Why $20.89 Explains Obama’s Love for Costco
(LANHAM, Md.) -- President Obama’s love for Costco runs deep. If he had his way, he probably might have grabbed a box of 500 golf balls, an 80-inch TV, and a $4.99 bag of organic tortillas chips for his Super Bowl party during a stop in the Lanham, Md., store Wednesday. But Obama didn’t really come for the goodies. He came for this reason: $20.89. That’s how much Costco says the average worker in its stores makes per hour, before overtime and benefits.
Full-time, that’s nearly $44,000 a year.
With Obama pushing a post-State of the Union focus on raising the minimum wage to $10.10 an hour, Costco is his poster child.
The company’s employees are happy, Obama says. They make, relatively speaking, a lot of money in the retail sector. And Costco has been wildly profitable despite its generosity to its workers. It is second only to Wal-Mart, as the second largest retailer in the country.
“Profitable companies like Costco view higher wages as a smarter way to boost productivity and reduce turnover,” Obama said. “When I was walking around taking a tour of the produce section, the bakery, you could tell that people feel good about their job, feel good about their company.”
When Costco opened its first store in Washington, D.C., in 2012, none other than Vice President Joe Biden stopped by, flashing his Costco membership card.
Unlike other giant retailers such as Wal-Mart who have tried to shake the bad public perception that they pay employees as little as possible, Costco touts its generosity to its workers and the relative frugality of its executives.
Costco founder and former CEO Jim Sinegal earned a $350,000 salary compared to Wal-Mart’s CEO Michael Duke, whose salary was $1.3 million. The company’s new CEO Craig Jelinek makes more— $650,000, since taking over in 2012.
But it also doesn’t hurt that Costco’s founder is a loud and proud Obama supporter.
Sinegal, who on Wednesday Obama called a “great friend,” was an early endorser of a higher minimum wage last year. And in 2012, he hosted a fundraiser for Obama’s re-election campaign in his Washington State home and opened his deep pockets for the president’s allies. He also gave $125,000 to pro-Obama outside groups that same year.
And now, with the help of Costco’s example, Obama has an easier time saying that companies can have it all: good profits, good pay for workers and a positive reputation.
“I guarantee you if workers have more money in their pocket, they’ll spend more at Costco,” Obama said.
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