Costco and the $20 an Hour Job Myth

Proponents of the addition of Costco to the Johnson Drive Economic Zone often use the argument that good, high paying retail jobs will be added to Pleasanton.

In fact, in 2015, President Barack Obama pointed to Costco as an employer paying high wages, saying pays its hourly employees $20.89 an hour on average. But according to further analysis, this figure is highly overstated.

Political analyst and commentator Paul Ogden examined the average wage levels presented on the website Glassdoor, where employees report their actual wage levels, and came to the conclusion that in reality, Costco did pay employees a little more than WalMart, but not up to the average stated above.

“The trouble with arriving at $20.89 as the average pay of hourly Costco workers is that there are a lot more employees at the lower end of the hourly pay scale than the supervisors and skilled and semi-skilled workers at the other end,” said Ogden in a February 2015 article.

“So the average wouldn’t be close to $20.89. How then to get it to $20.89? Instead of averaging all the hourly employees pay, average all the hourly positions. So even though there might be 20 stockers for every 1 hourly supervisor, their treated as 1 to 1 when calculating the average this way. The distinction, which would have a major effect in skewing Costco’s hourly pay upward, would be lost on the reporting that followed.”

While many in Pleasanton point to Costco’s ‘high’ wage levels, it appears that this is no more than good PR and fuzzy calculations. But it is a fact that the additional jobs that Costco would bring would lure current retail employees away from small businesses all around the city, leading to a shortage of qualified help for existing stores and an escalation of wage demands for those that can manage to stay in business.

To see Ogden’s entire article, click here.