Costco (COST) has a major problem on its hands following a profitable 2024.
Last year, Costco’s products and deals consistently went viral on social media platforms such as TikTok, driving a significant boost in sales and profits.
During the first quarter of fiscal year 2025, Costco saw its membership numbers increase by almost 8% year-over-year. The warehouse club also generated a total revenue of about $62 billion during the quarter, which is a 7% increase compared to the same period last year, with net sales spiking by about 7% year-over-year.
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In September, Costco hiked its membership fees for the first time in seven years, which helped to contribute to the recent increase in profits. Its basic annual membership fee increased from $60 to $65, while its executive annual membership fee rose from $120 to $130.
Costco announced these price increases after it revealed in March last year that it was increasing wages for managerial roles and hourly employees in its warehouses.
However, Costco workers nationwide are currently demanding fair wages and have threatened to go on strike to accomplish that goal.
Costco workers issue a stern warning
Costco Teamsters, a union representing 18,000 Costco workers across the country, is currently negotiating with the warehouse club to settle on a new labor contract as their current one expires on Jan. 31.
Over the weekend, the union voted to authorize a strike due to the company’s alleged failure to “present a fair contract offer that reflects the company’s record-breaking profits,” according to a new press release on the union’s website.
Costco had a very profitable 2024 but dissatisfaction with a proposed new contract has union members threatening to strike.
“Our members have spoken loud and clear – Costco must deliver a fair contract, or they’ll be held accountable,” said Teamsters General President Sean O’Brien in the press release. “From day one, we’ve told Costco that our members won’t work a day past January 31 without a historic, industry-leading agreement. Costco’s greedy executives have less than two weeks to do the right thing. If they refuse, they’ll have no one to blame but themselves when our members go on strike.”
The union also said that hundreds of Costco Teamsters members have already organized practice pickets last week to prepare for a potential strike
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In a post on social media platform X, the union stated that the final week of negotiations with the company begins on Jan. 20, and that it will “do whatever it takes to ensure Costco rewards its workers.” If negotiations fail, the union warns that its members will be striking nationwide.
The move from Costco Teamsters comes after it revealed in a press release earlier this year that the warehouse club rejected its “comprehensive economic proposal.” The union claims that Costco instead offered an “insulting” counterproposal that fails to reflect that company’s historic financial success in 2024 and provides no increased retirement benefits.
Costco has over 600 stores across the U.S., and a strike from its workers could have a negative impact on day-to-day operations, especially during a time when the warehouse club is facing increased momentum from consumers.
A strike threatens Costco’s clean reputation with its employees
Costco’s conflict with its unionized workers also adds a stain on the warehouse club’s reputation for treating its workers well and paying them wages that are competitive to its rivals.
According to recent data from Comparably, Costco has an “A” rating on its ability to retain its workers.
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“Costco is in the Top 15% of similar sized companies in its ability to retain quality employees,” said Comparably on its website. “58% of employees would not leave Costco if they were offered a job for more money while 67% are excited to go to work each day.”
On average, Costco’s hourly workers make roughly $22 per hour in the U.S., according to ZipRecruiter.
Costco even increased its starting pay and highest pay for service assistants, service clerks and meat cutters by $1 per hour in July last year.
The demand for higher wages from Costco workers comes during a time when inflation and the cost of living across the U.S. has continued to rise, which has added more pressure on the finances of many Americans.
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