Labor Conflicts: The Case of Two Supermarket Strikes

 

By
Cate Malek

July, 2005

In 2003, California endured the longest supermarket strike in US history. More than 70,000 grocery workers picketed outside their stores for almost five months. Although the two sides eventually reached an agreement, they both endured heavy losses. Many workers went into heavy debt while they were on the picket lines. Some even lost their houses. The chains suffered too, losing more than one billion dollars in sales.

"I don't think anybody won. Everybody lost," said Scott. [1]

Just one year after the strike, another supermarket strike looms in Colorado. As in California, the chains claim they have to cut labor costs to compete, but their workers cry exploitation. These workers and their employers are locked into an intractable conflict.

To understand this conflict, it is first necessary to understand who is involved. The obvious parties are the grocery workers and their employers, the big supermarket chains. But, there are also other players involved, most importantly the non-union discount stores like Wal-Mart, consumers, and the American government. These parties are all fighting over the distribution of a limited amount of money.

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To call the history of labor relations in the United States tumultuous would be an understatement. For almost two centuries, the nation has been involved in a tense discussion over the line between efficiency and exploitation. These disputes have often been addressed through government regulations. There are now laws governing the use of safety equipment in the workplace, the number of hours in a workday, and who can and can't be hired. Winning the right to organize has been one of labor's biggest victories. However, as this recent round of strikes shows, labor conflict is escalating once again.

The recent unrest reflects fundamental changes in the US economy. An increasing proportion of jobs are shifting to the service sector, which is notoriously unstable. More and more workers are working part-time jobs that don't meet their basic needs by offering them a living wage or benefits. Journalist, Naomi Klein writes:

A sense of impermanence is blowing through the labour force, destabilizing everyone from office temps to high-tech independent contractors to restaurant and retail clerks. Factory jobs are being outsourced, garment jobs are morphing into homework, and in every industry, temporary contracts are replacing full, secure employment. [2]

This instability is manifesting itself in the area of health care. Over 24.5 million working Americans had no health insurance in 2003. The number is equal to 13.7 percent of the adult population under 65. [3] The shrinking number of insured Americans is often blamed on non-union discount retailers. The biggest of these is Wal-Mart. In 2003, Wal-Mart earned $244 billion in net sales — more than any other U.S. company. Wal-Mart is also the largest private employer in the United States, employing 1.2 million people worldwide. [4] Many people are concerned with Wal-Mart's growing power because of its bad reputation concerning labor rights. The corporation is widely seen as committed to crushing unions. Its traditional response to attempts to unionize a store has simply been to shut that store down. With no unions to deal with, Wal-Mart is able to lower wages and to insure fewer of its workers than other supermarket chains.

The money Wal-Mart has saved on labor has allowed it to seriously threaten its competition. Colorado has three major grocery chains: Krogers, Safeway and Albertsons. All three chains have been hit hard by non-union groceries and especially by Wal-Mart. In order to cut labor costs and become more competitive, Colorado's grocery chains have asked their workers to start contributing to their health care premiums. The benefits package the three chains currently offer covers 100 percent of their worker's health insurance premiums. This kind of package is almost unheard of as health insurance premiums spiral upwards. Nevertheless, the workers have threatened to strike.

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Mike Rosen, a columnist for The Rocky Mountain News, asks:

Why should grocery workers expect a free ride? Supermarkets aren't government jobs programs or welfare agencies. Their primary reason for existence isn't to provide free health insurance for union members. They exist to provide goods and services to consumers and, in doing so, to provide a return on investment to their shareholders. [5]

Why should companies provide their workers with health insurance? There are no laws requiring employers to insure their workers and as premiums spiral upwards, health insurance is becoming a burden few companies can afford.

Grocery workers argue that it is exactly because insurance premiums are so high that they are fighting to keep their contract. They worry that because insurance is so expensive, they will soon be unable to afford insurance at all on their low salaries. These workers are afraid that if they compromise now, they will not only lose the contract they have spent decades fighting for, but they will also join the ranks of the uninsured and underpaid.

However, a strike is not an optimal solution. During the California strike, workers struggled to pay their bills during the long six months they were on the picket line. Despite mounting debt, many workers refused to quit the strike because they had already sacrificed so much. However, after six months, workers like Maria Vasquez became so desperate they had to find other jobs.

