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.
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