By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
"They force their suppliers down to the lowest penny, and to make any money off of it they have to outsource it to China or wherever," says Ken Stone, a retired professor of economics at Iowa State University who has researched Wal-Mart. It's estimated that 80 percent of the company's products are now manufactured in China, accounting for one-eighth of the U.S.'s trade with the country. In the last three years, the U.S. has lost more than 2.8 million manufacturing jobs.
In the end, Wal-Mart's much ballyhooed low prices exact a heavy toll. "The reality is that we can ill afford the bargains that are at Wal-Mart," says Mitchell. "There is a tremendous price we pay for every penny we spend at Wal-Mart."
On October 11, some 60,000 unionized grocery workers at 852 stores in southern California went on strike or were locked out of their jobs. The dispute involved supermarkets owned by three companies--Safeway, Kroger, and Albertsons-- that currently dominate the market in that region of the country. After a more than four-month work stoppage, employees reluctantly agreed to a new three-year contract at the end of February.
It was the largest and longest strike in the history of the UFCW, the primary union that represents grocery workers nationwide. The stoppage is estimated to have cost the stores more than $1 billion in lost sales, but the companies remained resolute in their demands that employees accept lower wages and diminished benefits. "This was an employer-initiated event," says Ruth Milkman, director of the University of California Institute for Labor and Employment. "The union never wanted this strike. They weren't well prepared for it."
The contract that workers finally agreed to grants significant concessions to the grocery companies. Existing employees will receive no raises over the life of the contract and could have to pay for health insurance after two years. Most significantly, the settlement allows for the introduction of a two-tier labor system whereby new hires will receive significantly lower pay and benefits than current workers. Milkman points out that it won't take long for the lower-tier jobs to dominate the workforce. "Given that there's so much turnover in this kind of industry, in a decade that will be everybody, pretty much," she says. "The big picture is very bleak in terms of what it means for the long term."
The not-so-secret X-factor in the strike was Wal-Mart. Southern California--most notably the urban centers of Los Angeles and San Diego--is an untapped market for the retailer. Naturally, Wal-Mart intends to change that. The company plans to open 40 Supercenters, equipped with full-service grocery stores, in the coming years. With this threat to sales looming, Safeway, Albertsons, and Kroger demanded major concessions from their employees in order to cut costs. "They kept the Supercenters out up until this time," notes Iowa State economist Stone. "Now it's a given fact that Wal-Mart is coming in. The grocery stores can see the writing on the wall, as can the unions."
Outside southern California, the strike generated little publicity, but it could have major implications for workers across the country, particularly supermarket employees. Grocery clerks have long been practically the only retail employees that get paid something resembling a living wage. The average grocery worker involved in the southern California strike--at least for the foreseeable future--makes $13 an hour and receives free health insurance. By contrast, the median hourly wage for retail sales jobs nationwide in 2002, the most recent year for which data is available, was $8.51, according to the Bureau of Labor Statistics.
The stakes become even higher when you consider that retail is one of the only areas where job growth is occurring: According to the BLS, 596,000 such jobs will be created by 2012, a projected increase bested only by growth in nursing and college instruction. As manufacturers continue to migrate overseas, in part because of the buying power of Wal-Mart, retail is increasingly one of very few options available to workers who don't have college degrees. "We look at the future of retail basically being the future of the American middle class," says Chris Conry, an organizer with UFCW, Local 789, in South St. Paul.
Twin Cities grocery workers have so far avoided a fate similar to that of their counterparts in California. UFCW, Local 653, which represents about 14,000 workers in the west metro area of the Twin Cities, recently negotiated a new three-year contract for its workers. The companies agreed to continue paying employee health insurance costs and promised that workers who have been on the job for at least five years will receive regular raises of 80 cents per hour over the life of the contract. Part-time workers didn't fare as well: They no longer will receive automatic annual raises.
Next year the three-year contract for members of Local 789, which covers St. Paul and the surrounding suburbs, will expire. Local 789 president Don Seaquist says that Twin Cities grocery workers are in a stronger position than their counterparts in southern California because the local market isn't dominated by huge chains like Albertsons and Safeway that can weather a protracted labor dispute without suffering serious economic consequences. But he worries that as unionized supermarkets continue to lose market share it will eventually lead to an erosion of employee wages and benefits. "It's not just Wal-Mart," he notes. "It's everybody that's selling groceries, from SuperTarget to Wal-Mart to Aldi's to the SuperAmericas that sell bread and milk. Wal-Mart's just the biggest guy."