business news in context, analysis with attitude

The  Los Angeles Times reports that " tens of thousands of Southern California grocery workers voted to authorize a strike if supermarkets don’t meet their wage demands as negotiations on a new contract resume in the coming weeks."  The vote, according to the Times, "could lead to walkouts beginning at some Albertsons, Vons, Pavilions and Ralphs markets stretching from Central California to the Mexican border … Negotiations over a new agreement began in January but stalled three weeks ago. Workers seek substantial wage bumps, higher minimum hours for part-timers and store-level health and safety committees as pandemic concerns persist."

The Times writes that "the United Food and Commercial Workers announced its seven local unions voted 'overwhelmingly' in favor of authorizing a strike, but delayed releasing a full breakdown of votes, citing a glitch in its electronic voting system.  A spokeswoman for Los Angeles-based Local 770, which includes 18,000 grocery workers, said 94.3% of those voting favored the strike."

There is a difference between this scenario and the five-month strike that took place in 2003 and 2004;  at that time, the en tire workforce walked out, but "this month’s authorization is framed as an 'unfair labor practice' action. Under federal law, that allows walkouts at selected stores instead of a full-blown strike."

The Times also frames the underlying tension that exists between the two sides this way:

"Supermarkets traditionally operate on thin profit margins of about 2%. But the pandemic turbocharged revenues as restaurants closed and more people ate at home. Kroger’s operating profit nearly doubled to $4.3 billion from 2019 to 2021.

"In 2020, the company paid out $1.3 billion to investors — money that workers say should have gone to pay them more as they faced COVID-19 risks on the job. Kroger Chief Executive Rodney McMullen was criticized for collecting a $22.4-million pay package in 2020 — his largest ever — even as the company ended a $2 an hour hazard bonus for frontline workers after two months."

KC's View:

I would agree with the Times observation that this vote "ratchets up pressure on two of the country’s largest grocery chains: Kroger, the parent company of Ralphs, and Albertsons, which owns Vons and Pavilions."  That's in part because the pro-unionization  movement in the US seems to have some momentum, with both Amazon and Starbucks facing labor pressure, which may have the UFCW feeling frisky.

At the same time, there is competition coming from non-union competition, which may have the chains feeling resolute.

I see trouble coming.