Costco Tells East Harlem That It's Laying Off 160 Workers

By DNAinfo Staff on January 21, 2010 6:42am  | Updated on January 21, 2010 12:09pm

The newly opened Costco in Harlem is laying off 160 employees.
The newly opened Costco in Harlem is laying off 160 employees.
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Flickr/Racked NY

By Jon Schuppe

DNAinfo Reporter/Producer

EAST HARLEM — Two months ago, Costco opened its first big-box store in one of Manhattan’s poorest neighborhoods, winning over residents by promising to hire locals.

Now many of those workers are losing their jobs.

Costco told community leaders by phone this month that it was laying off 160 of its 453 employees after its December sales fell short of expectations.

It remains unclear how many of the 142 employees from East Harlem are getting axed, but officials said they’ve heard from several already. They’ve demanded a meeting with the company to explain what’s going on.

“Any time you hear about job losses, it’s sad, to say the least,” Community Board 11 chairman Matthew Washington said.  “A big part of us pushing this through… was that there was this deal in which all these jobs were going to come. When you’re here two months later and people have been let go, it’s certainly upsetting. Especially when we don’t fully understand why.”

Two months after its grand opening, Costco has told East Harlem officials that it is laying people off.
Two months after its grand opening, Costco has told East Harlem officials that it is laying people off.
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DNAinfo/Gabriela Resto-Montero

So far, Costco has not responded to the board in any formal way. But the company seemed willing to consider seeking temporary subsidies from the city’s Human Resources Administration that could help them re-hire some of the locals, officials said.

Costco, which operates 566 warehouse stores worldwide, did not immediately respond to messages seeking comment. The company reported this month that its global earnings in December had increased 11 percent, to $8.26 billion.

The 105,000-square-foot East Harlem store (about half the size of its typical outlet) opened to citywide fanfare on Nov. 12. It was the first tenant of East River Plaza, a new shopping outlet between East 116th and East 119th streets near the FDR Drive. Eventually, the center will include Best Buy, Marshalls and Target stores.

East River Plaza’s developer worked with the community board and a local non-profit, STRIVE, to make sure people who lived in East Harlem would be among the new hires. Officials said the agreement called for Costco to take 60 percent of its new hires from East Harlem. Costco also agreed to accept food stamps.

In return, the community board agreed to allow Costco to make overnight truck deliveries.

That agreement wasn’t legally binding, but was important to a neighborhood with a 17 percent unemployment rate and where a quarter of residents use food stamps.

That optimism started to fade after the opening. Many employees were told that their positions were “seasonal,” officials said. Customers complained about the price of parking. And the community board was disappointed that the percentage of local hires didn’t rise above 38 percent.

Now they’re trying to salvage that number.

“Costco and other retailers are going to be there, and we want to have a good working relationship with them,” Washington said. “And we want to be able to put a dent in the unemployment rate in East Harlem.”