Workers Strike the Supermarket of the Future
by David Bacon
SAN JOSE, CA (4/16/95) - Thirty-two thousand workers struck or were locked out for nine days at the beginning of this month, as they tried to hold the line against the supermarket of the future. By and large, they were successful.
Although the cornucopia of the modern food store has become a symbol of American capitalist prosperity for people in many countries, for the people who work in them, the stores are places where earning a living has become increasingly problematic. A decade of restructuring by the flagship supermarkets of northern California - Safeway, Lucky's and Save Mart - has created giant food stores where over half the workers work less than a 40-hour week. Anyone passing by the picketlines, and noting the youth of the strikers, could see that young people have become the bulk of the supermarket workforce. Although the chains made a point of telling the public that a checker's wage is over $15.00 per hour, the growth of part-time work has created jobs where the weekly pay for many workers won't support large families and house payments.
In industry after industry throughout the U.S., large corporations have sought to shift the burden of similar restructuring onto their own workforces. For nine days, supermarket workers in stores from Fresno to the Oregon border chose to resist.
In the end the strikers settled for a contract which doesn't change the wage rate. But it preserves a floor which the chains tried to remove. The union saved the contract provisions which guarantee a minimum number of hours for every worker, and which allows them to qualify for a medical plan which has become, for many workers, even more important than the wage rate itself.
Structural change has transformed the way the nation buys its food, and it's squeezing workers in the stores against the wall. Mom-and-pop food stores and small markets were swallowed up so long ago that that they're not even part of the memories of most young working families. In the old-style supermarkets which replaced them, dozens of workers walked the aisles at night with clipboards, counting and pricing items on the shelves, while checkers handpunched the buttons on cash registers. Those days are gone as well.
Taking their place are automated supermarkets where a few workers now do the work which used to employ many. Food stores are no longer filled with workers handcounting items or punching buttons. Automated systems scan items for prices at checkout counters, and automatically update the stores' inventory records at the same time. The new warehouse stores look like exactly that - warehouses where workers often don't even take items off the pallets they were shipped on. Giant national chains of drug and variety stores hire workers at minimum wage, and sell everything under the sun, from tennis shoes to milk.
In the middle of this turmoil, picketline after picketline has gone up in front of food stores across the country, as the workers in the stores struggle to preserve jobs which can still support a family. Los Angeles, Detroit, Chicago, New York - they've all seen their share of the action. This time, the retail war was fought in northern California, in the flagship stores of the flagship chains. Its outcome will set the pattern, helping to preserve minimum conditions in supermarkets from coast to coast.
Safeway and Lucky own hundreds of retail food and variety stores throughout northern California, but they have moved lightyears away from the corporations they were. Both were caught in the huge leveraged buyouts of the 1980s. Safeway now belongs to Kohlberg, Kravitz and Roberts, who bought the company in one of the largest junk-bond deals of the decade. Lucky's became a link in the American Stores chain just a few years ago.
The price of the Safeway buyout was $5 billion in 1986. According to Steve Stamm, secretary-treasurer of Local 428 of the striking United Food and Commercial Workers, "our members paid for the debt the company took on as a result." For six years in the late 1980s, retail clerks received no actual wage increases in contract negotiations, just hourly bonuses. The agreement which ended the strike continues this pattern of no increase in the base rate.
Holding the lid on labor costs paid for the massive automation of supermarkets. While workers in some industries resisted the introduction of computers, fearing the sometimes-enormous job loss which resulted, union in food stores rarely did. Automation boosted productivity, as workers handled much larger volumes of items, whether at the counter or stocking shelves. While the size of the stores grew at the same time, it didn't make up for the losses.
Safeway's total employment dropped from 160,000 to 67,500 in the years since the buyout. Overall sales in the past three years stayed almost flat, from $15.1 billion in 1992 to $15.6 billion last year. But Safeway net profits rose from $43.5 million in 1992 to $239.7 million last year. The feeling by the union that wage restraint paid both the cost of automation and for this enormous increase in profits fuels the bitterness in this current strike.
Throughout the strike, Safeway said that it needed to maintain a no-increase posture. Roberta Wong, a spokesperson for the employers, says that Safeway presented the union with proposals for a flat-cost contract, which she described as one in which there is no rise in the total cost of wages and benefits. She agreed that many management proposals would have cut the cost of benefits, but she could not point to any proposal for a corresponding increase in any other area.
In bargaining leading up to the strike, Stamm says that negotiators for the food stores refused to address issues which union workers brought to the table. Instead, management submitted to the union a long list of takeaway proposals, which was rejected in a vote by union workers. Wong agreed that "you could probably conclude that neither side was able to discuss the other's ideas."
"They were asking for cuts so deep, I think they wanted to have this strike," Stamm asserts. "We understand that supermarkets are a very competitive business, and that competitiveness matters. There were things we were ready to do because of that. But they would only consider their own proposals."
While management asserted that it was making "flat-cost" proposals, its focus was a drastic reduction in the money the companies spend for health care coverage for union members. In particular, they proposed eliminating the hours guarantee for part-time workers, and at the same time increasing the hours necessary to qualify for medical coverage. These were the proposals which the strike defeated.
