Deja Vu All Over Again in SoCal Labor Talks
There were some grocers that came out ahead in the 2003/2004 grocery workers lockout/strike. Unfortunately, neither Albertsons (now owned by Supervalu), Ralphs (Kroger) nor Vons (Safeway), the companies involved in the dispute with labor, were among them. In fact, estimates have put losses for those chains at $2 billion for the period.
There were also some grocery workers that did okay during that period, but they weren’t employees of the aforementioned chains.
So, what in the world is going on in Southern California?
The parties have been negotiating on a new contract for more than eight months. Even though the old contract expired in March, the chains and employees, represented by United Food and Commercial Workers union, have continued talking while operating under the old contract. Union members over that time have given it permission to call a strike, but haven’t acted on it. But in an apparent bid to light a fire under the chains, the union has given 72 hours notice that it will cancel the contract extension. This move is required before workers hit the picket lines.
The major bone of contention with the parties is health care and who pays for it. The chains are asking grocery workers to pay $9 a week for individual coverage and $23 a week for families. Workers hired before 2004 currently pay nothing for health care coverage, while those hired after the strike pay between $7 and $14 a week, according to the The Bakersfield Californian.
The union has argued that the increase, in light of low wages paid to grocery workers, is too much for employees to take on, while the chains maintain that they continue to pay most of the load and need some help in an environment where many strong non-union competitors pay lower wages and benefits.
Greg Conger, president of UFCW Local 324 in Orange County, said the chains have given workers little choice but to take the action they have. "The talks have been going at a glacial pace," he told the Los Angeles Times. "If the employers don’t snap out of it and give our members a proposal that we can live with, the only option we have left is a strike."
Kendra Doyel, spokesperson for Ralphs, told the Times, "Even though the union leadership has canceled the contract extension, our stores are open for business. Bargaining will continue over the next three days and we remain hopeful that an agreement can be reached."
Discussion Questions
Discussion Question: Play mediator: What’s your answer to the impasse in labor negotiations in Southern California?
The UFCW has to recognize that companies need to show a profit to survive.
Employers, in turn, need to understand that UFCW members need to earn a certain amount of money to survive and that decreasing net take home pay by $468 a year for an individual and/or $1,196 a year for a family may represent a significant financial hardship for some of those individuals and/or families.
What’s the solution?
Somebody — labor or management — needs to wake up and insert some creativity into the bargaining process by tying raises to increased productivity, cost savings, etc., or offering an alternative slate of benefits including retraining and expanded educational benefits perhaps.
If you keep having the same argument, you shouldn’t be all that shocked when you reach the same conclusions over and over again.
The economic reality is that nobody wins from a strike.
It used to be that new hires benefited from gains secured during a strike, but that kind of model is a vestige of an Industrial Age/strong union environment that hasn’t been a reality for decades.
If people don’t get smarter, faster, many employers will lose and unions will simply cease to exist.
The times they aren’t a changing — they’ve changed.
Times have dramatically changed for chain retailers in SoCal during the past four decades but the mindset of the unions seem to be demand-constant.
With dynamic non-union competition having established itself in SoCal in recent decades, and being unrestricted by union work rules, today’s unionized chains are being further constrained by the union demands. That is ironic and its building a road, not to prosperity for the chain and its employees, but to their reduced significance and possible demise in both the stores and the union workers’ jobs.
My first experience in the SoCal market was when one of the chains began to report to me while at Kroger. I visited Army Armstrong, the local chain’s president then, and learned that even his secretary was unionized. That, for me, had all kinds of potential implications.
Bottom line: Union workers in California have good jobs by today’s standards. The objective should be to preserve them. Unless there are a lot of other good-paying jobs in California today, the answer to the impasse in labor negotiations in SoCal is for the union to preserve (vs. jeopardize) its members’ jobs. The chains need to be innovative but also be able to operate competitively with fewer work rules. Kroger eventually closed down the chain it owned then in Southern California for that reason. Is that prophetic?
