February 23, 2004
Can We Stop Walmartization?
Why a tough grocery strike in California matters to workers in British Columbia?
By Jim Sinclair
"I look at our country and I look at where it's going. We're going to have only the very rich and the very poor. We're not going to have any middle class." -- Susan, a striking grocery worker
The eyes of organized labour are turning more and more to a strike by 70,000 grocery store workers in California where one of the nation's largest private sector unions is dug in against three of the largest grocery store chains in North America -- and hanging in the balance during this lengthy battle, is the future of health care for millions of workers.
The strike, which began more than four months ago, pits the United Food and Commercial Workers Union (UFCW) against Krogers, Safeway and Albertsons, whose combined profits reached $9.7 billion last year. But the strike is not over how workers will increase their share of these huge profits, but whether or not they will be stripped of their health care coverage and if wages for new hires will be ratcheted back. It's a struggle that is not only critical to these workers, but a loss in this strike will signal a major defeat to the labour movement facing increasing demands for massive cuts to health care protection.
More broadly, the strike is seen as a test of the labour movement's ability to turn back the nationwide slide in living and working standards that is creating an ever increasing pool of cheap labour on one hand and the wealthiest Americans in the history of the nation on the other.
A billion dollars in concessions
The roots of this strike run far deeper than this round of bargaining. For the past decade and especially in the last three years, the entire U.S. health care system has been reeling from one crisis to the next. Skyrocketing drug costs, a dwindling number of major providers and rising profits have combined to drive up private health care insurance premiums to more than $6,000 per worker annually.
The response of large companies has been swift and brutal. Employee contributions have gone up an average of 170 percent, reaching an average of $2,700 annually. The other result has been more dramatic. Unlike Canada, where all citizens are covered through a single public system, U.S. workers rely heavily on company insurance. Until a few years ago, 80 percent of employees at large companies had insurance. Today this figure is down to 60 percent and continuing to drop.
With each new round of collective bargaining companies are demanding relief through passing along more costs to employees and restricting benefits. In the U.S. steel industry, the burden of health care premiums and carrying costs for retirees has helped bankrupt major companies. The picture is not pretty and the grocery store chains decided it was time to join the parade against decent health care benefits for American workers. The companies came to the bargaining table with demands totaling more than $1 billion in concessions. It didn't take long for others to see that this was a watershed battle for U.S. labour.
'Competing with Wal Mart'
"If these companies succeed in destroying affordable health care, all workers in America will be at risk of losing their health benefits." -- St. Cecilia minister John McAndrew, one of many religious supporters of the strikers
Working in the grocery industry has never been a path to wealth, but after years of battles, workers in large unionized chains can earn an average of $17 dollars an hour with health care benefits after five years. Many don't get more than 20 hours a week, but do receive benefits.
The companies want all this to change.
Key company demands include raising the employee share of health care premiums from $20 per month to more than $300, capping company contributions and freezing wages for existing employees. But the toughest medicine is aimed at the new employees who will be stripped of virtually all health care benefits no matter how long they work and have their wages permanently lowered between $3 and $4 dollars per hour (starting employees earn about $12 per hour).
Companies claim the drastic action is necessary to compete with the likes of Wal Mart where employees earn less than $10 an hour -- an average of $13,861 annually, well below the poverty level for a family of three. More than 50 percent of Wal Mart employees have no health care coverage and the remainder scramble to pay high premiums from small pay cheques.
Dubbed the "Walmartization of America," the trend to lower wages and no benefits now defines the so-called new economy. But Wal Mart is a small player, with only one percent of the California grocery market, and the three main companies claimed revenues of $119 billion last year. While workers are being asked to back up, the company executives are cleaning up. Safeway head Steve Burd is leading the pack with $7 million in earnings and more than $20 million in stock option sales cashed in just days before the strike began.
Symbol of broken health system
"In the corporate drive to maximize profits, obtain tax advantages and reduce employee pay and benefits, our country is in grave danger of accelerating the already serious erosion of the middle class to the point where decent wages and health care will be a historical footnote to America's decline into Third World status." - Sonja S. Marchand, former head of business and industry services at California State University, in an opinion piece on the strike
The old saying, that we can usually outwit them but out-waiting them is tough, is doubly true in this case. The UFCW is one of the largest unions in the country, but a strike of 70,000 members is draining $5 million per week from the union's strike fund. Nonetheless, the union understands that backing down sets the pattern for the rest of the industry across the country, starting with 50,000 grocery workers in northern California who are heading to the bargaining table this summer.
On the line workers are starting to feel the days drag on. When the strike began, the companies moved quickly to train scabs to run the stores which for the most part remain open. But business continues to drop. Community support grows with local churches, city councils and national women's organizations coming onside. And on Friday, January 30th, the big three faced a suit from the state's Attorney General, charging that by agreeing to share costs and revenue during the strike, the companies have broken anti-trust laws and have hurt consumers. The strike has come to symbolize all that's wrong with America and its health care system.
With so much at stake, strike support donations continue to roll in from around the country and Canada. Canadian UFCW locals have sent more than $5 million to their sisters and brothers in California and more is on the way. And there's no doubt they'll need it. When the union offered potential savings of $300 to $500 million in early January in an attempt to solve the dispute, the companies walked away from the table.
Lessons for Canada
For Canadian workers, the lessons are clear. The public health care system we have won in Canada is critical to not only keeping ordinary Canadians healthy but maintaining decent wages and working conditions. As right-of-centre governments push for more privatization and delist more services from provincial medicare plans, the pressure is growing at the bargaining table around health care issues.
Here in B.C., the major increases in MSP premiums and delisting of services have become crucial issues at bargaining tables. UFCW members in British Columbia met this challenge, settling a difficult dispute with Safeway last fall without concessions and cuts to benefits.
It's not just workers who benefit. Canadian employers should also beware of this trend away from publicly funded health care. All the studies show that our system, which unlike our southern neighbour doesn't leave 45 million people in dire straits without health care, provides Canadian business with a huge competitive advantage. Our fight to save public health care is critical to the future economic well-being of working Canadians.
Aside from that, grocery store workers in California are standing up for all workers who want a decent wage and fair benefits, so let's give them all the support we can. Donations and statements of solidarity can be sent to UFCW Strike Hardship Fund, Attn: Secretary-Treasurer Joe Hansen, 1775 K St. NW, Washington, D.C., 20006.
Jim Sinclair is the President of the British Columbian Federation of Labour, which helps fund The Tyee at www.thetyee.ca