"When I was on the picket line, I felt lost and confused, like my life was going downhill," said Vasquez. [6]

Furthermore, even if they do strike, the grocery workers have little bargaining power. Although strikes have been effective in the past, economists believe that this strike is unlikely to receive much public support. Precisely because so many people are uninsured, analysts believe that few will sympathize with the grocery employees. Raymond Hogler, a professor of management at Colorado State University says:

Many people hear the word union in today's environment and they think high wages and benefits and excessive demands on employers. People in a difficult position look at that and say, "Union members are trying to demand things they shouldn't have because I don't have them." [7] However, despite the risks involved, the Colorado grocery workers see no other choice except to strike.

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"Socially, we're engaged in a race to the bottom," says Craig Cole, the chief executive of Brown & Cole Stores, a supermarket in the Washington area. "Do we want to allow competition based on exploitation of the work force?" [8]

The supermarket chains may not be happy about cutting workers benefits, but they believe it is in their interest to sit through a strike.

Despite the risk that they will lose money and customers to the strike, the chains hope the money they save on labor costs will make their sacrifice worth it. This is called the companies' BATNA or best alternative to a negotiated agreement. If the companies believe that they can't gain as much through negotiating with their workers as they can by waiting the conflict out, they are less likely to compromise.

"People used to think, if you had a major labor dispute, it would hurt the company a lot," says Hogler. "Now, if a company is willing to stand up and get labor costs under control, (analysts) believe that although they'll operate under some constraints, they'll recoup those losses down the road in a better labor cost environment." [9]

However some analysts believe the chains are underestimating how much the workers and their employers rely on each other.

"The research on this is pretty clear — everybody loses," said Jeffrey Zax, an economics professor at the University of Colorado.

"Whatever gains either side gets in terms of the contract will be dwarfed by the lost business. A strike or lockout generally represents a real failure of communication. Jointly, they will lose much more than either side can hope to gain." [10]

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It is likely that the tension between companies and their workers will grow over the next few years as more companies begin to actively bar unions and workers see their wages and benefits drop even lower. It is in the interest of both the companies and their workers to avoid strikes, which are extremely costly for both sides. It is also clear that both parties in this conflict believe they have reached a stalemate. However, this actually may be a good sign. If both parties feel the costs of a strike will be more than any potential benefits, the conflict may be ripe for agreement.

Jeffrey Zax called the possible grocery workers strike a "failure of communication." If this is true, one of the key tactics to avoiding a strike could be to improve the communication between the workers and their employers. This could be done through a third sider, who would sit down and mediate between the fighting parties. In some cases, this could be a lawyer or a union leader. However, it is also possible to call in professional mediators, facilitators or arbitrators who can help the two parties voluntarily reach agreement. These professionals can use a variety of techniques to improve communication between the two parties. The first step in the negotiation should be to establish the facts. It is vital to know how much profit the grocery chains really need to stay competitive. If employees understand that their employers are really in trouble, then they will be less likely to mistrust their employers. But, if the grocery chains are still pulling in substantial profits despite the competition from Wal-Mart, then it will be difficult for them to justify cutting benefits. Professional mediators can also help the parties reframe their understanding of the conflict, thus enabling them to pursue their mutual interests and possibly find a win-win solution.

However, mediation may be difficult because this type of conflict is termed negative-sum, meaning there genuinely may not enough money to split between the two parties. If mediation is unsuccessful, workers may have to take the conflict to the government. The only methods for getting the government interested in the conflict are through lobbying and a publicity campaign. This is called strategic escalation, and can be used by relatively powerless parties to gain leverage over their more powerful opponents. Generally, government regulation has been the only effective method for removing the competitive advantage from exploiting workers. Lawmakers in California proposed a bill that would force companies to insure their employees or contribute money to the state for public insurance. The bill was defeated, but bills like it may be one way of resolving the conflict.

Another strategy could be to pull the non-union groceries into the debate. Although this story has been told as a standoff between grocery workers and their employers, the conflict is really more complex than that. Although Wal-Mart and other non-union discount stores such as Target and Costco are not directly involved in the union negotiations, it does not mean they can't be bargained with. In fact, because their presence overshadows every aspect of the negotiations, it may be necessary to deal with the non-union groceries before any progress can be made in the union grocery strike. Although Wal-Mart is often portrayed as a villain, it may not be as untouchable as it first appears.

