Jan 18, 2022

Supermarket Swindle

Published Jul 3, 2007, 12:00pm


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Supermarket Swindle

America’s supermarket titans, with corporate market caps in the billions and yearly salaries in the megamillions, have swindled their employees out of fair wages and benefits, resulting in thousands of children going without healthcare and their parents unable to afford even basic, human needs.

Quick Facts

44,000 grocery workers were hired since 2004

Less than 80 workers have health coverage for their kids.

20,000 kids of Southern Califoria's grocery workers have no access to health care coverage.

2005 profits:

$3.3 billion

$2.2 billion

Albertsons/Super Valu
$3.2 billion

And they can't afford health care coverage for kids?

In 2000 the average L.A. County grocery worker made $587 per week.

In 2006 the average was $497 per week.

That's a pay cut of $4,680 per year.

Jeff Noddle made $228,770.98 in 2006 PER WEEK.

Grocery workers in South Central L.A. make $22,490 per year while the same jobs in West L.A. pay $30,885 per year.

Waiting periods for health coverage since 2004:
Individual coverage: 1 year
Family coverage: 2 ½ years

Employee's health care premium contribution before 2004 = 0%

Employee's health care premium contribution after 2004 = 20%

Grocery workers with health coverage in 2003 = 94%

Grocery workers with health coverage in 2006 = 54%

Grocery workers hired since 2003 with health
coverage = 7%

Don't the grocery stores have to be competitive with Wal-Mart?

NO – Wal-Mart has a tiny 1% of the Southern California grocery market.

Gelsons and Stater Bros have eliminated the two-tier wage.

If the small companies can do it, so can Ralphs, Vons and Albertsons.

2007 Fact Sheet

There are approximately 65,000 members of the United Food and Commercial Workers (UFCW) that work at 785 stores in Southern California from San Luis Obispo and Bakersfield to San Diego. There are seven UFCW Locals that are involved in the contract negotiations: UFCW Local 770 (Los Angeles), Local 1442 (Santa Monica), Local 1036 (Bakersfield, Ventura County, Santa Barbara), Local 1428 (Ontario), Local 1167 (San Bernardino, Palm Springs), Local 135 (San Diego) and Local 324 (Orange County.)

The 2003-04 Strike/Lockout

In the 2003-04 strike/lockout, grocery workers were subjected to a record 141-day strike that caused untold hardship on grocery workers and their families. The employers also lost up to $3 billion dollars.

Creation of the Second Tier Grocery Worker

The resulting contract in 2004 that ended the strike created drastically reduced wages and benefits for new employees, while retaining the wages and benefits for veteran workers. This created a two-tier system allowing the employers to pay reduced wages and benefits to employees hired on the new contract. Entry-level employees make 5 cents above the minimum wage and don’t qualify for healthcare benefits for18 months. Their families do not qualify for healthcare for 30 months. Of the 44,000 second tier workers, less than 3,800 have health care coverage, and of that 3,800, less than 80 have benefits for their children. This translates to 20,000 children in Southern California without access to health care coverage. Veteran employees received no wage increases, meaning that they have not had a pay increase since 2002. In 2003, 94% of all grocery workers had health care coverage. Today, only 57% have health care coverage.
The two-tier wage system created a situation where two grocery workers doing the same job are paid unequally. More than 50 % of the current UFCW membership is now from the second tier of workers, meaning they were hired since the new contract in 2004. The low wages also mean that it is difficult to retain new workers. The current turnover rates are as high as 85% per year.

2007 Contract Negotiations

The current contract expired on March 5, 2007. Stater Bros. and Gelsons markets successfully negotiated a fair contract with UFCW that was subsequently ratified by its members. The contract increased wages and eliminated the two-tier wage system. Current negotiations are now with Ralphs, Vons and Albertsons.
Two contract extensions have been agreed to once the expiration date occurred. The first was from March 6 - 19. The second was from March 20 – April 9 with an automatic renewal each day unless one of the parties cancels the agreement. The contract would then expire in 72 hours.

In order to prevent the lockouts that grocery workers experienced in the 2003-04 strike/lockout, UFCW decided to negotiate with each employer separately. Stater Bros. and Gelsons markets negotiated their contracts successfully under this model. Ralphs, Albertsons and Vons decided in response that they would negotiate with each local union separately, meaning that each stage of negotiations for each employer required seven separate meetings. This caused numerous and unnecessary delays.

