Monday, August 29, 2011

Unions Gone Wild: Grocery Workers Threaten to Put Their Employers Out of Business

Back in June, we wrote about the contentious negotiations taking place between the UFCW and the Ralphs, Vons, and Albertsons grocery chains in southern California. At issue is the union's demand for continued free health care; the grocers have offered insurance coverage for as little as $9 a week, and for employees who work as few as 16 hours a week, but they're insisting on at least some contribution from the workers. As a result, the union overwhelmingly voted, just over a week ago, to reject the supermarkets' offer and go on strike.

Of course, like government workers who can't understand why some taxpayers have a problem with their six-figure pensions, these folks might find that the public is a lot less sympathetic than they were in 2004, the last time the UFCW went on strike. With unemployment ranging from 9% in Orange County to north of 14% in the Inland Empire, beleaguered Southland residents may find it hard to shed tears for union workers getting strike pay in return for refusing to work for a willing employer. What's more, many of the 2004 strikers picked up second jobs to supplement their strike pay; good luck with that now.

More importantly, the three union supermarkets lost $2 billion in the 2004 strike, and the San Diego Union-Tribune is openly wondering whether they'd survive another work stoppage. While Albertsons, Vons, and Ralphs all recovered the market share they lost in that strike, times have changed since then. Big box retailers like Target, Wal Mart, and Costco have greatly expanded their grocery offerings, and stores like Fresh & Easy and Trader Joe's have only gotten easier to find. Moreover, with inflation squeezing grocer profits, the sizable wage differential between union and non-union stores means that better bargains are more likely to be found in the latter. As such, a loss in market share resulting from a strike might be more permanent this time around. Whether this would wipe out one or more of the affected chains is an open question. But it is a possibility.


  1. RobAug 30, 2011 07:26 AM
    Without knowing their financial position, I can't say whether any of the affected chains would go south. However, I do think that to most people, it won't matter; they'll buy more stuff from non-union competitors. Unions are nice for people who can get in, but not so nice for everyone else, and ultimately, as this instance shows, the price you pay for that strike may well be your own job. Go ahead on, strike; within walking distance to my local Ralphs are two non-union competitors, Target and Sprouts.
  2. GSLAug 30, 2011 07:31 AM
    So far as I know, the union chains have seen strong profits in recent years, but are heavily in debt.
  3. RobAug 30, 2011 10:10 AM
    It would be kind of funny if they negotiated a deal, the chains went into Chapter 11, and then the unions had to renegotiate down as a consequence.
  4. GSLAug 30, 2011 10:12 AM
    Heh. Cause, meet Effect.