Wage, Living Wage Campaign, Toledo Blade and Toledo Talk