Costco bosses basked in praise for making union-friendly statements but have yet to commit to bargain in good faith.
By Jonah J. Lalas ,
February 18, 2024
During the 11 months that preceded Costco’s statement, over 500,000 workers in the United States participated in nearly 400 strikes.
KENA BETANCUR / VIEWPRESS / GETTY IMAGES
Last December, a group of 238 Costco workers in Norfolk, Virginia, voted to unionize and join Teamsters Local 822. The local declared the vote “the union’s first organizing victory at the wholesale retailer in two decades.” The voices of the pro-union workers who won this contested election — the vote was 111-92 — were quickly overshadowed, however, by a letter from Costco’s leadership that garnered much attention beyond the shop floor.
Outgoing Chief Executive Officer Craig Jelinek and incoming CEO President Ron Vachris stated in a letter addressed to all Costco employees, that “we’re disappointed by the result” of the union election. But, they added, “We’re not disappointed in our employees; we’re disappointed in ourselves as managers and leaders.” In their view, the employees voted for a union because management failed to satisfy its “core value of ‘taking care of our employees.’”
For an HR letter, it went viral. Much praise was lavished onto Jelinek and Vachris for their “graceful” and “classy” response. CNN described the letter as “surprising” and in “stark contrast” to “other companies, such as Starbucks, [which] have pushed back hard against union organizing.” Others praised Costco’s “emotional intelligence” and ability to look “inward.”
During the early 1990s, Costco competed with Price Club, another retailer that already had unionized workers. When Costco merged with Price Club in 1993, many of the union warehouses (mostly located in California) remained union. In the early to mid-2000s, the Teamsters expanded the number of union warehouses with some successful campaigns in New Jersey, New York, Maryland and Virginia. But it was always a challenge.
Last December, a group of 238 Costco workers in Norfolk, Virginia, voted to unionize and join Teamsters Local 822. The local declared the vote “the union’s first organizing victory at the wholesale retailer in two decades.” The voices of the pro-union workers who won this contested election — the vote was 111-92 — were quickly overshadowed, however, by a letter from Costco’s leadership that garnered much attention beyond the shop floor.
Outgoing Chief Executive Officer Craig Jelinek and incoming CEO President Ron Vachris stated in a letter addressed to all Costco employees, that “we’re disappointed by the result” of the union election. But, they added, “We’re not disappointed in our employees; we’re disappointed in ourselves as managers and leaders.” In their view, the employees voted for a union because management failed to satisfy its “core value of ‘taking care of our employees.’”
For an HR letter, it went viral. Much praise was lavished onto Jelinek and Vachris for their “graceful” and “classy” response. CNN described the letter as “surprising” and in “stark contrast” to “other companies, such as Starbucks, [which] have pushed back hard against union organizing.” Others praised Costco’s “emotional intelligence” and ability to look “inward.”
During the early 1990s, Costco competed with Price Club, another retailer that already had unionized workers. When Costco merged with Price Club in 1993, many of the union warehouses (mostly located in California) remained union. In the early to mid-2000s, the Teamsters expanded the number of union warehouses with some successful campaigns in New Jersey, New York, Maryland and Virginia. But it was always a challenge.
Workers at Elmwood Taco and Subs, an iconic local food shop, are continuing the wave of worker-led organizing.By Derek Seidman , TRUTHOUT November 27, 2023
In comparison to Walmart — the symbol of anti-union capitalism run amok — Costco has long represented itself as having provided employees with decent health care benefits, paid holidays and an above-minimum wage salary. In fact, in the year before the pandemic, the job site Indeed ranked Costco as the top-rated workplace when it came to compensation and benefits based on a survey of over 4,000 U.S. adults. Selling this work friendly image to workers may have been effective messaging it used to defeat previous organizing campaigns.
The credit showered upon Costco’s CEO and president, however, is overinflated; at best, it is premature.
