January 23, 2004

The War Over Health Care

By David Bacon

LOS ANGELES — Today Mark Norton is one of 70,000 workers forced on strike, or locked out, in southern California. Soon he may be one of hundreds of thousands more facing the same difficult predicament.

Across the country, the system for financing health care benefits for union workers is breaking down, as managed care drives the cost of medical insurance through the roof. Some employers, like Safeway, which owns the Von’s store where Norton works, can pay the increases from rising profits, but they won’t. Whether from greed or economic pressure, the growing crisis of this system threatens to make 2004 a year of massive strikes and labor wars.

Over 40 million people in the US have no health insurance. That makes the benefit Norton is fighting to save not a perk or a luxury, but a vital necessity. Protecting it has already cost him three months on the picket line, and promises to cost even more.

Norton went to work for Von’s eighteen years ago. By last fall, when the strike started, he’d become a grocery manager. That gave him a full-time job, earning wages capable of supporting a family, in an industry where that’s become a rarity. The retail industry nationally pays close to minimum wage for most workers, offering jobs with little security to an overwhelmingly young workforce. In this industry, union supermarket workers have been able to maintain a better standard of living than most, yet over three-quarters of the baggers, checkers, and stock clerks who make LA supermarkets function have trouble accumulating the work hours they need to survive. In a fairer world, they would be striking for more fulltime jobs, at higher wages. But when Norton walked out of Von’s on October 11, it was over Safeway’s demands to make life even harder.

The chain demanded for the first time that existing employees begin paying for their health insurance. “They said they were just asking for $5 a week, or $15 for family coverage. When we did the numbers, it turns out it could cost as much as $95 a week by the end of the contract,” he explains. The average weekly wage for a Los Angeles supermarket worker is $312.

In each of the last three years, the premiums charged by private health insurance plans have gone up 15%; the predicted future rise is 12-14% annually. Safeway wants to cap it’s contribution, which would leave workers paying for those hikes.

An even bigger threat was Safeway’s proposal to begin hiring new workers at lower wages, with an insurance plan most wouldn’t be able to afford. Safeway says it wants to pay $1.35 an hour for their medical care. The company pays about $5.00 an hour for its current employees. If new hires don’t go into the existing plan, as the workforce it covers grows older, they will become more expensive to insure, and their premiums will rise for that reason also. Meanwhile, few new hires will be able to pay the difference between the com-pany’s contribution and the actual cost of health insurance premiums.

Safeway is offering no wage increase to anyone, and proposes to pay new hires $3.00/hour less, at the top rate. “They want a two-tier system, where they can bring in new employees at several dollars less an hour with little to no benefits at all,” Norton says. “A lot of us believe they’ll weed out the rest of us once they hire these new employees. That’s why I volunteered to go to Northern California, to picket stores there.”

Once Norton and his coworkers struck, the two other large grocery chains in southern California, Albertsons and Ralph’s (a division of Kroger Stores), locked out their own workers in a common front with Safeway. This long-standing practice is now being investigated by California Attorney General Bill Lockyer as a possible violation of anti-trust laws.

The three chains say they need concessions in order to compete with the world’s largest corporation, Wal-Mart. Not only does Wal-Mart pay close to minimum wage, but its health plan is so expensive that most employees can’t purchase coverage. They get their medical care either through another family member working elsewhere, in the local emergency room, or not at all. Wal-Mart’s lower wages and benefits have made the company one of the most important organizing targets of the UFCW and the AFL-CIO. Nevertheless, a union contract there is still a long way off.

Safeway and the other two grocery chains claim Wal-Mart represents an immediate threat to their market share. Yet most southern California Wal-Marts don’t sell groceries, and even if the company carried through on its announced plans to build 40 “super centers” throughout the state, it would only gain 1% of its grocery market, compared to the 60% held by the big three.

Norton and other strikers extended their picket lines to other areas of the state, where they say they’ve found a sympathetic public. Supermarket workers — mostly young, and often people of color — meet and talk with store customers all the time. Their predicament bears a familiar human face. But solidarity also has another source. This year workers in other unions, from hotel room cleaners to hospital nurses and dieticians, are going to face similar demands from their employers. “We’re expecting a major confrontation with hotel chains over health care costs when our contract comes up this summer,” says Mike Casey, president of San Francisco’s Local 2 of the Hotel and Restaurant Employees. The Service Employees Union will be negotiating with hospital chains in all major west coast cities this year as well, and health care costs will be the number one economic issue.

Northern California’s 50,000 supermarket workers are watching with the most concern — their contract is up in September. “We certainly expect this fight to be on our doorstep then,” says Rich Benson, president of UFCW Local 870. “That’s why our local unions fully support the efforts of unions in southern California. Safeway has contracts from Virginia, to Colorado, Washington, and Nevada.

This is a watershed moment, not just for the UFCW, but for the whole labor movement.”

The immediate fights this year seem almost unavoidable, but the pressure of rising healthcare insurance rates won’t stop there.

Unions are already spending millions of dollars on strike benefits and expenses, with more to come, while workers are bearing the brunt of lost wages. The cost could be even higher, if any of these strikes are lost, or unions broken.

California labor took a step towards a longer term solution to this problem, by pushing legislation this fall to begin taking healthcare costs out of competition. Just before being recalled, ex-Governor Grey Davis signed a bill, SB-2, which requires large employers to provide healthcare coverage for their employees.

Unions, which supported the more limited SB-2, will have their hands full this year just hanging onto it. Newly-elected Governor Arnold Schwarzenegger, speaking for the state’s largest employers, has already promised to place an initiative on the ballot to repeal SB-2, and is collecting millions of dollars in corporate campaign contributions. 

California corporations are making it impossible for unions and workers simply to maintain the status quo. Instead, employers are gearing up for a protracted and interminable war to dump onto them the system’s rising costs, or force them to do without healthcare entirely. “I’d like to ask Steve Burd (Safeway’s CEO) at what point in his life he stopped caring about people and only about money,” Norton asks angrily. “How can he tell his stockholders that putting 80,000 people on the street is an investment in their future? No one’s going to get rich doing our job. We just want to make a living.”

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