Supermarket strikes drag on, raising stakes for chains, workers

In Southern California, companies say they need to compete with Wal-Mart


LOS ANGELES -- As 80 picketing workers bellowed chants outside the supermarket Thursday evening, Rosalyn Colvard, a grocery stocker, said she would need help from welfare to make ends meet if California's three biggest grocery chains win their 4-week-old battle with 70,000 workers.

For the cashiers and stockers on the picket lines, the fight to fend off large-scale concessions is a struggle to avoid being thrown into one of America's lowest castes, the working poor. But for the supermarkets, the confrontation -- the biggest labor dispute in the nation in recent years -- is a painful investment to ensure that they can survive against Wal-Mart and other low-cost rivals.

"The stakes are enormous," said Ruth Milkman, chairwoman of the University of California Institute for Labor and Employment. "If the employers succeed in their effort to extract large concessions, they will turn these into low-wage jobs, and other employers across the nation will see this as a green light to try to do the same thing."

The feuding sides appear to be dug in. On one side is the United Food and Commercial Workers Union, which for more than 60 years has succeeded in obtaining such good wages and benefits that the region's supermarket workers can lay claim to being part of the middle class, or at least the lower rungs of the middle class. The workers' pay ranges from $7.40 an hour for baggers with 30 months on the job to a $17.90 maximum for cashiers.

"If we lose this fight, there go 70,000 jobs that will no longer be middle-class jobs," said Connie Leyva, president of the food workers local in San Bernardino County. "It would have huge ramifications on the economy of Southern California."

On the other side are the supermarket chains, led by Steven A. Burd, chief executive of Safeway, a former management consultant who told the workers that they had "Cadillac benefits" that were too generous in this era of retail competition. Unlike most Americans, the supermarket workers do not pay any premiums for health insurance.

Each side says the showdown, which involves a strike and a lockout, has reached a critical stage, and each insists that the other is suffering badly and may soon soften its position. The grocery chains involved -- Albertsons; Vons, owned by Safeway; and Ralphs, owned by Kroger -- lost more than $131 million in sales in each of the showdown's first weeks, according to Merrill Lynch. And many workers acknowledge that a month without regular paychecks hurts badly.

Millions of shoppers are unhappy, too. Across Southern California, 859 supermarkets are involved in the dispute, causing Californians to debate whether to cross the picket lines as they weigh personal convenience against support for the workers. During the stoppage, the picketed stores have stayed open, but sales have dropped by two-thirds, industry analysts estimate.

The two sides have not negotiated since Oct. 11, when workers at Vons walked out, but the next day Albertsons and Ralphs struck back by locking out their unionized workers to show solidarity with Vons. As evidence that the dispute is taking its toll, the two sides agreed on Friday to resume talks today, joined by Peter J. Hurtgen, director of the Federal Mediation and Conciliation Service.

On the picket line, workers often grow furious as they discuss the concessions demanded by management: a two-year freeze on raises for current workers; a requirement that workers pay $780 in annual premiums for family health coverage; and a limit on annual employer health contributions, which would likely cause a decrease in benefits.

Management wants to create a second tier of wages and benefits for new employees.

The three chains have said that they need concessions because Wal-Mart, the world's largest retailer, will soon open the first of 40 grocery-selling supercenters planned for Southern California over the next five years. Wal-Mart's grocery workers average less than $9 an hour.

"The supermarkets don't have a choice," said Lisa Cartwright, an analyst with Citigroup Smith Barney. "They're losing market share to alternative formats, whether it's Wal-Mart, Dollar Stores or wholesale clubs. They are in a tough position, and they have to find ways to compete more effectively."

She said the California battle "would set a trend for the supermarket industry in other regions," especially if a new contract created a lower second tier.

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