Costco Has Thousands of Hourly Worker 401(k) Millionaires: CFO

Costco has quietly built an army of blue-collar millionaires. According to CFO Gary Millerchip, COST now has “many thousands” of U.S. hourly workers with over $1 million in their 401(k) accounts, a byproduct of two decades of compounding wages, matches, and a stock that has run more than 2,000% since 2008.

The setup

The story went viral off a Wall Street Journal profile of Tony Barzar, a 60-year-old self-checkout worker in Tucson. Barzar earns $32.90 an hour and his 401(k) holdings have pushed his retirement savings past $1 million.

He started at Costco in 1986 gathering carts in a parking lot for $5.85 an hour, and now works the register at $32.90 an hour as a millionaire. Millerchip framed it as a category, not an anecdote.

Why the model actually works

Costco deliberately pays hourly workers well above the retail average, driving turnover down to roughly 7 to 8 percent a year versus an industry average near 60 percent. Low turnover produces experienced staff, faster checkout, and better member service, which protects the membership renewal rate that is the actual profit engine.

That is the part traders should internalize. Costco sells merchandise at near break-even and earns its profit from membership fees, so the cashier is not a cost center, they are the guardian of the renewal rate.

The stock did the heavy lifting

Costco stock has increased over 2,000% over the past 20 years, trading as low as $40 per share following the 2008 recession to around $953 this week. Employees who stayed and kept contributing rode that curve.

Worth noting on the mechanics: Costco matches 50% of the first $1,000 you contribute, which caps the company match at $500 per year. The millionaire outcomes are largely a function of time, payroll deferrals, and COST’s share-price compounding, not an unusually rich match.

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Wages versus the rest of retail

Costco’s base hourly rate of $19.50 is the highest base floor among large non-specialty retailers in the U.S. Peers are meaningfully behind on the low end.

Walmart’s average hourly pay for field associates is $18.25 and supply chain associates average $27. Lowe’s pays most hourly workers between $15 and $24, with some Pro Customer Service specialists up to $28. Home Depot ranges from $15 to $26, with skilled Pro Desk Associates up to $32.

Options market and stocks to watch

COST: The obvious focal point. Watch for flow around membership fee commentary, comparable sales prints, and any labor cost narrative shift, all of which sit at the center of the flywheel described here.

WMT: Walmart is the direct comp on wage floors and turnover economics. Watch for how the market prices its lower base pay against Costco’s retention advantage.

TGT: Target has lagged the group on both stock performance and store-level execution. Watch for any labor investment announcements framed against the Costco model.

HD and LOW: Home Depot and Lowe’s pay skilled hourly workers into the low $30s at the top end. Watch for wage-and-turnover disclosures on the next earnings cycle as investors reprice the retention trade.

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