Tony Barzar has spent nearly four decades as a cashier at Costco, long enough to retire a millionaire without ever becoming a supervisor.
His story is not an outlier. Turnover after one year of employment at Costco sits around 7%, a fraction of retail industry averages, The Wall Street Journal reported July 8. For health system leaders fighting a workforce crisis in their own industry, that number, and how Costco gets there, is worth studying.
Costco has long paid more than most U.S. retailers, a strategy its founders believed would cut the costs of training new hires and improve customer service, according to the Journal. Mr. Barzar, 60, earns $32.90 an hour and has built his 401(K) past $1 million, one of “many thousands” of hourly workers at the retailer to hit that mark, CFO Gary Millerchip told the newspaper. Mr. Barzar pays $15 for a regular physician office visit and $25 for a specialty visit under his Costco health plan, both well below national averages.
The retailer has also raised the maximum hourly wage it pays workers from $31.90 to $32.90, boosted its annual bonus and added a week of vacation for employees with at least three decades of tenure.
Hospitals and health systems face a similar retention imperative, but with higher stakes attached. The national turnover rate for registered nurses climbed to 17.6% in 2025, up 1.2% and reversing the previous year’s decline.
Matching Costco’s wage strategy is easier said than done in healthcare. Workforce costs across U.S. hospitals rose 5.6% in 2025 and remained the industry’s top expense, at 60% of all costs, according to the American Hospital Association. Rising pharmacy costs and delayed insurer payments are squeezing margins further.
The pressure is compounded by HR 1, signed into law in July 2025, which cuts federal Medicaid spending by $90.9 billion in 2029 alone, according to a June 9 report from the Commonwealth Fund. The law is projected to reduce federal Medicaid spending by $911 billion and leave about 10 million more Americans uninsured by 2034.
Wage expectations keep climbing on top of that. Advertised salaries for registered nurses have grown 26.6% faster than inflation over the past four years, according to an AHA analysis of Lightcast data, and union pressure on pay has continued into 2026.
At Renton, Wash.-based Providence, about 38% of caregivers are represented by a union. Chief People Officer Greg Till told Becker’s in October that navigating those constraints starts from common ground with labor.
“We all want the same basic things: to keep our hospitals open and caring for communities, and to ensure our caregivers have fair wages, good benefits and safe work environments,” Mr. Till said. “We’re aligned on those goals. Where it gets difficult is in the details — how to achieve all that within today’s cost- and revenue-constrained environment. We’re working through that in our contracts with labor partners and also for non-union caregivers.”
Some systems are finding the investment pays for itself anyway. McKinsey has estimated that losing a front-line retail worker costs employers about $10,000, per the Journal, a figure dwarfed by healthcare’s own math: turnover of a full-time registered nurse cost $60,090 in 2025.
That gap helped drive a bigger decision at Baton Rouge, La.-based FMOL Health. The system had budgeted $11 million for its workforce budget in 2025, but President and CEO E.J. Kuiper approved nearly five times that after the system’s CHRO made the case for more. FMOL Health’s RN turnover rate has since fallen below 10%, outperforming the national healthcare average, he recently told Becker’s.
“So take care of people, make sure that they feel they’re taken care of, that they’re in an exceptional workplace, and then they stick around and help us take care of the patients and the communities that we serve,” Mr. Kuiper said.
Costco executives frame their wage investment as a long-term bet that has already paid off: The retailer’s annual sales have grown for nearly two decades and its stock has climbed more than 2,000% over that stretch. In Mr. Millerchip’s view, the approach saves money over time, too.
Costco also leans on its longest-tenured workers for something beyond loyalty: institutional knowledge. That is an advantage some healthcare leaders worry could evaporate as a wave of baby boomer retirements is set to hit the workforce. Health systems have started building similar structures to keep veteran staff engaged longer and pass down what they know before they leave. Systems such as Annapolis, Md.-based Luminis Health and Santa Barbara, Calif.-based Cottage Health, for example, are using flexible scheduling and phased retirement to retain experienced employees and strengthen mentorship in the process.
At Costco, mentors do not have to be supervisors. Many stores have created “culture coach” roles specifically so long-tenured hourly workers such as Mr. Barzar can train newer employees without being their boss. Becker’s has reported a similar shift in nursing: Intermountain Health’s Saint Joseph Hospital in Denver moved to group mentoring led by nursing professional-development staff, rather than management, after losing many of its most experienced nurses to turnover. The pilot pushed the hospital’s nurse retention rate to 97% as of January 2025.
The payoff for both industries looks similar. Retailers with the top 25% highest employee-satisfaction scores were more than twice as likely to also rank in the top 25% for customer satisfaction, according to a 2023 McKinsey study, the Journal reported. Hospitals in the top quartile for employee engagement are 4.2 times more likely to achieve top patient experience scores, according to a June Press Ganey report.
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