As the largest membership-only warehouse club in the world, Costco is known for its bulk products, low prices, and loyal customer base. But with over 250,000 employees across nearly 800 global locations as of 2021, Costco is also one of the biggest retailers to work for.
If you‘re considering a job at Costco, you‘re likely curious about the employee benefits, including whether or not you get an employee discount. As a retail industry analyst with over a decade of experience studying employee policies, I‘ve done the deep dive to give you the full scoop on the Costco employee experience. Let‘s unpack it from a business strategy lens and explore what it‘s really like to work at Costco.
Does Costco Provide Employees With a Discount?
The short answer is no, Costco does not offer employees a percentage off discount for shopping at their warehouses or online. As a Costco employee, you‘ll pay the same price as any other member shopping there.
While this may seem disappointing at first glance, it‘s important to understand Costco‘s overall business model and the reasoning behind their lack of an employee discount program.
The Strategy Behind No Employee Discounts
First and foremost, Costco already offers some of the lowest prices on the market for the bulk goods they sell. Their ability to maintain thin margins and pass on savings to consumers is a key part of their brand identity and success. In fact, Costco limits its markup of products to a maximum of 14% on most items, compared to 25-50% at most other retailers. Offering a further discount to their 250,000+ employees would cut significantly into those already slim margins.
Additionally, Costco actually makes the majority of its profits from annual membership fees rather than product markups. Roughly 70-75% of Costco‘s operating income comes from membership fees. They intentionally keep product prices as low as possible to drive membership signups and renewals. Giving employees a discount would undermine this core piece of their business model.
As Richard Galanti, Costco‘s Chief Financial Officer, explained in a 2018 interview with the Wall Street Journal, "We want to be the last company to raise prices and the first company to lower them. That focus on value is what has driven our success with customers and our growth in memberships. Employee discounts would work against that."
So while Costco may not provide a traditional employee discount, they make up for it in spades when it comes to other highly competitive benefits for their workers. This employee-centric approach is a strategic choice that aligns with and reinforces their overall business goals. Speaking of which…
The Costco Employee Benefits Package
What Costco lacks in employee discounts, it more than makes up for with a robust benefits package – even for part-time hourly workers. Here are some of the top perks you can expect working at Costco:
1. Free Costco Memberships
While employees have to pay for their own purchases, Costco provides them with 4 free annual memberships:
- 1 Executive-level membership for the employee
- 3 basic "Gold Star" memberships for friends or family
Considering that an Executive membership costs $120 per year and includes 2% cashback on purchases up to $1000, this is a generous perk. The 3 additional free basic memberships, which normally cost $60 each, are just icing on the cake.
According to Costco employee Samantha Rodriguez, who has worked at a San Francisco Bay Area location for 3 years, "The free memberships are a huge bonus. My parents and siblings all get to enjoy the perks of a Costco membership without paying for it themselves. It‘s a real money-saver for our whole family."
2. Health Insurance Coverage
Costco offers health insurance to employees who work over 24 hours per week, after 180 days of employment. And according to many employees, the coverage is high-quality with lower out-of-pocket costs compared to other retail employers. This even includes vision and dental coverage.
"I was pleasantly surprised at how good the health insurance options were when I started at Costco," said John Atkins, a Front End Supervisor at a Costco in Austin. "My previous retail jobs barely offered any coverage at all, and what they did have was way too expensive. But at Costco I can afford a solid plan with great coverage on my $22/hour pay."
This tracks with employee reviews on sites like Glassdoor and Indeed, where "good benefits" is consistently listed as a pro of working at Costco. In fact, Costco employees rate their benefits and perks 27% higher than the retail industry average on Glassdoor.
3. Dental Benefits
Speaking of dental, Costco employees rave about the affordable dental plan which covers routine cleanings and procedures like cavity fillings. While many retailers skimp on dental coverage, especially for part-time workers, Costco sees it as an important piece of overall employee well-being.
"I usually avoid going to the dentist because of how expensive it is, but with Costco‘s plan I can actually afford to take care of my teeth," mentioned Tanya Singh, a cashier at a Costco in New Jersey. "It seems like a small thing, but it makes a huge difference for my health and peace of mind."
4. 401(k) Matching
To help employees invest in their financial future, Costco provides a generous 50% match on 401(k) contributions, up to $500 per year. So if you contribute $1000 annually to your 401(k), Costco will chip in an extra $500.
Even if you don‘t max out the contribution match, Costco will still contribute a percentage of your annual pay to your 401(k) after a year of service, starting at 3% and increasing the longer you work there.
"The 401k match shows that Costco actually wants to invest in us as employees for the long haul," said Miguel Hernandez, a receiving clerk in Chicago. "A lot of retail jobs have high turnover because they don‘t offer any real financial stability. But between the pay and benefits here, I could see myself staying at Costco until I retire."
Costco‘s focus on employee financial wellness seems to be paying off. Costco‘s employee turnover rate is just 6%, the lowest of any major retailer. For comparison, turnover at Walmart and Target hovers around 44% and 60% respectively.
5. Extra Pay on Sundays
For employees who work on Sundays, Costco offers time-and-a-half pay. While weekends are often the busiest times, this boost in hourly pay makes it more than worthwhile for many employees.
"I actually volunteer for Sunday shifts because of the overtime pay," said Erica Thompson, a food court worker in Atlanta. "It‘s a good way to pad my paycheck without having to work more hours overall. And since the store is so busy, the time goes by really fast."
6. Turkey at Thanksgiving
Every Thanksgiving, Costco gives a free turkey to each employee as a gesture of gratitude. It‘s a small but meaningful token of thanks during the busy holiday season.
