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October 22, 2003

Look Who's Coming to Dinner

For the first time in 25 years, grocery employees in Southern California are on strike. The union (UFCW) representing 70,000 employees is at odds with the Big Three--Kroger (owner of Ralphs), Albertson's, and Safeway (owner of Pavilions and Vons)--over health benefits and wages.

The Big Three bought a full-page ad in the LA Sunday Times entitled "Do You Care About the Folks on the Picket Line? We Do, too.", claiming to have offered employees a contract which is more than fair. Just how fair is "more than fair"?

"We've asked our employees to do what more than 90% of other Americans already do--pay a small portion of their own health care coverage; $5 a week for individuals and $15 a week for families."

Employees don't win decent health care benefits without a fight; they're often acquired at the cost of deep cuts in wages and other benefits. In short, when the Big Three ask employees to share in health care costs, they're really asking them to swallow a pay cut. But is a pay cut warranted? Kroger had a net income of $1.2 billion in 2002. Albertson's net income was $485 million, down 3% from the previous year but mainly due to a poor distribution system and the acquisition of American Stores (Lucky). Safeway is in the red $828 million, but also because of major acquisitions in two states.

"A full time food clerk in Southern California can earn as much as $17.90 an hour--and much more on Sundays and holidays. We've offered our current employees a wage increase plus two lump-sum bonuses."

They failed to mention that most employees work unpredictable part-time hours and are lucky to work 30 hours a week. Even at $17.90 an hour, a full time employee only makes $37,000 a year, not much to feed a family in California (where the average home starts at $250,000).
They also didn't mention that the wage increase offer is in exchange for cuts in new employees' starting salaries.

"At the same time, new low-cost, and in many cases, non-union companies are entering the grocery market everyday."

An obvious reference to Wal-Mart, which is planning to open 40 grocery Supercenters in Southern California soon. Wal-Mart is indeed non-union and doesn't pay much in labor costs and health care, enabling them to undercut the grocery chains by 15-20%. But guess what? Wal-Mart employees who get sick get treated at public expense; what Wal-Mart doesn't pay, you and I pay. Fortunately, this is a free ride that might be over in California soon: Governor Davis has signed legislation that requires big employers to provide health care. By the way, Wal-Mart's annual employee turnover is a whopping 45%.

The Unmentioned Factor? Wall Street. Analysts have urged the Big Three to beef up profits or be downgraded, so they scramble to make the easiest cut first: labor costs, even though labor is not the main culprit. It's mainly bad management--from poor distribution systems to costly acquisitions--and the recession. If labor costs and competition are cutting deep into profits, then why did Kroger post a 15% income gain, in spite of lowering its prices to effectively compete? And why are they spending big money on full-page ads and big-discount coupons, anyway?

I am not crossing that picket line. If big corporations had their way, we wouldn't have any health care at all. Until the Big Three make concessions--which the union is willing to do--I will continue to buy at Trader Joe's and Smart and Final, and continue honking my car horn and giving the thumbs up sign to the picketers sweating in 97-degree heat.

Incidentally, this fight may be coming to your neighborhood soon. The unions are planning to go on strike in at least three other states.

posted at 9:05 PM by Wonky Muse

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ABOUT

"Sapere Aude."
(Dare to Know)
-- Epistularum Liber Primus, Horace

Wonk (noun): def. A political nerd. Know spelled backwards.

Wonky Muse is the other Filipino American female political blogger. The sane, liberal one.


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