Thursday, February 26, 2004
Will it ever end?
For about a week now I've been googling 'California Grocery Strike' every few hours thinking that I could announce the end of the strike in a post. But it keeps not ending. The latest news, which I've got over in the Holding Zone and which Calpundit also has, is that the agreement on the horizon seems to contain serious concessions by the strikers. The LA Times is reporting that, "the deal on the table would trim supermarket employees' health benefits and create a second tier of new workers who would earn less than those hired before the dispute began, according to sources who know the rough details of the proposed contract."
Until we know how much health benefits are cut we won't be able to identify any winners. This much seems clear: there are lots of losers.
The strikers, even if their health benefits aren't cut substantially, have lost five months of income. While it's true that some earned strike pay by walking the picket lines, that money didn't match their normal income. Assuming that a two-tier wage system is installed, don't be surprised if the strikers find themselves slowly pushed out the door by managers eager to reduce labor costs.
Any new employees are going to be on the bottom tier of the pay scale, so they will be consigned to the working poor. Count them among the losers.
Nor is it clear that the three grocery chains are going to benefit much. To begin with, they've significantly eroded their customer base. They've also lost so much money that when you crunch the numbers it's hard to see how picking this fight could make any economic sense at all. Worse, for all their talk about the need to reduce payroll expenses, they haven't addressed any of the inefficient business practices that lie at the root of their inability to match the low prices of discount retailers.
Critics have lambasted the UFCW for their failure to bring the supermarkets to their knees. But as far as I can see the real problem is that the chains aren't acting in their own rational self interest. How do you influence someone who's immune to reason?
I know it goes against the conventional wisdom to suggest that it's in management's interest to pay their employees a living wage. But consider:
While Ralphs, Vons and Albertsons spent a 14th consecutive day Tuesday at the bargaining table with their workers' union, one of the grocers' biggest rivals, Costco, smoothly agreed to a new contract with 12,000 California employees.
The International Brotherhood of Teamsters ratified Costco's contract proposal on a 94 percent vote and Teamsters officials contrasted their bargaining process to the bitter stalemate that has kept 59,000 Southern California grocery clerks out of work for 137 days.
"This contract makes sure that Costco employees remain the highest paid workers in the grocery industry," said Teamsters President Jimmy Hoffa. [source]
Not only did Costco avoid a dispute that would have alienated their workforce, they also saved tens of millions of dollars that they could have spent fighting the union. And by keeping the peace while others went to war, Costco gained significant marketshare.
They look pretty smart to me.