Sunday, May 10, 2009

Safeway, Kroger Co. and UFCW Union Agree to Extension in Colorado Store Worker Contract Dispute; We Suggest A 'No Loser' Policy in Negotiations

Food & Grocery Retailing and Organized Labor: News, Analysis, Commentary

Safeway Stores, Inc.'s Colorado division and the United Food & Commercial Workers (UFCW) union avoided a potential employee strike at Safeway supermarkets in the western state when the grocery chain decided to extend its just-expired union contract until May 30, giving the retailer and UFCW local 7, which represents the store workers, more time to negotiate a new contract.

Safeway operates over 100 supermarkets in the Colorado Rocky Mountain region.

Safeway Stores, Inc. issued a statement today announcing the contract extension.

Colorado Safeway store workers voted yesterday in favor of a strike but have agreed to continue to work under the old contract, which expired at 11:59 p.m. Saturday, May 9, until a new contract can be agreed upon or the May 30 contract extension deadline is reached, according to Kristine Staaf, a spokesperson for Safeway Stores.

Safeway's Colorado Rocky Mountain division isn't the first supermarket chain in the state to extend its contract with the UFCW over the weekend.

Yesterday another supermarket chain with stores in Colorado, Kroger Co.-owned King Soopers, decided to extend the union contract for its store-level employees to May 30 after being offered the opportunity to do so earlier in the week by UFCW local 7.

Safeway-Colorado and Kroger's King Soopers-Colorado had previously agreed to a mutual pact in which if employees of one chain or the other went out on strike, the other chain would then lock out its store-level workers in return. This has become a common strategy among unionized supermarket chains in the U.S. when the UFCW threatens a strike if a new contract isn't agreed upon within a certain timeline.

Such an agreement won't be needed between now and May 30 however, since employees for both chains have indicated they plan on working through contract negotiations, at least until May 30.

The contract negotiations and threat of an employee strike come at an obvious difficult time --the recession, massive unemployment, and the financial crisis -- for both the two grocery chains and their employees.

The union and its employees want a slight wage increase under the proposed new contract.

The two grocery chains want wages kept where they currently are under the new contract.

The union wants certain changes to the employee pension system, chief among them is changing the age in which store-level workers are eligible to start receiving their pensions, from the current age of 55, to age 50.

Safeway and Kroger's King Soopers want to keep the minimum retirement age right where it was in the just-expired contract -- at age 55.

Safeway Stores' and Kroger/King Soopers' Colorado divisions are the two leading supermarket chains in the the state. Albertsons, also unionized, is number three.

Fresh & Easy Buzz Analysis and Commentary

Unionized supermarket chains like these three pay store-level employees with one-year of full-time experience from about 30% to as much as 50% more per hour than what non-union grocery and mass merchandiser chains like Wal-Mart, Target, Costco, Trader Joe's, Tesco's Fresh & Easy, Colorado-based Sunflower Farmers Market, Whole Foods Market and others do.

The hourly wage for a full-time journey-level retail clerk at a unionized supermarket chain in the Western U.S. is about $20 an hour. They also receive a higher hourly wage when they work on Sunday and on holidays.

The unionized supermarket chains also offer workers a defined benefit pension plan.

The non-union chains generally offer 401-k-type of plans in which the employer matches a certain percentage of a store worker's contribution.

A UFCW-affiliated union chain employee with 30 years' of full-time service can retire after such service and collect as much as $40,000 annually in pension benefits every year he or she is alive post retirement.

Additionally, the UFCW-union supermarket chain health plan is among the best of any business sector, at any level, in the United States. Compared to most health plans the unionized supermarket clerks have more choice, lower employee contributions and minimal co-payments.

There's a growing frustration among the CEO's and others at unionized supermarket chains like Safeway, Kroger, Supervalu, Inc. and others because the fastest-growing retailers of food and groceries, the ones nipping hard at their heels, are non-union.

In Colorado this challenge from non-union retailers especially includes Wal-Mart with its Supercenters, Costco with its big box stores that sell fresh foods and groceries, and Target with its discount format stores and Super Target stores, which are similar to a Wal-Mart Supercenter.

To a lessor but important extent it also includes increased competition from the non-union and fast-growing natural foods-grocery hybrid chains Sunflower Farmers Market and Natural Grocers, both which are based in Colorado.

