Costco and the Teamsters union have reached a tentative agreement on a new three-year contract, successfully avoiding a strike that could have disrupted operations at several Costco locations.
The announcement, made on Saturday, comes after intense negotiations as the previous contract expired at midnight Friday.
Details of the Tentative Agreement
Teamsters spokesman Matthew McQuaid confirmed that the agreement will now be presented to union members for approval.
While specific terms of the contract have not been disclosed, the Teamsters union had previously emphasized their demand for a contract that reflects Costco’s recent sales and profit growth.
Costco has not yet commented on the agreement.
Union Members Voted to Strike if No Agreement Was Reached
On January 20, Teamsters members at Costco voted overwhelmingly in favor of a strike if a new contract was not in place by the end of January.
The union represents 18,000 Costco workers across six states: California, Washington, Maryland, Virginia, New Jersey, and New York.
Despite the large number of employees represented, the labor agreement with the Teamsters applies to less than 10% of Costco’s 617 U.S. stores.
However, a strike could have affected supply chains and daily operations, given the vital roles union members play in Costco’s distribution and warehouse centers.
Costco’s Profit Growth a Key Factor in Negotiations
The Teamsters union’s demands were driven by Costco’s recent financial success. For the fiscal year ending September 1, Costco reported a 5% increase in revenue, reaching $254 billion, with net income of $7.36 billion—double the company’s 2019 profit.
Union members argued that such growth warranted better wages, benefits, and working conditions. Teamsters General President Sean O’Brien made it clear that the union was prepared to strike if Costco failed to meet their demands.
“Costco Teamsters deserve an industry-leading contract that reflects the company’s massive profits,” O’Brien said in a statement. “If Costco thinks they can exploit our members while raking in billions, we’ll shut them down.”
Next Steps: Member Approval
The tentative agreement must now be approved by Teamsters members. If ratified, the new contract will prevent any work stoppages and could set a precedent for future labor negotiations at the company.
With Costco continuing to grow its revenue and expand its store base, this contract could serve as a model for other agreements within the retail industry, especially as unions across various sectors seek to secure deals reflecting corporate profitability.
The agreement marks a win for both sides, avoiding a potentially costly strike while ensuring that Costco workers’ demands for better compensation were addressed.
As union members prepare to vote on the contract, the outcome could signal broader changes in how profitable companies negotiate with their workforce.