Grocery Workers’ Union Strikes a Blow Against Consumers

I couldn’t help but chuckle when I heard striking grocery clerks advising shoppers to take their patronage to competitors such as Trader Joe’s and Whole Foods. I also couldn’t help but wonder why they do not just get jobs at Trader Joe’s or Whole Foods if the they are so preferential, and what good a victory in their current contract dispute with the grocers would do them if they have driven significant business away from their employers. Maintaining relatively high wages and benefits does little good if there are no customers, as grocers would be forced to lay off workers.

The grocery strike affecting 859 stores and 77,000 striking and locked out United Food and Commercial Workers (UFCW) employees in southern California has now spread to Fresno, Sacramento, and the San Francisco Bay area. Similar grocery contract disputes are underway in other states, including Arizona, Kentucky, Ohio, and West Virginia.

Analysis of the issue to date has generally consisted of taking either the side of the poor, hard-working union members who are just trying to make a decent living or the business-minded grocers who are simply trying to make the unreasonable union workers understand the economic realities of rising health-care costs and heavy competition that require them to sacrifice short-term benefits for the long-term survival of the company. I would like to offer an analysis from the consumer’s point of view.

First, let us put the grocery clerks’ terms of employment in perspective. The average UFCW employee earns between $12 and $14 per hour. The most experienced, or journeyman, employees earn a top rate of $17.90 per hour, which translates to $26.85 per hour on Sundays and $53.70 per hour during holidays. In addition to manning the registers, these more experienced clerks will manage inventory and perform various other duties, but that still seems like a pretty good deal to me. Contrast this with employees at Wal-Mart and other non-union retail establishments that pay their employees roughly half of the UFCW pay rates. It is no wonder that Wal-Mart, which was not in the top five grocers in the nation as recently as five years ago, is now number one. It has achieved its position by passing along these cost savings in the form of lower prices. This is certainly a good thing for consumers.

One of the biggest issues in the contract dispute is the grocers’ proposal to require union workers to contribute to their health-care plans, which are currently completely covered by the employers. The grocers’ proposition is to require a $20 per month contribution for individual coverage, or a $60 per month for family coverage. Again, let us put this proposal in the context of the market in general. According to the Kaiser Family Foundation and the Health Research and Education Trust 2003 annual survey of employer health benefits, the average non-union employee pays $42 per month for individual health-care coverage, or $201 per month for family coverage. The same survey shows that average health-care costs for employers are $240 per month for individual coverage and $555 per month for family coverage. In fact, my father, who is a college professor in southern California, pays about $200 per month toward the health and dental plan offered by the university for him and my mother. It is worth noting that this university plan is the same for all university employees, whether janitor or tenured professor. Again, while any employee contribution is worse than the union workers’ current agreement, the proposal does not seem unreasonable and will not result in the catastrophic results some union spokesmen have led us to believe.

Those taking the union position often try to tug at the heartstrings of the hapless consumer by claiming that the union clerks are just trying to make ends meet and must keep (if not increase) their salaries and benefits in order to support their families. The same argument is often made in minimum wage and "living wage" debates. The fallacy is that most grocery clerks (and minimum wage earners, for that matter) are not heads of households, but are people new to the labor market, such as students, or those just looking to earn a little supplementary income. Employees are free to seek raises or search for better jobs with higher pay and other compensation – that is the essence of the free market – but this does not mean they should be entitled to any particular "living" wage.

Allow me to offer one final observation. Since the strike went into effect, I have shopped at all three of the targeted grocery chains. At all three stores, I was startled by how much more pleasant and willing to serve the non-union grocery clerks were compared to the previous union employees. I have spoken with others who have shopped at Albertson’s, Vons, and Ralph’s since the strike and found, without exception, that they have come to the same conclusion. Given the difficult labor market for potential employees of late, this is probably due to the fact that they are happy to have the opportunities the union workers were unwilling to take. In any case, as a consumer, I have been pleasantly surprised by the improved customer service offered by the non-union employees and am happy to continue doing business with the strike-affected stores as a result.

The clash between the grocers and the UFCW union is a contract dispute involving private parties, and each party has a right to negotiate the terms of employment. I might be more neutral toward the union’s position if it did not advocate its position with such emotional irrationality and possess a sort of gang mentality, as all unions tend to do. Sooner or later, the grocery strike will end. From my purely self-interested consumer’s point of view, I hope the union caves. At least then I will still be able to find some relatively good deals at my neighborhood Albertson’s, Vons, and Ralph’s stores (Wal-Mart is a farther drive for me). Consumers want the best quality, service, and selection and the lowest prices. We are selfish that way. Then again, the union workers (indeed, all workers) selfishly want to receive highest wages and benefits for the least amount of work and the grocers selfishly want to pay the lowest wages for the greatest amount of work. Somehow, the invisible hand of the free market sorts out these competing interests.

The large grocery chains have some difficult issues to address if they are to remain in business. And at some point, the union workers may have to come to the realization that unless they relax their demands, soon we will all be buying our groceries at Wal-Mart. When that day comes, they had better hope Wal-Mart is hiring.

December 3, 2003

Adam B. Summers [send him mail] is a freelance writer and a Policy Analyst at the Reason Foundation. He holds a Master's degree in economics from George Mason University. A version of this article appeared in The Press-Enterprise (Riverside, California) on November 30, 2003.

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