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<back | home Strike! Grocery Clerks vs WalMartization by Richard Kresja Everyone who eats knows there is a grocery strike in Central and Southern California. Many customers are honoring union picket lines but many others are asking, "Why, after more than four months, can’t food union members and their supermarket employers settle their wage and benefit differences so the rest of us can go back to shopping at our favorite market?" Answers to that question are complex, but I will attempt some answers. First, however, let me pose a few additional questions regarding this multi-faceted issue: Who is involved? What are the financial stakes? What are the hidden social costs? Why was an anti-trust lawsuit filed against the supermarkets? Which employee benefits are being negotiated? What are the national ramifications? Is there a connection to presidential politics? The Numbers The strike began on October 11, 2003, when members of the United Food and Commercial Workers union (UFCW) walked off the job at Vons and Pavilions stores. The next day, management teams at Ralphs and Albertsons locked out their employees. The strike now involves more than 850 stores and some 70,000 members from seven UFCW locals. Vons and Pavilions markets are owned by Pleasanton, CA-based Safeway Stores. With revenues of $32 billion, Safeway ranks 41st in size among U.S. corporations. Idaho-based Albertson’s, with annual revenues of $36 billion, ranks 35th in size. Ralphs, owned by the Cincinnati-based Kroger Co., has annual revenues of more than $51 billion and is the 18th-largest company in the nation. In 1998, the combined operating profits of these three companies were $5.1 billion; in 2002, combined profits totaled $9.7 billion.1 The Stakes UFCW contracts are about to expire in other cities and states. Whatever wage and benefit packages are finally agreed to in these conflicted contract negotiations will set precedents with local, national and, perhaps, even international significance. Indeed, the stakes are high, not only for organized labor and corporate employers, but also for the American middle class. "Work hard, be loyal to your employer, and you will make it," my dad told me during my teenage years, immediately after World War II. My first summer job was a union job and, of course, I had several other jobs along the way, including a stint as a commercial tuna fisherman and in the non-union U.S. Air Force. But I ended my career as a member of a professional labor union and, thanks, dad, I made it! Half a century later, that post-FDR, post-WWII economy in which I grew up now seems like some kind of a labor union dream. In the current economy, pension benefits are vanishing, healthcare has become unaffordable to a broad section of the American population, layoffs due to downsizing are an ever-present reality, and some thirty million Americans work at low-paying jobs that do not provide for basic family needs. One-in-four American workers make less than $8.70/hr, the "official" poverty level for a U.S. family of four. The reader now can appreciate one lens, of several, through which I view this conflict. The Hidden Social Costs This titanic story involves a giant corporate iceberg floating offshore in California waters. Wal-Mart Stores, Inc., with 1.4 million workers ("associates") worldwide, is the world’s largest retail corporation. With over a million employees, it is the largest U.S. private employer and the biggest employer in 25 of the 50 states! In 2001, it ranked #1 on the Fortune 500 corporations list. In Mexico, one-third of all household expenditures occur in just one supermarket chain — Wal-Mart! Wal-Mart aspires to similar market coverage in the US and, with the introduction of "Supercenter" stores that combine food sales with its otherwise standard inventory of consumer merchandise, the supermarket industry is anticipating the pinch of Wal-Mart making its move to dominate the retail end of California agribusiness. The first of 40 new Supercenters is due to arrive in Southern California in February.2 Furthermore, Wal-Mart "associates" are non-union workers. They work about 29-32 hours per week at an average wage estimated between $7.50 and $8 per hour. Wal-Mart is reputed to cut its prices by hiring full-time supervisors and part-time associates. In manager training sessions, supervisors utilize Wal-Mart publications with such titles as "You and Labor Relations: What a Wal-Mart Supervisor Should Know About Labor Unions," and "A Manager’s Toolbox To Remaining Union Free."3 At that average wage, high premiums and deductibles prevent, perhaps, more than two-thirds of Wal-Mart workers from participating in the company health plan. Thus, about 700,000 U.S. "associates" must rely on health coverage either through their spouses’ plans, or from the government, e.g., through visits to emergency rooms, (which shifts the health insurance cost to all taxpayers including other employees).3 Wal-Mart is expanding from small town, rural areas into urban America. What do you do when a corporate big box store with a "one-step-from-welfare" wage policy moves into your city? L.A. City Council Member Eric Garcetti recently paraphrased a recent L.A. Times series which demonstrated Wal-Mart’s effect in U.S. markets and abroad: "whether through the wages paid to employees or the low wholesale prices demanded [by] overseas manufacturers, [the effect has been] to push wages everywhere below the standard of living. With the introduction of the Supercenter by Wal-Mart and other big-box stores, unionized grocery stores go out of business or, in our city’s case, anticipate the arrival of Supercenters by attempting to slash their wage packages, forcing thousands of workers onto picket lines."4 In early October, 2003, the Los Angeles City Council supported the strikers with a unanimous vote. An Antitrust Lawsuit. How Wal-Martization Affects Grocery Workers & Shoppers In order to stave off anticipated competition with Wal-Mart, management at Vons and Pavilions (Safeway owned), Ralphs (Kroger owned), and Albertsons, joined forces in attempting to avoid escalations in future health care, wages, and pension costs. They are, in a word, mimicking Wal-Mart, and the rest of us are becoming "Wal-Martized." 