In supermarkets, only a small percentage of the workforce actually works a full-time, 40-hour week. Statistical reports in the Local 428 office show that 37% of the workers at Lucky's are full-time, and 41% at Safeway.
In 1980, workers struck in large part over what they viewed as efforts by the stores to hire more and more people on a temporary, part-time basis. In the 1983 negotiations, the first set following that strike, the union won an hours guarantee, enabling store employees to work enough hours to qualify for medical benefits. Under the expired contract, baggers were guaranteed 16 hours a week, and other employees were guaranteed 20. Baggers needed 64 hours in a month to qualify for the medical plan, which is the same as the guarantee. Other workers needed 76 hours a month, which the guarantee more than provides.
This year, management proposed numerous changes in this system, which would have eliminated medical coverage for thousands of workers. One proposal would have ended the hours guarantee. Another proposal would have changed the number of qualifying hours for the medical plan to 120. A third proposal would have made large reductions in the contributions employers make towards the cost of health insurance premiums.
All of these proposals would have had their sharpest effect on young people. The foodstores proposed to eliminate health coverage from baggers entirely. Almost all baggers are part-time workers, most of whom are 18-25 years old. "Lots of baggers are students and single parents," Stamm says. "The medical coverage they get for themselves and their children is often what keeps them off welfare, which is exactly where many of them may wind up." For the clerks at the counters, the stockers who keep items on the shelves, and the specialty workers at the fish and meat counters, the delis and the bakeries, a reduction in hours could have eliminated their medical coverage as well. "A manager could short-schedule you," Stamm explains, "and all of a sudden you'd lose your medical benefits for that month."
Wong would not confirm specific management proposals, and says they "were just a list of ideas." She agreed that eliminating medical care for baggers "was an area they were looking at." and called the workers' medical coverage "a Rolls-Royce plan," saying that the stores "wanted to bring it into line with today's marketplace." In the agreement which ended the strike, all of these management proposals were taken off the table.
Management also had to accept an important qualification of its flat-cost concept. The insurance premiums for medical coverage have increased as much as 20% per year over the past decade. While supermarket management wanted to pay for the cost of future increases by shrinking the number of workers who qualified for coverage, the strike settlement worked out a different arrangement. Increases in the cost of insurance will instead be paid out of the reserves of the medical plans which cover the store workers.
Throughout the strike, Wong and management spokespeople asserted that the purpose of their proposals was to reduce costs in the face of competition from the new warehouse-style food retailers. With companies like Wal-Mart and K-Mart retailing food, "the growth potential is forever gone" for companies like Lucky's and Safeway, Wong declared.
In some cases, however, the chains themselve own the competition, which Wong calls "having other formats." Pack and Save, for instance, belongs to Safeway, and Supersaver belongs to Lucky's. The big chains have set up the same kind of "double-breasted" operations as employers have in industries like construction, where they own low-wage competitors themselves. The advantage of this restructuring is that it allows the stores to use the pressure of lower wages to demand cuts in labor costs in the higher wage contracts, as they tried to do in the current strike. According to the Wall St. Journal, wage rates in non-union food stores are about half the union rate at Safeway and Lucky's. An experienced union checker earns $15.83, while the non-union average is $7.50.
In major metropolitan areas almost all food retailers and variety stores are unionized, however. In Santa Clara County, for instance, the only major non-union food retailer is MaxClub, which is currently being picketted by UFCW. "Safeway keeps opening more stores," Stamm points out, "which they would hardly do if they weren't very profitable." According to Investor's Business Daily, Safeway opened 20 new stores in 1994, and remodeled 70 more. The company plant to spend $400 million this year on capital improvements, opening 25 more, and remodeling as many as 100. Altogether, the company owns 1062 stores in the US and Canada.
Management points out that wages at drug and variety chains, like Wal-Mart, K-Mart, Walgreens or Thrifty, are well below union scale. Some of the older drug chains have union contracts, but the new, bigger ones don't. The union rates are often substantially below the standard of the master grocery contract. But the union denies that drug and variety stores are competitors to the supermarkets. "You can stand out in front of one of these drug chains all day, and you won't see anyone leaving with a cart full of food," Stamm says.
In the end, the union may have been more willing to risk a strike this year because of recent action by President Clinton. A month ago, he issued an executive order banning the hiring of permanent replacements for striking workers by companies which have federal contracts. The union believed that Safeway has federal contracts. While the order didn't prevent the supermarkets from hiring temporary strikebreakers, it reassured the union and the strikers that if the strike began to lose support, striking workers would be able to return to their jobs.
In the end, they needn't have worried. As the strike unfolded, the struck supermarkets are filled with the echoes of a few solitary shoppers, while crowds swelled their unstruck competitors. After a militant rally of hundred of strikers outside Safeway's head office in Oakland, negotiations began again. Management negotiators claimed agreement had been reached when the union said it would settle for existing conditions. But when it became clear that the companies meant that they would not pay for increases in the cost of medical insurance, the strikers and the union refused to end the strike. After holding out for two more days, agreement was reached on using the plan reserves to pay for increases.
On the Safeway picketlines, clerks and baggers kept repeating what other strikers have said to themselves over and over through the last decade: "all we have to do is last one day longer than they do."
As it turned out, they did.
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