TOPICS > Economy

Benefit Issues

October 21, 2003 at 12:00 AM EDT


JEFFREY KAYE: For two weeks, pickets have seemed to be almost everywhere in southern california. In Los Angeles, 2,000 striking mechanics supported by six thousand drivers and train operators have idled most buses and closed rail and subway stations. As a result, LA traffic is even more clogged than usual, as 400,000 former mass transit passengers scramble for transportation alternatives. 70,000 members of the United Food and Commercial Workers Union are also pounding the sidewalks.

They’re picketing 859 supermarkets throughout southern California. The overriding issue in both labor disputes is the same: Company plans to cut health benefits. A broad array of labor unions is rallying to support the supermarket workers.

SPOKESMAN: We’re going to last one day longer than they do and we’re going to win this strike! ( Cheers)

JEFFREY KAYE: Miguel Contreras heads the L.A. County Federation of Labor which comprises some 350 local unions.

MIGUEL CONTRERAS: We’re united with the retail clerks here to tell all the employers, that if the battle’s about health care, this labor union stands united in supporting each other.

JEFFREY KAYE: Supermarket workers are on strike against Vons and Pavilions, owned by safeway. The two other major chains, Ralph’s owned by the Kroger Company and Albertsons, have locked out their employees in a show of corporate solidarity. The three companies, the nation’s largest supermarket owners, negotiate as one. Teamsters, afraid that their benefits will be cut in the future, are trying to prevent trucks from delivering merchandise to the markets. The grocery chains want to cut pension benefits, freeze existing salaries, and pay new hires lower wages. But workers on the lines say their main concern is health costs.

DOMINGO ALAMO, Produce Manager: We are not asking for a raise, or anything like that. We want our benefits. Without a benefit, what am i going to do, you know? I mean, what if my kid gets sick tomorrow or today? How about if something serious happened? I mean, where am I going to get money? I would have to sell my house in order to pay for that.

JEFFREY KAYE: The grocery chains had paid the entire cost of family health benefits for their workers. The companies now want employees to start paying premiums. Transit workers are also being asked to pay more for their health care.

JUAN VILLALVA, Mechanic: We’re here to protect our health and welfare benefits. In the last two contracts, we have given up any kind of raises so we could keep those benefits, and now the company is going after that too.

JEFFREY KAYE: Labor experts say disputes over health costs are increasingly common nationwide. In addition to California, supermarket workers in West Virginia, Ohio, Kentucky and Missouri are also striking Krogers to retain their health benefits.

KENT WONG: What we are finding is that healthcare is the number one strike issue in the country today.

JEFFREY KAYE: Kent Wong directs the Center for Labor Research and Education at UCLA.

KENT WONG: This is the first time in 25 years that we’ve seen this labor dispute, and in part it is because the supermarket employers are very aggressive in demanding massive concessions on the part of the supermarket workers.

JEFFREY KAYE: Grocery executives would not be interviewed for this story. But a newspaper ad signed by the three chains explained “our health care costs have skyrocketed 50 percent in the last four years. We simply cannot pass these costs along to our customers.” Across the country, skyrocketing health care costs have led to double-digit inflation of insurance premiums for four straight years.

U.S. workers pay on average $2,400 in annual premiums for employer-provided health insurance. The supermarket chains want their southern California employees to pay nearly $800 a year in premiums. That’s in addition to increased fees for office visits, medicine, and other expenses. Steven Burd, the CEO of Safeway, in a conference call with analysts last week, said the supermarkets had to cut their health bills.

STEVEN BURD: When you consider what the alternative is, I think if we had done a business as usual deal in that marketplace, our costs three years out would have gone up in excess of $130 million. I mean, this offer does a marvelous job of protecting the existing employees, an incredible job. They still have Cadillac benefits when it’s over with. It shouldn’t have really created a strike, but the fact is it did, so you just ride it out.

JEFFREY KAYE: With companies around the country are passing on rising health care costs to their employees, Southern California grocery workers are a distinct minority. They have been among only 8 percent of employees nationwide whose companies pay for their family health insurance premiums.

JACK KYSER, LA County Econ. Development Corporation: If you have fully covered health benefits, you’re very, very lucky, but you’re also sort of a dinosaur.

JEFFREY KAYE: Jack Kyser is chief economist of the LA County Economic Development Corporation, which advocates for business. He says a variety of factors contributed to the skyrocketing health care costs.

JACK KYSER: Cost of pharmaceuticals, drugs, they’re going up rapidly, cost of medical equipment, medical malpractice suits. There’s a whole array of forces that are driving up the cost of health care.

JEFFREY KAYE: The grocery chains say increased competition makes them less able to afford additional expenses, without cutting profits. On its Web site, Safeway compares the number of union supermarkets in LA with the multitude of comparatively low- wage, nonunion rivals. One looming challenge is Wal-Mart, the goliath of retailers. The discount, non-union store, has announced plans to increase grocery sales in the area.

JACK KYSER: Wal-mart with their super centers, are going to come into southern California, very, very tough competitors, non-union, huge buying power. And so the supermarkets are scared. They’re being hammered by wall street, to bring their costs down, to get more competitive.

JEFFREY KAYE: The financial fortunes of the three supermarket chains have been mixed. Their stock prices have been sliding. But their combined net income has risen by about 40 percent over the last five years. The unions argue that the large supermarkets can afford to preserve their employees’ health benefits.

RICK ICAZA, United Food & Commercial Workers Union: They want to take away our medical benefits. Are we going to let them do it? ( Crowd shouts “no” )

JEFFREY KAYE: Rick Icaza is president of the Los Angeles local of the supermarket workers union. He says the grocers are exaggerating the threat from Wal-mart. He points out that the three chains control 60 percent of the area’s retail food industry.

RICK ICAZA: It’s corporate greed and that’s what it boils down to: Corporate greed. And they want it to get away from the people. They want them to pay the medical care, yet they make all this profit. And it’s all about Wall Street. Wall Street wants them to trim down.

JEFFREY KAYE: The conflict between labor and management over who should pay for spiraling health care costs is becoming a hot political issue. Wong points to the estimated 44 million Americans, most of them working, without health insurance.

KENT WONG: Until there is some type of resolution to the healthcare crisis nationally, the issue of healthcare will continually emerge as the number one issue that will lead to strikes in the country.

JACK KYSER: So, I think health care is going to be an issue on the 2004 presidential election. It’s not yet, but I think it’s fast moving onto the agenda.

JEFFREY KAYE: Public sympathy for supermarket workers is cutting into sales. At many stores, normally busy parking lots are virtually empty. No talks are scheduled in the grocery dispute. Negotiations to end the transit strike resumed this afternoon.