5 On February 2, 2004, Bill Lockyer, California’s Attorney General, filed a lawsuit in federal court in Los Angeles against the companies asking the court to rule that the mutual aid pact "violates federal antitrust law, specifically the Sherman Act." According to the complaint, this "Mutual Strike Assistance Agreement" was entered into by the grocers on August 5, 2003, more than two months before the strike began! One of the major points in the complaint is that (Kroger-owned) Food 4 Less also entered into the pact "to share with each other revenue and costs disproportionately lost or gained as a result of the strike." According to the complaint, this involves "restraining trade and competition between stores involved in the strike and one that is not involved in the strike." The complaint also alleges that the pact results in depriving shoppers of the "benefit of full competition among and between defendants for the sale of food and non-food grocery items for a period beyond the end of the strike and lockout."6 The Main Employee Benefit Issues Issue 1. Health Care Benefits. At present, current grocery workers’ contracts require supermarket management to maintain certain health benefits for their employees even if medical costs escalate. Naturally, the industry wants to abandon this "Maintenance of Benefits" clause in future contracts. It prefers a plan wherein current employees would pay a fixed premium for health insurance and, if medical costs rise, the employees would have to pay higher premiums or accept reduced benefits.7 New hires would have a different health plan with even fewer benefits. If employers succeed in eliminating the Maintenance of Benefits clause from the new contract, covering the three-year period (Nov, 2003, thru Oct, 2006), then, by union rules, the Trustees of the UFCW would have to make up the difference for its employees. It also means that if new hires are eliminated from participating in it, the plan costs escalate for current employees. The health care issues mentioned here are not restricted to the supermarket industry and Wal-Mart. A recent article by David Lazarus states that "Nearly 100,000 workers at telecom giant SBC say they’re prepared to walk off the job when their contract expires in April if the company attempts to have them pay a greater share of insurance premiums."8 For its part, SBC argues that it "pays more than $2 billion annually in health-care costs." This health care benefits crisis leads one to ask: Is private, employer-based health insurance likely to collapse through employer connivance and/or design of health plans which shift the growing medical tab to employees? The Employee Benefit Research Institute, a nonprofit group in Washington, D.C. has analyzed Census Bureau data and reports that the share of workers getting insurance from an employer dropped from nearly 75% in 2000 to slightly over 72% last year. Lazarus says: "Calls are gradually emerging from the private sector for a radical overhaul of the existing health-care system. The U.S. auto industry, for example, estimates that it spends as much as $1,200 on employee and retiree medical benefits for every vehicle it builds."8 Furthermore, "General Motors is the largest purchaser of private health-care coverage in the country. It spent $4.5 billion in 2002 to insure 1.2 million active and retired workers. Those costs in turn are passed on to buyers of GM cars and trucks," according to Lazarus.8 In a recent study appearing in the International Journal of Health Services, Harvard Medical School, Lazarus also reported on researchers David Himmelstein and Steffie Woolhandler’s findings that "The United States squanders more money every year on health care bureaucracy than it would cost to provide medical coverage for the 43 million Americans now lacking insurance.... Of $1.6 trillion in total health care spending last year, at least $399 billion was eaten up by administrative costs such as clerical work in hospitals and processing a vast array of insurance forms.... But, if a national health care plan like Canada’s were implemented in this country, the researchers found, administrative overhead would be slashed by about $286 billion. This amount, in turn, would be sufficient to not only provide health coverage for every uninsured American nationwide but also allow millions of underinsured people to improve their quality of care.... In California, they found, nearly $163 billion was spent last year on health care. Of that total, $45 billion, or about 28 percent, went to administrative costs," according to Lazarus. 