You know this: “It’s the economy, stupid!”
When the economy’s bad, somebody’s gotta take the hit. And neither side wants to take the hit. They want to string it out as long as they can," says Chris Tilly, who directs the UCLA Institute for Research on Labor and Employment.
For five months, union workers at the “Big 3” grocery chains have been working without a contract. So what’s the holdup on a new deal? Tilly says to think of this stalemate like the one that grips the Southern California housing market.
"You’ve got the homeowners whose homes have lost value. They don’t want to take that hit, and you’ve got the buyers who say, “Hey, this home isn’t worth that much” so they don’t want to take a hit,” he says.
Eight years ago, neither the “Big 3” chains — Vons, Ralphs and Albertsons — nor their union workers wanted to take the hit from more innovation and growing non-union competition. The result, strike or lockout, cost the grocery workers four months of pay and the supermarkets more than $1.5 billion in revenue plus a few thousand customers who decided to shop elsewhere and never came back. Today when they talk about that labor dispute, the two sides can finish each other’s sentences.
Here's the grocer side:
"It was clearly an inconvenience — which I think is an understatement — to our customers. And we look around and we see that there are a number of non-union, low-cost operators and people have other options," says Vons spokesman Daymond Rice.
And there's the worker side:
"Our market share at the time was somewhere around 75 percent of the food industry. Today, it’s below 50 percent. People are going to Trader Joe’s — non-union, Whole Foods — non-union, primarily because of the fact that we had that strike," says Rick Icaza, president of the United Food and Commercial Workers Union local 770,
What the union and the supermarkets can't agree on is financing health care benefits. The supermarkets want the workers to pay more. The union says health care costs are rising, and the supermarkets aren’t paying their fair share. The union points out the supermarkets make billions in profits. UCLA’s Tilly says yeah, that’s true, but …
"It’s a business with relatively thin margins, and the retailers that are really booming right now are the 99 Cents Only stores. So the retailers are looking at this. They’re counting their pennies, and they’re also realizing that to some extent they have the upper hand precisely because the union is running scared," he says.
The union’s running scared, Tilly says, because with L.A.’s unemployment rate topping 12 percent, its members face tough odds in the job market. He says circumstances now aren’t all that different from when the last supermarket labor action began.
"In 2003-04, we were in another jobless recovery. We were coming out of the 2001 recession. The companies had the upper hand," he says.
Most analysts say the companies came out the winner in that dispute. But when the contract was up again four years later, the economy was booming, and the union made gains.
"So both of them are looking at that business cycle — that good times, bad times alternation — and trying to play it to their advantage," he says.
And for now, that means avoiding a work stoppage, or at least talking that way.
"We do not want a strike. Employers don’t call strikes. Unions call strikes. We think any discussion of a strike is unnecessary and counterproductive to the process," says Rice.
And neither does Icaza.
"I promised the membership that we’d do everything in our power to avoid a strike," he says. "So when we know for sure that we can’t budge the employers or they’ve put us in a situation where we have no alternative, then we’ll strike."
Both sides will take a break from contract talks next week. They’ll meet again after that with a good chance that something — either a deal or a strike — will happen by the middle of August.
This is the last of a five-part series. For months, Ralphs, Vons and Albertsons have been chipping away at a new contract with the union for grocery store workers. Sometimes, the talks get nasty enough to raise the specter of the “Big Three” labor dispute of 2003, when 70,000 grocery store workers stopped working for four months. In the end, the workers kept jobs but lost pay. The stores won a new pay scale but lost customers. Eight years later, a repeat of that dispute could be a disaster for the supermarkets and their workers. We’ll look at why this week.