Friday, February 13, 2004
Get out your calculator
I don't know how many of the striking workers are employed at the stores owned by Safeway. But let's suppose, falsely, that all 70,000 are employed there. Next suppose that all of those workers are full-time. Then, they put in 2.8 million work-hours per week and 145.6 million work hours per year.
Safeway's $103 million dollar loss is for the quarter running from October 4 through January 3. That means that during that period Safeway lost about $2 million per day. If losses continued at that rate, then Safeway has lost another $80 million since January 4. Company execs don't give specifics, but they claim that strike-related losses are trending lower. Let's give them the benefit of the doubt and say that Safeway's total loss through February 13 is a mere $143 million. And we'll assume that losses continue to accrue at the rate of $1 million per day.
REALLY SIMPLE MATH tells us that, under these assumptions, Safeway's loss amounts to nearly $1 per work-hour over the course of a full year. That is, four months of labor unrest have cost Safeway about as much as it would have cost to pay for a full year of $1 per hour raises for every striking worker. Add a nickel to that for every two weeks the strike goes on from here.
Safeway, of course, doesn't employ all of the striking workers. If they employ three quarters then the loss per work-hour jumps to $1.32, and goes up by a dime for every three additional weeks. If they employ half then the loss is $1.96 per work-hour, with another nickel added every week.
Discussion question: Was it worth it? Your answer should take account of such factors as brand damage, workplace civility, and the workers' expressed willingness to renew the expired contract despite the fact that it did not provide for significant increases in compensation. Only those who answer in the affirmative will be considered for admission to the M.B.A. program.
Update (Thursday, February 26): It looks like the strike is going to end within the next few days. I wanted to take this opportunity to post some final numbers. As noted elsewhere, the UFCW changed it's estimate of the number of strikers, revising the number downward to 59,000. Using that number and the previous assumptions (including the assumption that Safeway employs all 59,000 strikers) carried out through today, the cost of the strike is about $1.27 per work hour over the course of a year. If Safeway employs three quarters of the strikers, then the cost rises to nearly $1.70 per hour. And if Safeway employs half of the strikers then the cost is $2.54 per work hour.