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When Unions Back Corporate Mergers, Workers Lose

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Hamilton Nolan

There has always been a fundamental tension in the organized labor world between people who think that unions exist to counteract the self-serving tendencies of businesses, and people who think that unions should copy the self-serving tendencies of businesses.

The gap between the view that unions should¬†change¬†capitalism and the view that unions should just help working people¬†get their piece¬†of capitalism is not just fodder for theoretical arguments — billions of dollars, thousands of jobs, and the entire direction of the post-neoliberalism economy could ride on it. We‚Äôre seeing that tension painfully demonstrated right now, at the grocery¬†store.¬†

Last week, Kroger announced its¬†plan¬†to merge with Albertsons. That merger would create a $25¬†billion grocery giant that would control¬†more¬†than¬†15% of the American grocery market, second only to Walmart. (In certain local markets, it would control the majority of the grocery business.) Kroger argues that it needs such massive scale in order to compete with Walmart and Amazon — a strange claim, since Kroger‚Äôs profits¬†grew¬†14% in the past¬†year.¬†

Why do companies find this sort of mega-merger so attractive? It allows them to squeeze suppliers for lower prices, and, on the flip side, it gives them greater pricing power over consumers. (Mergers also create a¬†ton of fees for advisors and potential bonuses for executives, and a¬†little sugar rush jolt to the stock price — all things that create personal incentives for the people in charge to do deals, whether or not they end up being wise.)

What companies¬†say¬†when they do such mergers is, ‚ÄúIt will help us lower prices for consumers, and it will help us strengthen our company for shareholders,‚ÄĚ as if corporate dealmaking was an altruistic process. What they¬†mean¬†is,‚ÄúIt will help us proceed one step closer to monopoly power, the ultimate goal of all corporations, and also it will help the CEO buy a¬†new house.‚Ä̬†

Then there is the labor angle.

These grocery companies have an enormous number of employees who are unionized with the United Food and Commercial Workers (UFCW) — the merger, in fact, could create the¬†biggest¬†single private sector union employer in the country, even bigger than the Teamsters unit at UPS. Common sense should tell you that bigger, more omnipotent companies with more extreme market power are not generally a¬†good thing for their own blue collar workers, for many of the same reasons they are not a¬†good thing for consumers. Companies want to get bigger to squeeze suppliers, customers, and workers in service of shareholders and executives. That is Capitalism¬†101, and it has been demonstrated countless times.

It is an easy call for anyone who considers themself a progressive, or who cares even a bit about the balance of power between capital and labor, to oppose this merger and others like it. It is quite a tell that the fairytale of the free market‚Äôs benefit is all about how competition will create an optimal outcome for everyone, but the reality of capitalism is that companies seek to eradicate every possible trace of competition in order to accrue benefits for themselves and screw everyone else. 

This merger needs approval from the Biden administration‚Äôs Federal Trade Commission. That means this is a¬†political issue, and opens a¬†door for organized labor — particularly the UFCW — to have an extraordinarily large say, given the fact that this administration actually listens to unions more than any other in living memory. As soon as the merger was announced, a¬†group of five UFCW locals representing tens of thousands of grocery workers in the Western United States put out a¬†statement¬†opposing the merger, saying it would be, ‚Äúdevastating for workers and consumers alike and must be stopped,‚ÄĚ for all of the reasons just mentioned. Their position was very clear. They knew this would be bad, and they immediately stood against it. The internal reform caucus called Essential Workers for a¬†Democratic UFCW is also¬†agitating¬†against the¬†merger.

Oddly, though, a¬†full day then went by with silence from the UFCW‚Äôs International headquarters. Then, the union dropped a¬†statement¬†that was excruciating in its refusal to take a¬†stand. Rather than clearly coming out against the merger, it said that, ‚ÄúGiven the national impact such a¬†merger would have, the UFCW and our Local Unions are discussing this and will stand together to prioritize the best interests of our members, their families, and the communities they proudly serve,‚ÄĚ adding that the union, will oppose any merger that threatens the jobs of America‚Äôs essential workers, union and non-union, and undermines our communities.‚ÄĚ It was a¬†glaring, flashing siren that the leadership of the UFCW may be considering cutting a¬†deal.¬†

And here is where we come to my initial point about how union leaders see their mission. In theory, the UFCW could reach an agreement with Kroger that, for example, ensured the company would be neutral as UFCW went about organizing more of its workers. It could be a¬†way to deliver hundreds of thousands of new members into the UFCW‚Äôs ranks. (Of course, thousands of existing UFCW members could be laid off as a¬†result of the store divestments that would go along with this merger.) But no matter what the company offered, common sense again tells you that they will not give up the underlying benefits of this mega-merger — which are structurally bad for suppliers, consumers, and workers.

No union should think of workers as pawns to be traded back and forth with companies, in order to benefit the union.

This blog originally appeared in full at In These Times on October 19, 2022. Republishing with permission.

About the Author: Hamilton Nolan is a labor writer for In These Times. He has spent the past decade writing about labor and politics for Gawker, Splinter, The Guardian, and elsewhere.


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