Andrew Maykuth Online
The Philadelphia Inquirer
October 19, 2003

Calif. crisis augurs U.S. conflict
Increasing health-care costs are at core of strikes

LOS ANGELES -- Major labor strikes that erupted last week against grocery stores and the public-transit agency here suggest that workers are increasingly willing to stop work over the spiraling cost of health care.

Negotiations broke down over employers' attempts to pass on part of the double-digit increases in health-insurance premiums. And with costs showing no sign of retreating, more strife is expected across the nation.

"It is the single most vexatious bargaining issue now," said Peter J. Hurtgen, head of the Federal Mediation and Conciliation Services. "Employers and unions can't control costs. They can only argue and push back and forth about who absorbs those costs."

The transit strike, called Tuesday by maintenance workers at the Metropolitan Transportation Authority and joined by the agency's other unions, has stranded nearly half a million bus and light-rail passengers, clogged roads, and hurt the mostly low-income workers who rely on public transportation.

Southern California's three largest grocery chains were crippled last weekend when workers struck at Safeway Inc.'s Vons stores. Two other large chains, Albertson's Inc. and Kroger Co.'s Ralphs Supermarkets, then locked out unionized workers. About 70,000 workers at 859 stores are affected.

Bracing for 'a long strike'

The stores have remained open using managers and replacement workers, but their parking lots are largely empty except for picketers, and customers are crowding into competing stores unaffected by the strikes. "We are bracing ourselves and our temporary workforce for what could be a long strike," John Burgon, president of Ralphs Grocery Co., wrote to employees Wednesday.

The number of strikes in the United States has fallen dramatically in the last decade. Last year, the Bureau of Labor Statistics counted 19 work stoppages at companies employing a thousand or more workers, down from 35 a decade ago. But the health-care crisis could change that.

"Health-insurance costs seem to be the No. 1 issue right now in contract negotiations, and probably the No. 1 reason people are going on strike," said Forrest S. Briscoe, a professor of labor studies and industrial relations at Pennsylvania State University. "There's a sense that once you begin with cost-sharing, it's a slippery slope."

The grocery industry alone is girding for multiple strikes across the country over the issue. About 90,000 members of the United Food & Commercial Workers union are on strike against stores in California, West Virginia and Missouri. Workers are preparing for walkouts in Arizona, and in cities such as Memphis. The major grocery contracts in the Philadelphia area will expire in 15 months.

"Every strike in the past decade has been over health-care issues," said Greg Denier, a Food & Commercial Workers spokesman. "It's a growing problem. The system is collapsing. More and more employers are abandoning their employees, shifting millions of dollars in costs on them."

Workers paying more

Last month, the Kaiser Family Foundation reported that U.S. workers were paying 50 percent more for health-insurance premiums than they were three years ago. The survey said two-thirds of large employers increased what employees pay for health insurance this year and that half planned increases next year.

Real wages declined in five of the last eight months, reflecting how higher health-benefit costs are cutting into income.

The number of people with no insurance also is increasing. The Census Bureau reported last month that 43.6 million were not covered last year, up 5.8 percent from 2001.

The transit-agency talks broke down over attempts by the MTA to rein in health costs of the Amalgamated Transit Union. Until last year, the MTA contributed $1.4 million per month to the fund for 2,500 maintenance workers. Those costs have risen to $1.9 million per month and the fund is insolvent, according to the union.

Transit workers now pay no premiums for their insurance, $3 a month to cover a spouse, and $6 for a family.

The MTA said it was willing to bail out the health-care fund and would increase its monthly contributions over the life of the three-year contract, but only if the union surrendered control of the fund, which the agency says the union has mismanaged. The union declined.

"It doesn't make sense to keep putting money into a fund that is heading toward bankruptcy," said Ed Scannel, an MTA spokesman.

The grocery strike represents more of a comprehensive management attempt to roll back costs by allowing stores to institute a two-tier system that would provide less insurance to new employees. They would receive full coverage after 7,800 hours of employment.

The stores also want employees to pay premiums of up to $15 a week for families. They now pay no premium.

"We're simply asking that our employees share in some small cost of the coverage," said Brian Dowling, a spokesman for Safeway. "Up until now it's been for free."

Analysts say the grocery-store industry is particularly susceptible to rising health-care costs. Unionized workers typically get modest wages but generous health benefits. Because health insurance is a greater proportion of overall labor costs than in other industries - the average is about 20 percent - grocery stores are especially susceptible to double-digit increases in insurance premiums.

And with low-cost leader Wal-Mart Stores Inc. moving into the grocery business, owners of traditional chains are struggling to hold on to market share.

"Grocery stores have basically seen the future by looking at the other companies that were run over by Wal-Mart," said Mark Hugh Sam, equity analyst with Morningstar Inc. "It's a low-growth, consolidating industry, and the only way to grow profits is to cut costs."

Grocery-store workers in Southern California say they have given up wage increases in recent years to preserve health benefits; they regard the store owners' demands to cut benefits as a betrayal.

"A lot of people work at grocery stores more for the benefits than the pay," said Ellen Anreder, spokeswoman for six of the seven locals on strike. "It's almost a social contract we've had with our employers to maintain the benefits."

Union leaders say they have agreed in the past to efforts to contain costs and had signaled willingness to cooperate on some issues, but they were unprepared for management's hard-line stand.

"We have solutions to the problems if they're willing to work in a cooperative situation," said Greg M. Conger, president of UFCW Local 324 in Orange County, which represents 13,000 striking workers. The union managed to settle two of its last three contracts before they expired, and last went on strike in 1978.

Picketers at a Ralphs grocery store in Garden Grove say that not all customers sympathize with their cause - some tell the strikers they should be happy they have any insurance at all.

"We are willing to make copayments if we have to, but they're talking about taking away everything," said Alba Goens, 39, a bakery store manager and mother of three who earns $13.97 an hour after nearly 20 years with the store.

Goens is particularly concerned about health benefits. She was diagnosed with thyroid cancer last year and underwent surgery, paid for by insurance. She is undergoing therapy; she had another round of radiation treatment on Monday.

"Why work all those years for nothing?" said Goens, whose husband is a Web page designer and intermittently employed. "Why invest all those years for nothing?"

She said she was willing to stay out for the long haul. "I'll be here as long as it takes - unless I have to go to the hospital."

Inquirer staff writer Karl Stark contributed to this article. .