These non-union chains, which generally pay lower hourly wages and offer less in employee benefits than do unionized Safeway and Kroger, have been and continue to open new stores in Colorado, putting pressure on the unionized chains.

The unionized chains argue that because these non-union retailers pay employees less and offer fewer benefits, it puts them at a competitive disadvantage when it comes to retail pricing. Despite that fact, Safeway and Kroger are both rather competitive with Wal-Mart and Costco on price -- and are actually lower overall than Target.

It's important to note that neither Safeway or Kroger has been or is talking about breaking the union. Nor are they complaining. But they have a valid argument, one the UFCW should take seriously we believe, about the competitive advantage afforded the non-union competitors.

Safeway Stores' and Kroger Co.'s stores in Arizona, Nevada and California aren't affected by the contract negotiations or threatened strike. The divisions in these respective Western States --the three states where Tesco's Fresh & Easy operates its 120 non-union grocery and fresh foods markets -- operate under separate contracts.

Safeway Stores, Inc. operates 500-plus supermarkets in California, Nevada and Arizona under the Safeway and Vons banners.

Kroger Co. operates about the same number of stores in the three states. It's banners in the three states are: Ralphs (Southern and Central California), Food 4 Less (Southern California, Nevada); FoodsCo (Northern California) Smith's Food & Drug (Nevada) and Fry's (Arizona).

Additionally, both Safeway and Kroger operate hundreds of additional supermarkets in other Western U.S. states, including in addition to Colorado, in Oregon, Washington State and elsewhere in the west.

The fact that non-union retailers have been gaining on unionized supermarket chains is best demonstrated by looking at the changes in the ranking of the top-five retailers of food and groceries over just the last four -to- five years.

Just four years ago Kroger Co. (unionized) was the number one retailer of food and groceries in the U.S., followed by non-union Wal-Mart at number two, Supervalu, Inc. (unionized) at number three and Safeway Stores, Inc. a (unionized) number four.

Today, non-union Wal-Mart is the number one food and grocery retailer nationally in the U.S. Kroger (unionized) is number two. Non-union Costco is number three Unionized Supervalu, Inc. is fourth and Safeway Stores, Inc. (unionized) is number five.

Non-union Wal-Mart and Costco have been the two fastest-growing chains among these top five in terms of annual sales volume.

Additionally, Aldi USA and Whole Foods Market, Inc., both multi-billion dollar a year grossing non-union chains, and both among the top-25 largest chains in the U.S., have grown faster on a percentage basis than any unionized supermarket chain in the U.S. over the last five years.

American workers are seeing wage stagnation greater than ever in recent history during this recession. In fact, such wage stagnation has been going on for at least the last five years.

And of course, most American workers just want to hold on to their jobs right now, since finding a new one at present reminds one of that old song: " (Dream) The Impossible Dream."

Such are the realities facing Safeway Stores, Inc., Kroger Co., the UFCW union and the employees of Safeway's Colorado stores and Kroger's King Soopers supermarkets this weekend.

All sides in the negotiations should be extra considerate of one another in these tough times, we suggest. Give and take must be the order of the day. It's not a time for winners and losers. The stakes are too high for all of the stakeholders involved.

And, with all due respect to the UFCW... Is this really a good time to be arguing for the retirement age for unionized supermarket clerks to be reduced from age 55 to 50? We get it -- the more folks that retire at age 50 the more new jobs open, at least theoretically. That could backfire though, actually, in the form of employers freezing openings.

It's just that the move is rather tin ear we think for the current times. Right now the vast majority of Americans in their late fifties and early sixties, including those at retirement age now, will have to postpone retirement because they can't afford it.

Therefore, along with a couple other reasons, we aren't sure arguing for unionized grocery clerks to get the same retirement benefits at age 50 that they now get when they retire at 55 if they choose to is a good move in terms of gaining public support. Not to mention getting continued support from unionized supermarket chains.

Related Stories from Fresh & Easy Buzz:

>April 13, 2009: Analysis: Major Retailers Costco, Whole Foods Market and Starbucks Propose Employee Free Choice Act 'Third Way' Compromise; What About Fresh & Easy?

>February 13, 2009: Labor & Food Retailing: Kroger Co. Chains Sign New Contract With the UFCW Union in Vegas; What Happened to the UFCW Tesco Fresh & Easy Campaign?

