Economy

How Costco Closed On Thanksgiving And Did Just Fine

CREDIT: AP

Many of the largest American retail brands decided to keep their stores open on Thanksgiving, but one company that put its workers’ holiday plans ahead of business was rewarded with sales growth that beat analyst expectations.

A Costco spokesperson told ThinkProgress last month that it gives workers the day off because they “work especially hard during the holiday season and we simply believe that they deserve the opportunity to spend Thanksgiving with their families.” And while it might seem like the company would take a financial hit for closing while others opened their doors, Costco’s total November sales were up 7 percent at its American locations compared to November 2013, the company announced on Thursday. Factoring in a decline at its international stores, the company reported overall monthly sales growth of 5 percent, well above the 3.7 percent growth forecast by industry professionals.

Other all-purpose retail chains including Walmart, Target, Sears, and Kmart opted to open their doors on Thanksgiving in hopes of luring shoppers with early sales tied to “Black Friday.” Kmart went so far as to threaten to fire workers who refused the holiday shifts, which began before 6 a.m. on Thanksgiving day. None of those stores had released sales figures for November at the time of this writing.

Costco’s overall approach to its workforce contrasts with the cost-trimming approach that companies like Walmart employ, and its relative benevolence doesn’t hamper the company’s profitability. Costco’s frontline employees start at $11.50 an hour for work that pays less than $9 an hour at Walmart. Seven out of every eight Costco employees gets company-sponsored health care coverage, something that the majority of Walmart workers are either ineligible for because of their part-time hours or unable to afford because the company’s insurance plan is so expensive.

Walmart’s approach typifies the classic way of thinking about labor costs for large American businesses. By squeezing as much productivity as possible out of workers who get paid as little as the company can manage, retailers hope to increase their profit margins. From fast food stores to Amazon.com warehouses, that view of labor as just one more cost in a basic profit-seeking equation is dominant in many sectors of the U.S. economy.

But the approach seems to be backfiring for Walmart, where understaffed stores routinely fail to keep shelves stocked and store sections clean, and various fast food stores, where two years of strikes and worker unrest have produced an official labor law finding that could shake the foundations of the industry’s business model. And because many of these companies’ workers earn such a meager living, they end up relying on taxpayer-funded assistance programs to make ends meet. In effect, the public subsidizes corporations that offer substandard wages and benefits as a way of maximizing their profits.