According to Crain’s, Costco Wholesale Corp. bowed to political pressure and agreed to accept food stamps in it’s East Harlem store which is scheduled to open in September. As a result of the decision, community leaders and elected officials including Rep. Charles Rangel and Manhattan Borough President Scott Stringer called off a rally planned at the construction site.
According to their website, “Costco Wholesale operates an international chain of membership warehouses, carrying brand name merchandise at substantially lower prices than typical retail.” In addition to basic household items, they are known for their high quality, low price, brand name bulk food department. I think that poor families who qualify for food stamps would be their ideal customer. I guess they think differently.
Currently, Costco does not take food stamps but they are starting a pilot program in their Brooklyn and Queens stores to do so. Politicians and community leaders had to demand that the East Harlem store be included in the program. According to Crains, “32,000 East Harlem residents are eligible for Supplemental Nutritional Assistance Program (SNAP) payments, colloquially known as food stamps”.
State Attorney General Andrew Cuomo had to write a letter reminding Costco of their obligation to accept SNAP payments since they received tax breaks for the East Harlem store. (The store has been developed with $55 million in tax-free bonds and grants.)
Mayoral candidate and City Comptroller William Thompson, Public Advocate Betsy Gotbaum and City Councilman Eric Gioia, also contacted Costco. Thompson’s letter carried a little more weight than the others since he oversees New York City’s pension fund (one of the top five in the country) which contains $82 billion in the city’s investment funds including 1.5 million shares of Costco stock, valued at $66 million.
Last November, the New York Times contacted Costco about not accepting food stamps. At that time, executives at Costco said they declined to accept food stamps for three reasons.
- They did not think they would qualify based on the federal government requirements.
- It was too expensive to adapt their equipment to accept food stamps.
- With their annual fee/bulk-purchase model, people on food stamps probably could not shop there anyway.
The Times asked one of the same questions that I asked myself, “If the corner bodega could qualify to accept food stamps, why wouldn’t Costco?
I guess the answer goes back to the title of this article — Costco Wants Harlem’s Frugal Customers But Not The Poor Ones.
Notably absent from the Costco discussion is New York City’s current Mayor and candidate for reelection, Michael Bloomberg. In another article, the New York Times states that “food stamps have been a touchy issue for Mr. Bloomberg, particularly since 2006, when he clashed with aides and declined to extend food stamp benefits for able-bodied adults, even though New York’s relatively high jobless rate allowed him to do so. In February, the issue flared up again when the a provision in the stimulus package allowed Mr. Bloomberg to extend food stamp benefits again, but he stuck to his position that if these adults want to receive food stamps for longer than three months in a three-year period, they can enroll in a city workfare program.”
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Update: I forgot to mention that Costco has a $50 dollar yearly membership fee.