>November 10, 2008: Food Retailing & Organized Labor: Tesco's Fresh & Easy Gets Some Company as the UFCW Union Launches Campaign to Unionize Wakefern's PriceRight Banner

>November 4, 2008: U.S. Organized Labor, Including the UFCW Union, is Feeling Good Tonight About A President Obama and Stronger Democratic Majority in Congress

>October 28, 2008: The UFCW Union, Tesco's Fresh & Easy, U.S. Labor Relations, and Next Week's Presidential and Congressional Election

>October 2, 2008: Tesco Fresh & Easy Denies Huntington Beach Store Employees Request to Be Recognized As A Union Store; Next Step Likley to Be Open Ballot Election

>September 26, 2008: News & Analysis: Employees At Two More Fresh & Easy Grocery Stores Could Soon Request UFCW Union Recognition From Tesco's Fresh & Easy

>September 17, 2008: Store Workers at Huntington Beach Fresh & Easy Demand Union Recognition From Tesco Fresh & Easy Neighborhood Market

>August 27, 2008: UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees

>August 5, 2008: UNI Global Union Launches Tesco-Specific Alliance; Calls For Tesco Executives to Meet With UFCW Union Officials Over Fresh & Easy Neighborhood Market

>August 4, 2008: Pico Rivera, California City Council Members Boycott Fresh & Easy Store Grand Opening; Mayor Attends But Delivers Pro-UFCW Union Message to Execs

>July 30, 2008: UFCW Union Flyers On His Door Knob Cause Heat in 'The Pragmatic Chef's' Mental Kitchen; Others Wondering About the Negative Campaign As Well

>July 3, 2008: Mid-Week Fresh & Easy Roundup: Fresh & Easy Gets Caught in A Land Use Dispute; Those Near-Famous Mixed Grill Packs; More On Manhattan Beach

>July 4, 2008: Breaking News: UFCW Union Strikes Again With Anti-Tesco Fresh & Easy Brochure Drop in Neighborhood Surrounding New Manhattan Beach Store

>July 2, 2008: UFCW Union Pickets Out in Force This Morning At Manhattan Beach Fresh & Easy Store Grand Opening

>June 30, 2008: Breaking News: UFCW Union Launches Preemptive Anti-Tesco Fresh & Easy Brochure Distribution Drop on the Eve of Manhattan Beach Store Grand Opening

>June 26, 2008: Tesco 2008 AGM: Barack Obama Sends Second Letter to Tesco CEO Requesting the Company Meet With U.S. UFCW Union Leaders About Fresh & Easy

>June 22, 2008: Vocal Cast of Critics and Advocacy Groups to Attend Tesco's Annual General Meeting On Friday, June 27

>June 4, 2008: News and Analysis: UFCW Union Takes its Tesco Union Organizing Campaign Across the Pond to the United Kingdom Beginning Today

>March 26, 2008: United Food and Commercial Workers Union Begins its Spring 2008 Organizing and Communications Campaign Directed at Tesco's Fresh & Easy

>February 11, 2008: Supermarket Union President Asks Britain's Prince Andrew to Arrange A 'Sit-Down' With Tesco Fresh & Easy Neighborhood Market Senior Executives

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Anonymous said...

To argue that Costco is a non-union retailer I think is a little bit misleading. With very few exceptions, the other examples you give as being non-union are companies that are virulently anti-union, where as Costco is 18% union, and is known for providing the same wage and benefits to its non-union employees. Which ruins the argument that they are able to see significant cost savings because they don't have a union.

Fresh & Easy Buzz said...

Anon commentor:

We aren't attempting to make a value judgement in our story as to whether or not any of the food retailers mentioned should or should not be unionized. Nor are we making any value judgements between/among the non-union food retailers mentioned as to their respective relative strength of union/anti-union activity.

Costco, like the others mentioned, is a non-union store-level employee chain. That's all.

And they do pay higher hourly wages than Wal-Mart, without doubt.

We aren't suggesting they or any others should be unionized.That's up to the employees and the process.

For example, store-level employees at Whole Foods Market have voiced their collective opinion to date that they don't want to be unionized; that they prefer the type of compensation they receive as a non-union retailer just fine. That's why unionization efforts have failed at Whole Foods to date.

Trader Joe's employees have done the same thus far. So have those at Costco.

You might find this piece of interest:

Thanks for your comment and for the link.

Anonymous said...

Boiled down, I think my dispute with your comments is that it is probably misleading to characterize a store chain in which approximately 1 in 5 store employees is a union member as "non-union."
Thank you for your response, though.