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NEWS ANALYSIS

2-Tier Plan Is Crucial to Grocery Pact

February 28, 2004|Nancy Cleeland and James F. Peltz | Times Staff Writers

For 139 days, tens of thousands of California grocery workers walked the picket lines, trying to stave off cuts to their health and pension benefits. But in many ways, those who stand to lose the most are people who haven't even been hired yet.

The tentative contract reached late Thursday, which would end the supermarket strike and lockout, would create two classes of employees at Albertsons, Ralphs, Pavilions, Vons and other stores covered by the accord in Central and Southern California.

Those newly hired under the "two-tier" setup would earn less per hour, be eligible for fewer holidays and receive more meager health and pension benefits than veterans, people familiar with the matter confirmed Friday.

Securing a two-tier plan was a crucial win for the grocery chains involved in the dispute, the longest-running in U.S. supermarket history. The stores insisted on the plan to significantly cut their labor costs to better compete with nonunion, lower-cost grocery retailers such as Wal-Mart Stores Inc.

The United Food and Commercial Workers union initially fought against a two-tier program, arguing that it would lead to discrimination against longtime employees and put a financial strain on the fund that covers their health benefits. That's because the new hires -- who are likely to be relatively young and healthy -- would be placed in a separate healthcare pool from veteran workers.

In the end, though, the union had little choice but to accept the two-tier arrangement to help bring an end to a clash in which many of its members were already suffering great hardship, people close to the talks said.

As tens of thousands of UFCW members prepared to vote over the weekend on the contract, their moods ran from relieved to angry.

The rank and file haven't seen the document they will be asked to ratify -- they will receive copies when they go to union polling places Saturday and Sunday -- but some are worried that the terms will be unacceptably inferior to those in the contract that expired Oct. 6.

"I'll vote for it if it is better than what we have. To me, this is common sense," said Rickie Williams, a 43-year-old customer service clerk walking the picket line in an Albertsons parking lot in Santa Monica. "Why stay out for almost five months and then vote yes on a contract that isn't as good as the one we have?"

But one of his fellow pickets, Diane Landau, said she would follow the union's guidance and vote in favor of the pact.

"I will accept the contract," said Landau, 47, a courtesy clerk. "I know the union fought the good fight for us."

Details of the deal reached Thursday haven't been made public. But sources close to the negotiations said the two-tier terms weren't radically different from those put on the table by the supermarkets in early December.

Under that proposal, the gap between the two groups was significant: Top scale for a newly hired cashier, for example, would have been $15.10 an hour, compared with $17.90 for a veteran -- a 16% difference. What's more, it would have taken a new cashier about six years to reach the top; it used to take two years to do that.

When it came to healthcare benefits, the early December proposal had the supermarkets capping their contribution for the first tier at $4.60 an hour per employee, while the contribution for the second tier would have been only $1.35 an hour per employee.

Two-tier contracts had widespread appeal in the 1980s, when deregulation and globalization began to squeeze large, established companies. They demanded concessions from unions, and unions found cuts easier to swallow if members already on the payroll were spared the brunt of them.

But most two-tier plans didn't last.

In 1985, for example, two years after American Airlines pioneered the dual structure in its contract with pilots, the union threatened to strike, saying the 50% wage gap between old hands and newcomers created conflict. The gap was narrowed through subsequent contracts and eliminated within a decade.

"There was a revolt from junior seniority members saying, 'Enough of this. Why should we be paid less?' " said Capt. Steve Blankenship, chairman of the national communications committee for the Allied Pilots Assn., the union for American's pilots. "A two-tier contract is divisive in its initial construct and, as it goes on, it sabotages morale. I would not recommend it."

For their part, the supermarkets have defied the trend of moving away from two-tier agreements. The three parent companies in the dispute -- Albertsons Inc., Kroger Co. and Safeway Inc. -- have two-tier contracts in place around the country, several with the UFCW. And they were especially determined to put the system in place in Southern California, where grocery workers have been among the best-paid in the country.

What's more, this contract will set the stage for contract talks across the nation: Between now and mid-October, Safeway will be negotiating five contracts, including one in Northern California, while Kroger faces nine.

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