Why Obama is a huge Costco fan

If only Costco’s sales clerks were always this attentive to their customers.
If only Costco’s sales clerks were always this attentive to their customers.
Image: Reuters/Yuri Gripas
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Not only did the American membership-only warehouse store get a shout-out in US president Barack Obama’s State of the Union address on Jan. 28. One of Costco’s outlets in the suburbs of Washington DC received a visit from the commander-in-chief this morning.

Costco’s business model of selling discounted consumer goods at bulk rates doesn’t really fit with the president’s long-held goal of transforming the country into a place where citizens are “ makers of things, not just consumers of things.” (Costco is a huge purveyor of imported goods, which helps the discounter cut costs but also comes with troubles.)

But then, its remuneration practices fit well with Obama’s latest political push to raise the minimum wage. In 2005, the New York Times described Costco as the “anti-Walmart,” given that it currently pays its workers an average of $20.89 per hour, nearly triple the current minimum wage of $7.25 per hour, and more than double the US president’s desired $10.10 per hour. That’s well above Wal-Mart’s average of $12.67 per hour, according to Businessweek. Costco is also famed for its less labor-intensive business model compared to Wal-Mart, which leaves more room to boost individual worker pay.

Obama’s visit may have been inspired by the fact that Costco is a major donor to the US Democratic party, as is its co-founder, Jim Sinegal. But the company contributed less to Obama’s re-election campaign than did Wal-Mart. Associating himself with Costco also makes Obama seem more relatable than if he cozied up to snobbier high-wage retailers like Whole Foods or the Container Store.