Associates Paid Too Much

Aug 25, 2003
George Anderson

By George Anderson

Labor costs, particularly those in unionized businesses, have put supermarkets
at a competitive disadvantage against non-union competitors such as Wal-Mart,
reports Reuters.

Mark Husson, a Merrill Lynch supermarket industry analyst. said, “Grocers have
to try to close the gap between their labor costs per hour and those of nonunion
competitors like Wal-Mart. They’ve got to get their cost down.”

The average hourly earnings at supermarkets is $10.35 based on US Labor Department

The average hourly amount paid to Wal-Mart associates is $8.00, according to
the United Food and Commercial Workers Union (UFCW).

Patricia McConnell, a UFCW attorney with law firm Meyer, Suozzi, English &
Kline told Reuters, “The unions are not the enemy, Wal-Mart is the enemy that
we all face. What supermarkets should be doing is help unions put pressure on
Wal-Mart to protect workers and pay benefits as the rest of the industry is

Moderator’s Comment: Are labor costs the competitive
impediment they are so often made out to be?

The problem, as we see it, is not that union employees
make $2 more an hour than Wal-Mart associates. The problem is companies are
A) not initially hiring better people than Wal-Mart and B) not training those
hired to reach their full potential from a productivity standpoint.

Unionized companies such as Meijer have done quite well
with high labor costs. Perhaps this is because management at this chain understands
how to develop its personnel resources where others simply see an expense.

Instead of spending so much time concentrating on what
hourly employees are costing, perhaps supermarkets would be better off analyzing
the productivity of those holding corner offices in headquarters.

Anderson – Moderator

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