To be sure, as of now, Costco has not followed the Starbucks playbook of stalling negotiations and retaliating against pro-union workers. As Sen. Bernie Sanders pointed out last year during his questioning of Starbucks then-CEO Howard Schultz at a Senate hearing, “What is outrageous to me is not only Starbucks’ anti-union activities and their willingness to break the law, it is their calculated and intentional efforts to stall, stall and stall.”
In fact, the National Labor Relations Board has issued over 100 complaints against Starbucks, arguing it violated the law by, for example, closing stores in retaliation for its employees engaging in union activities, and failing to bargain in good faith.
The Costco CEO’s and president’s response also contrasts with Schultz’s, which construed unionization as a personal attack on him. Writing in his memoir, Schultz stated that “[i]f they [Starbucks employees] had faith in me and my motives, they wouldn’t need a union.”
The response from Costco’s leaders, however, didn’t happen in a vacuum. During the 11 months that preceded Costco’s letter, over 500,000 workers in the United States participated in nearly 400 strikes. The results are impressive.
For instance, both Hollywood unions — the Writers Guild of America and SAG-AFTRA — secured historic gains from their nearly five-month strikes, which include increases in minimum compensation and unprecedented restrictions on the use of artificial intelligence. The United Auto Workers’ 46-day strike resulted in major gains from the Big Three automakers, including a minimum 33 percent wage increase over the life of the new collective bargaining agreement and a faster pathway for workers to reach the top of the pay scale. And after just a three-day strike, 75,000 health care workers at Kaiser Permanente secured a 21 percent increase over four years, and new provisions to address staffing shortages.
When viewed in this context, the significance of the unionization effort at Costco is less about CEO magnanimity than it is about the power of solidarity that workers exercised in 2023. In other words, after seeing a record number of work stoppages, Costco may have made a business calculation: The significant costs it may incur by declaring war on its unionized workers are simply not worth it.
The credit for the conciliatory gesture from Costco really should go not to the CEO and president, but to the 238 Norfolk Costco workers, the 18,000 Costco workers who won the first national contract with Costco in 2022, and the nearly half a million workers whose momentum contributed to the union’s victory. One union’s gains beget another’s — that is why we call it the “labor movement.”
Notably absent from Costco’s letter is a commitment to bargain in good faith with the Norfolk workers. Admittedly, it’s unclear if they will be governed by the terms and conditions of Costco’s national master agreement with the Teamsters. Barring such special circumstances, the true test of whether Costco’s CEO and president deserve the credit they’ve already received is yet to come. Will they ensure a fair contract for the newly unionized workers without delay, or will they follow Starbucks’s lead?
Over the last two years, 9,000 workers across 350 Starbucks stores have unionized, but only one store has held bargaining sessions over the past six months. Not one shop has won an actual union contract.
Such delays are not uncommon. According to one study, 63 percent of unions fail to reach a first contract within one year after the NLRB has certified them as the representative of the workers. That timing has legal significance. After one year of certification, the employees can vote to decertify (i.e. get rid of) the union. In fact, workers at over a dozen Starbucks stores have petitioned to decertify the union, some with the help of the right-leaning National Right to Work Legal Defense Foundation. The goal of stall tactics by employers like Starbucks is ultimately decertification by wearing down the workers. Indeed, when asked whether he could ever see “embracing the union,” Schultz, without hesitation, replied “no.”
Starbucks’s actions frustrate the purpose of collective bargaining: to allow workers to literally have a seat at the table where they can negotiate face to face with their bosses about working conditions. Last month, Costco cashier Fernando Pérez, one of the leaders of the Norfolk campaign, told Jacobin that the next step for them is contract negotiations. If Costco’s leaders are truly serious about their commitment to their employees, rather than writing about being disappointed in themselves, they need to pull up a chair, invite workers to the table and bargain.
Jonah J. Lalas is a former union organizer and currently a partner at the union-side labor law firm Rothner, Segall & Greenstone in Pasadena, California. He is a PD Soros Fellow and a Public Voices Fellow of The OpEd Project.
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