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Labor Strikes: Effective Strategy or Outmoded Process? And Does It Matter with Wal-Mart Around?

A traditional strike, where employees refuse to work until a satisfactory labor contract has been reached between their union and their employer, has always been one of the most effective weapons that a union has to encourage an employer to accede to union demands. A recent news article, however, in analyzing the current grocery workers’ strike in Southern California, notes the decline in the number of strikes in recent years, and questions whether unions will be able to continue using strikes effectively. (See Indianapolis Star article.) And regardless of how the SoCal strike ends, is the real winner going to be non-unionized Wal-Mart, who by planning to open new SuperCenters with groceries in Southern California, appears to be driving down wages and benefits industry-wide?

In an article in today’s Indianapolis Star, reporter Bill W. Hornaday claims that strikes are becoming a “workplace relic.” According to Department of Labor statistics, just 19 work stoppages idled 1,000 or more workers last year — about one-tenth as many as the 187 recorded in 1980, while only eight such job actions have occurred so far this year — a tally that does not count UFCW walkouts against Kroger and some affiliates in California, Kentucky, Ohio and West Virginia. What accounts for the decline in the number of strikes? One expert, Victor Devinatz, a management professor at Illinois State University, attributes the decline to two developments: a corporate crackdown against organized labor (starting around 1980) and a broader global economy that discourages lengthy standoffs.

After companies began taking a much harder line against unions around 1980, within three years the number of large-scale work stoppages was cut in half….With a more global economy, workers are more afraid to risk their jobs. They fear they may be outsourced, moved to another location or that the company can be profitable without them.

Devinatz also notes that the Federal Mediation and Conciliation Service, a U.S. government agency which provides mediation and arbitration services in labor disputes, also has been successful at averting many strikes (as many as 80 percent) before they begin.

However, resorting to the hardball tactics that both sides adopt in a strike situation can be necessary when the stakes are high. According to University of Illinois-Chicago labor historian Robert Bruno, “The old model of negotiating in a win-lose way is still prevalent. It still makes sense to bargain in a hard-edge way.” Both sides often take strategical positions, such as when employer negotiators abruptly end negotiations after making what they deem a “last, best and final” offer. This sends a unmistakable message: “You break off negotiations at a point when you feel the union is not making any further movement that is not necessary,” said David Diamond, a partner at Proskauer Rose LLP who has litigated labor disputes for more than 20 years. “This really sends a message to them that you’re prepared to strike and daring them to do so.”

At this point, the ball is back in the union’s court, says Eli Bortman, a visiting assistant professor of business law at Babson College. “The union’s risk is that they can threaten a strike, and repeat the threat over and over — perhaps with rallies to show they’ve got their picket signs already printed and their picketing schedules prepared.” Yet the threat of a strike almost always packs more of a punch than the strike itself, which in turns depends largely on the resolve of union members, he said. “Once they go out, the threat is gone. So (unions) really do need to gauge the brink carefully.”

In the current grocery strike in Southern California, both sides understand the significance of the strike that is now over a month old. It’s not just about health care benefits for United Food & Commercial Workers members in Southern California, but about the grocery industry in general, the union movement in general, and perhaps even the service industry in general. As New York Times reporter Steven Greenhouse characterizes it,

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. (See New York Times article.)

As Ruth Milkman, head of the University of California Institute for Labor and Employment, calls it: “This is a real defining moment, not only for the UFCW but for unions. And to me it is deeply significant that it is happening here in Southern California, which is the home of labor’s revitalization.” (See Chicago Tribune article.)

And what’s at stake for employers? According to Steven A. Burd, chief executive of Safeway, one of the three chains involved in the current strike, “We view this as an investment in our future. And I’m confident that my bargaining partners view it exactly the same.” (See New York Times article.) One Wall Street analyst, Mark Husson, a food retail analyst with Merrill Lynch, tolerates the strike as essentially a pesky, annoying, yet essential price for employers to pay: “Investors need to look at strikes like a visit to the dentist. Never something to look forward to, but preferable to waking up next to false teeth in a glass. … The cost of not taking the strike is higher; like the dentist visit, it is the lesser of two evils.” (See Chicago Tribune article.)

No matter how the Southern California grocery strike is ultimately resolved, the true winner in all of this may be Wal-Mart, whose shoppers, looking for its “everyday low prices,” are mostly unaware of the impact the country’s largest private employer (second only to the U.S. government) has on workers’ wages. (See USA Today article.) The average full-time union grocery worker earns about $12.48 an hour, nearly 30 percent more than a non-union counterpart at Wal-Mart and others, and is nearly twice as likely to have a company-paid health insurance and pension plan. (See Chicago Tribune article.)

Given that many if not most employees do pay something towards the cost of their health care, the grocery chains’ demands may seem fairly reasonable to those who know relatively little about what’s at stake. But once Southern California grocery workers give in to Wal-Mart, then other unionized service industry jobs will face the same pressure to give in on wages and benefits. And then Wal-Mart will have succeeded, not only in depressing wages and benefits for its own workers but for many millions of other workers in industries either competing with or servicing Wal-Mart. The Southern California grocery workers clearly understand what a tragedy for the American worker that would be. We hope that they will be able to keep up the good fight as long as necessary to beat back this threat.

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