A Federal Mediator is now managing negotiations. As a stipulation of the contract extension, UFCW and the employers cannot publicly share any details from negotiations. All that can be shared is that negotiations are still taking place.

Albertsons Strike Authorization

On March 25th, UFCW members ratified a strike authorization for Albertsons only. UFCW members do not want to go on strike. Many of them have not recovered from the trauma of the strike/lockout three years ago. This action was taken to send a message to the employers that grocery workers want a fair contract and want the employers to get down to business at the bargaining table.
Ralphs, Vons and Albertsons Threaten to Lock Out Employees

On April 4th, Ralphs, Vons and Albertsons announced that they will lock out union members if UFCW initiates a strike against any one of them. The three chains also agreed to provide financial assistance to any of the companies targeted by a strike.
The 2003-2004 strike/lockout featured a similar mutual-aid pact in which the three chains agreed to help each other financially if any of the chains were disproportionately hurt by lost sales. Bill Lockyer, then California's attorney general, sued the chains over that agreement, claiming it was a violation of antitrust laws. That suit is pending in federal court in Los Angeles and is scheduled for trial in January. Last November, Ralphs was placed on probation for three years and forced to pay $70 million in fines and restitution for using false social security numbers, defrauding the federal government and illegally hiring strikebreakers during the lockout.

UFCW Sets Deadline of June 21st for Ralphs, Vons and Albertsons to Offer Comprehensive Proposal

UFCW had been in negotiations with the employers for six months and over 100 days past the contract expiration. The employers continually stalled negotiations because every day grocery workers work without a contract, they make millions of dollars. In early June, UFCW set a deadline of June 21st for the employers to present a comprehensive contract in order to build momentum for negotiations to continue. The employers failed to meet the deadline.
Ralphs and Vons Strike Authorization

On June 24th, UFCW members ratified a strike authorization for Ralphs and Vons, with 95% of voting members supporting it. UFCW members do not want to go on strike, but the employers failed to meet the deadline. The strike authorization sent a strong message to the employers that grocery workers want them to get down to business and offer them a fair contract, like Stater Bros. and Gelsons did months ago.
What do grocery workers want from a new contract?

• Fairness and a contract that shows them respect.
• To eliminate the two-tier wage system so grocery workers get equal pay for equal work.
• Fair wage and benefits increases. The supermarkets are making record profits due to the hard work of grocery workers. The employers can afford to offer a fair contract.
Ralphs, Vons and Albertsons made record profits last year.

• Ralphs/Kroger: $3.4 billion
• Vons/Safeway: $2.6 billion
• Albertsons/Supervalu: $2.3 billion
The CEOs of Ralphs, Vons and Albertsons are collecting record bonuses for the success of the supermarkets. Details below are from 2005. On the same day that the supermarkets threatened to lock out their employees, it was announced that Steven Burd, CEO of Vons/Safeway would receive an $11.5 million bonus package for 2006.

2006 Bonus Packages:

• David Dillon (Ralphs/Kroger): $8.3 million
• Steven Burd (Vons/Safeway): $7 million
• Jeffrey Noddle (Albertsons/Supervalu): $11.9 million
Non-union competition is not a factor

The employers always point to Wal-Mart and Costco as major reasons they need to cut costs (and pay grocery workers less), but Wal-Mart has less than 1% of the Southern California grocery market share. And Costco has lost half its market share, from 14% in 2003 to 7% today. Tesco, a new company from the UK, hasn’t even built a single store yet. And when they do, the stores will be less than 12,000 square feet, competition for 7-11, not supermarkets. And, union supermarkets have regained the market share lost in the 2003-4 strike/lockout.
Ralphs, Vons and Albertsons can afford to offer the same contract as Stater Bros.

Stater Bros. is a regional company with 162 stores. It had profits of $26.2 million in 2005, compared to an average profit of $3 billion for Ralphs, Vons and Albertsons.
If Stater Bros. can afford to eliminate the two-tier wage system and offer grocery workers fair benefits and wages, so can the national chains.

The Outlook

Despite the supermarket’s threat to lock out union employees and their failure to meet the June 21st deadline, UFCW agreed to go back to the bargaining table. It is UFCW’s intention to negotiate a fair contract for grocery workers without having to take any strike action.
However, it has become clear through the employer’s threats and stalling tactics that it may be difficult. UFCW and grocery workers are prepared to take strike action if it becomes necessary.

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