9 These are just a few among many ideas currently being discussed in a simmering debate about the Health Care Crisis appearing on the internet (see websites below), and also in the San Francisco Chronicle, during the week of January 14-19, 2004. Issue 2. Wages. For purposes of this discussion it is important to note that the so-called "grocery clerks" strike really involves six categories of supermarket employees: Food Clerks and Clerk’s Helpers, Meat Cutters and Meat Clerks, General Merchandise Clerks, and Pharmacy Technicians. Each of these categories has a different pay scale, and that of the Food Clerks is highest. In order to compete with the imminent threat of food "wal-martization" in their territory, the united supermarket managements are attempting to create a two-tier system for their present and future employees: one tier would include existing employees (currently with higher wages and good benefits but proposed in negotiations to be replaced by a fixed-premium health insurance plan and other benefit reductions); a second tier would include all future employees (hired with a lower pay scale and fewer health and pension benefits including a health plan rumored to cost new employees up to 75% of its cost). Obviously, UFCW members are fighting this system as unjust.10 Supermarket management is encouraging vendors, brokers, and salespersons to stock their specific shelf spaces (normally the job of Food Clerks). They also want to use General Merchandise Clerks to stock shelves and perform other Food Clerk tasks as well as having the Clerk’s Helpers perform certain jobs now done by Food Clerks. All of these proposed changes by management would erode Food Clerk duties, thereby reducing the need for as many future Food Clerk hires and, thus reduce the companies’ total amount of pay and benefits to the highest paid class of food workers. In regional areas where unionized market share is less than 25%, the new contract proposed by management would not apply and any new store constructed in these areas would be non-unionized, thus reducing overall bargaining strength of the remaining union employees. Finally, management is attempting to do away with (time-and-a-half) overtime pay in the new contract by offering a $1 per hour pay increase for hours worked at night or on weekends/ holidays. The New York Times writes: "Everyone should be concerned about this fight. It is, at bottom, about the ability of retail workers to earn wages that keep their families out of poverty."5 The introduction of Wal-Mart plays a significant role in a growing management tactic that takes dollars from the lowest classes of employees and producers worldwide, and concentrates them upward to the most powerful few. Suffice it to say that, in the global effort to maximize corporate agribusiness profits, workers at both ends of the human food chain, i.e., farmers and retail grocery workers, are being marginalized. National Ramifications. Americans who work in low-paying jobs that do not provide for basic family needs are called the "working poor." If the supermarket management cabal is successful in wal-martizing its grocery employees, more of America’s middle class becomes jeopardized as other companies, whether unionized or not, seek to become competitive at the expense of forcing more working families to join the ranks of the working poor, who are more likely to shop at Wal-Mart; it’s the only place they can afford. If the supermarket conflict isn’t resolved during the next round of talks (scheduled for February 11th), the IFCW strike could go nationwide. If more employers cut health care benefits, the issue could become a central part of the presidential campaign. For several years, the UFCW has been trying, unsuccessfully, to organize Wal-Mart workers.11 The IFCW has also joined other national unions in openly expressing opposition to the War in Iraq. How significant is it, then, that Steve Burd, President and CEO of Safeway Stores, and the leader of the supermarket cabal, has raised more than $200,000 to help re-elect anti-union President George W. Bush in 2004?12 For his effort, Burd was awarded the campaign title of "Ranger." In December, 2003, Ranger Burd was also appointed to the Homeland Security Advisory Council, a private sector subcommittee. I doubt that millions of American working families, especially grocery workers, will feel more secure when they hear this news. m Cal Poly emeritus biology professor Dr. Richard J. Krejsa is a member of President Bush’s Small Business Advisory Council and, in his spare time, a professor of harmonica happiness with Cuesta College’s Community Programs. Sources 1. "A Watershed Strike." Kelly Candaele & Peter Drier, in The Nation, 23 Oct 2003. 2. "Supermarkets Boom in Developing Countries." Stefania Bianchi, in: Inter Press Service www.ipsnews.net 3. UFCW website: www.ufcw.org/issues_and_actions/walmart_workers_campaign_info/facts_and_figures/ 4. LIBERALLY SPEAKING: The Newsletter for Progressive Activists, Southern California Americans for Democratic Action. Winter, 2004 5. "The Wal-Martization of America." New York Times, 15 Nov 2003 6. Attorney General Lockyer’s Website: www.ag.ca.gov/newsalerts/2004/04-014.htm 7. "Health Care is Making Labor Sick." Aaron Bernstein and Ronald Grover, Business Week, 13 Nov 2003 8. "Health care is broken," David Lazarus. San Francisco Chronicle, Wednesday, 14 Jan 2004 9. "What premiums pay for." David Lazarus, San Francisco Chronicle, Friday, 16 Jan 2004 10. Website: United Food and Commercial Workers union www.ufcw.org/ 11. "Union Blues at Wal-Mart." John Dicker. The Nation, 8 Jul 2002. 12. KABC-7 Los Angeles Website: abclocal.go.com/kabc/business/printa_safeway.html Other Resources via Internet 13. Strike updates UCFW can be found at: www.ufcw770.org/strikepage.htm 14. More information on strike-health care connection can be found at: www.saveourhealthcare.org, or from Los Angeles chapter of Health Care for All California: www.healthcareforall.org, or phone : 888/442-4255 15. Physicians for a National Health Program: www.pnhp.org 16. For a report commissioned by the L.A. City Council that confirms the effects of Wal-Mart on neighborhoods, etc., see Councilman Gill Garcetti’s website: www.cd13.com. <back | top^ home | current issue | subscribe | books | events | contact us