Insanity, according to Einstein, meant “doing the same thing over and over again and expecting different results.” He was a pretty smart guy and both the chains and workers in this case meet that definition.
To believe that employees in any company, retail or otherwise, are not participating in the cost of health care is far outside of the norm. To ask a employee to participate at the level of $468 per year for coverage is not even the least bit unreasonable.
Jobless claims rose yesterday to their highest levels in three months to 428,000 according to reports. As we watch union membership continue to decline to its lowest level in over 100 years to 6.9% according the U.S. Bureau of Labor Statistics, it’s very easy to understand why. Last year, union membership fell by over 600,000 — in that one year alone. It’s almost mind boggling to imagine the UFCW taking this stand. However, the union culture seems undaunted by its losses.
The answer somehow lies in companies such as these three and others being able to communicate directly to their workers. The economic conditions in California are no better than anywhere in the country, in fact in many ways they may be worse than some states. There is and has to be a way to better communicate directly with workers without a third party involved that apparently has other concerns and motivations than the sustainability of the employment of their members.
Ryan said it all. If the unions strike everyone loses. My family changed its shopping habits during the last strike. Most of our grocery dollars are now spent with Trader Joe’s and Costco, rather than Ralphs.
Both the unions and the grocers need to come up with innovative solutions, if a strike is going to be averted. Otherwise, both sides will lose.
I won’t say that I’m anti union but I do believe that they have no place in retail. Wages and benefits are already on the low point and I look at union organization as more of a cash grab for the union coffers than a benefit to the rank and file employee. I really don’t have an answer for how to get through the impasse but after hearing the Prez’s speech last Thursday, perhaps the employees should be thankful there is a job to go to.
All the solutions are bad, as the unions can destroy the bottom line of the stores, as their tactics are scary. To pay nothing for health care is a complete joke, and I feel sorry for the stores who are trying to get a little cooperation from the unions. Everybody loses except Walmart, Costco, and strong independents, and the union workers themselves will lose, as layoffs and store closings are going to be the end result of their narrow mindedness. When will these guys learn? Sounds like Congress!
Having been a first-hand observer and commentator on the previous grocery strike here in Southern California the times and the situation were quite different. The economy was booming and the grocery workers union had a strong position. Unfortunately, both the union and the major grocery chains lost in that battle of wills.
Today the California economy is very weak and unemployment is around 12%. With health care costs rising here and around the country, the union will ultimately lose this battle. Traditional supermarkets are also losing market share to stores like Walmart, Costco and others. The union would be far better off to negotiate in good faith and settle this thing before a strike since the major chains will have little difficulty in replacing these workers.
This comment could apply to everyone, not just the grocery workers in Southern California.
Everyone in a business relationship has to work harder to make the incentives mutually rewarding. Whether it is the consumer and the retailer or the worker and the employer, there is no reason mutual incentives cannot be found. In this particular situation, where we are talking about unions and employers, it would be a lot easier if negotiations could move toward some kind of profit sharing arrangement. Probably the most notable company that implements this model is Publix. You probably can’t get there in one contact negotiation, but the groups can start to put in mutual incentives that would give union members and management a stake in the success of the corporation. Just because the employees are unionized does not mean their welfare cannot be tied to the success of the company.
Union management is probably the biggest factor in this situation. It is almost as if the union management’s incentives are directly opposed to the best interests of the corporation. Instead of labor stability, higher turnover increases initiation fees for unions. Instead of increasing employee productivity through better equipment and training, some union dues may be based on hours worked or total wages so lower productivity improves union revenue. In this particular situation, the health benefits should really come from three sources: the employee, some of the union dues, and the corporation. When the cost of benefits increases, everyone has an incentive to minimize their impact.
We see it all the time in business, where incentives are simply not aligned. Whether it is the trader on Wall Street who makes deals for the commission, or the doctor who books an extra procedure to generate a charge, the incentives are not aligned with the long term goal. In addition to adjusting the benefits charge, I suggest union management be put on corporate stock options along with their members.