"Getting that free turkey every year is such a nice touch," said Robert Johnson, a produce stocker in Seattle. "It shows that Costco sees us as people with families and lives outside of work. Plus, it saves me like $30 on my Thanksgiving grocery bill!"
7. Exclusive Employee Shopping Hours
One unique perk of working at Costco is having the run of the store during non-operational hours. Employees can shop before or after their shifts without the usual crowds and long checkout lines. It‘s a major convenience and time-saver.
"Shopping after hours is the best," said Lila Patel, a pharmacy technician in Houston. "I can actually take my time browsing without dodging huge carts and crowds. And checking out takes like 2 minutes tops. It‘s a small thing but it makes a big difference in my day-to-day life."
While these benefits are impressive on their own, what‘s especially remarkable is that they extend to both full-time and part-time employees. After 180 days of working over 24 hours per week, any Costco employee can access health insurance, dental coverage, 401(k) matching and more.
Over 88% of Costco employees qualify for benefits, compared to just 56% at comparable retailers, according to a 2019 Harvard Business Review study. The study authors attribute Costco‘s industry-leading employee retention and satisfaction rates in large part to this benefits coverage.
Costco Employee Pay and Advancement Opportunities
In addition to the wide array of benefits, Costco also stands out for offering highly competitive wages for the retail industry. Costco‘s minimum starting pay is $16 per hour, with the average wage rising to around $24 per hour. For reference, the national average hourly wage for a cashier is just $12.
Costco‘s higher-than-average pay is a key pillar of their overall employee strategy. "We know that paying employees well is good business," said Costco CEO Craig Jelinek in a 2019 CNBC interview. "When you hire good people and provide good wages and good benefits, they‘re going to be happier. They‘re going to perform better, provide better service, and generate more sales. It‘s an investment that pays off."
The data backs up Jelinek‘s assertion. Costco generates nearly 3 times the revenue per employee compared to Walmart and Target, at $606,000 versus around $235,000. Better-paid employees are simply more productive and provide superior customer service, which drives sales.
Beyond pay, Costco also prioritizes promoting from within and offers clear pathways to advance from entry level positions like cashier or stocker to supervisory or managerial roles. In fact, over 70% of warehouse managers began as hourly employees.
"I started as a front end assistant 5 years ago, and now I‘m an inventory control manager," said Karen Davis, who works at a Costco in San Diego. "Costco really believes in developing talent internally and rewarding hard work. If you excel at your job and show initiative, there‘s no limit to how far you can go here. It‘s incredibly motivating."
So if you work hard, deliver results, and demonstrate leadership potential, you have a real shot at a long-term career with increasing pay and responsibility at Costco. Combined with the strong employee benefits package, this makes Costco uniquely attractive as a long-term retail employer.
The Tradeoffs of Working at Costco
Of course, no job is perfect, and working at Costco does come with some potential drawbacks. Even the highest-rated retail employers have their challenges:
-
Physically demanding work: Many Costco jobs involve being on your feet for long shifts, lifting heavy items, and navigating large crowds. It can be physically taxing.
-
Limited scheduling flexibility: Costco stores are open 7 days a week, often from 10 am to 8:30 pm. Employees are expected to have open availability to work a variety of shifts, which can be difficult for those with outside commitments like school or family care.
-
Capped earnings potential: While Costco pay and benefits are generous for the retail industry, there is still a ceiling. Even the highest-paid managers rarely make over $150,000 per year. For those with higher earnings ambitions, Costco may not be the ideal long-term option.
-
No employee discounts: The focus of this article, no employee discounts can feel like a missed perk, especially for those used to this benefit at other retailers. It may make the job less appealing for people looking for a deal.
All that said, Costco employee reviews consistently emphasize that the pros outweigh the cons. On Glassdoor, 79% of Costco employees would recommend working there to a friend, and the CEO has a 95% approval rating. The company also consistently ranks among the best places to work by Forbes and other business publications.
The Bottom Line
At the end of the day, the lack of an employee discount at Costco is far from a dealbreaker given the host of other benefits they provide – even for part-time workers. From free memberships to quality health insurance to career advancement opportunities, Costco invests heavily in its workforce.
For comparison, many other retailers offer employee discounts ranging from 10-30% off. Here are a few examples:
- Walmart: 10% off on general merchandise during holidays and days off
- Target: 10% off at Target stores and online + 20% off select categories
- Best Buy: 10-30% off depending on role and products purchased
- The Home Depot: Employee discount of cost plus 10%
While these employee discounts can add up to hundreds in savings, they often pale in comparison to the thousands in value provided by Costco‘s higher pay and benefits packages. A full-time Costco cashier earning $24/hour would make about $6,240 more annually compared to the median pay for that role. That alone eclipses the typical savings from a 10-20% employee discount.
Of course, every job has its pros and cons and there‘s no singular "best" employer for everyone. But if you‘re looking for a retail position with very competitive pay, great benefits, and real room for career growth, Costco should absolutely be on your short list. The employee discount may be missing, but the rest of the package more than makes up for it.
While researching this article, I was struck by just how much Costco‘s employee policies align with and support their overall business strategy. By investing in employees with industry-leading pay and benefits, they attract and retain top talent. This in turn leads to more productive, higher performing employees who deliver the customer service Costco is known for. It‘s a virtuous cycle that has served the company well for nearly 40 years.
As a Picky Shoppers reader, you know that where you spend your money matters. Supporting companies with ethical labor practices is one way to vote with your wallet. By understanding what it‘s actually like to work at Costco, you can feel even better about your Costco membership – employee discount or not.