Wal-Mart has been wildly profitable in the past decade, but one of the biggest threats to its future success the increasingly hostile views that many have toward the company. Wal-Mart, more than any other discount grocery, has come under fire for putting independent stores out of business and driving down wages in the service industry. Recently, more than one million of its current and former female employees sued the company for sexual discrimination. To add to this list, Wal-Mart has been taking increasing heat over its policies towards health insurance.

Wal-Mart defends its insurance policies, pointing out that health insurance is a national problem. Company spokesperson, Susan Chambers, says, "You can't solve it for the 1.2 million [Wal-Mart] associates if you can't solve it for the country." [11] Chambers argues it is unfair for the government to expect companies to shoulder the burden of the increasing cost of insurance. Still, these attacks have prompted the company to spend more money on improving its image, from television ads showing contented workers to large donations to National Public Radio.

It is possible that if Wal-Mart is unable to improve its image, it will begin to lose money. Union grocery workers could exploit this weakness by picketing Wal-Mart instead of their employers. A campaign like this could help workers empower themselves and even the playing field between them and the large corporations.

This strategy has been somewhat successful for other large corporations, notably Nike. In 1994, Nike received a lot of bad press for using Indonesian sweatshops to reduce its labor costs. Despite public protest, Nike refused to change its policies. Finally, after four years of steady pressure, Nike's CEO, Phil Knight addressed the charges. Klein writes:

In May 1998 Phil Knight stepped out from behind the curtain of spin doctors and called a press conference in Washington to address his critics directly. Knight began by saying that he had been painted as a "corporate crook, the perfect corporate villain for these times." He acknowledged that his shoes "have become synonymous with slave wages, forced overtime and arbitrary abuse." Then, to much fanfare, he unveiled a plan to improve working conditions in Asia. [13]

Knight's plan contained some significant changes to its labor policies. He promised to improve safety within his factories and provide some workers with classes. He also promised not to hire anyone under eighteen years old and to obey the Indonesian minimum wage laws. His critics were not entirely satisfied. There was nothing substantial in the plan about allowing independent outside monitors to inspect the factories, and there were no wage raises for the workers. Still, the case of Nike shows that public protest can force large corporations to negotiate with their workers.

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There are difficult issues at the heart of this conflict. One is what to do about health care in the United States. Another is how to close the widening gap between the rich and the poor. These are questions that will not be answered anytime soon. But, they continue to play themselves out in disputes and conflicts all over the country.

Colorado grocery stores aren't the only ones facing labor conflict. There are similar problems throughout the United States. Airline workers have threatened to strike if United and US Airways cut their benefits. Tech workers are becoming increasingly frustrated as their jobs are outsourced overseas. Southern California is facing a bitter round of hotel strikes. If the grocery workers and their employers can come to an agreement, it might be possible to resolve these other labor conflicts as well. It would probably take a combination of approaches to begin to resolve these highly intractable conflicts and even then progress would come slowly. But, even incremental success could help stop the bitter negotiations and strikes that are slowly bleeding both workers and corporations dry.


[1] "Effects of Southern California Grocery Strike Still Felt, One Year Later" KESQ NewsChannel 3, October 11, 2004. http://www.ke sq.com/Global/story.asp?S=2416131&nav=9qrxRsYB

[2] Naomi Klein, No Logo, (London: Flamingo Press) 2000.

[3] Gretchen Weber, "More Americans are Uninsured; Up By 2.5 Million People in 2003," Workforce Management, August 1, 2004.

[4] "Wal-Mart's Social and Economic Impact," National Public Radio, June 2003. http://www.npr.org/news/specials/walmart/

[5] Mike Rosen, "Rosen: Grocery Strike Senseless," The Rocky Mountain News, October 8, 2004. Click here for URL

[6] Jenifer Goodwin, "In a Holding Pattern; Those Left Standing are Weary but United, Resolute," The San Diego Union-Tribune, January 30, 2004.

[7] Janet Forgrieve, "Soft Support Seen for Grocery Workers," The Rocky Mountain News, October 29, 2004. Click here for URL

[8] Reed Abelson, "States Are Battling Against Wal-Mart Over Health Care" The New York Times, November 1, 2004.

[9] ibid. The Rocky Mountain News

[10] ibid. The Rocky Mountain News

[11] ibid. The New York Times

[12] ibid. No Logo


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