Working In These Times
New England Grocery Unions Face Grueling Obamacare Test (Update)
UPDATE: UFCW union leaders in New England announced a tentative settlement with Stop & Shop March on 4, following marathon negotiating sessions over the previous few day. Details of the settlement are being withheld pending formal presentation of the new contract to union members for a ratification vote. According to the union's special Stop & Shop web site, the union will announce a date for the ratification vote in a matter of days.
Union leaders and grocery chain managers are back at the negotiating table in New England today in a bitter and messy attempt to adapt existing health insurance programs to the new realities of the Affordable Care Act, a.k.a Obamacare. The negotiators—from the United Food & Commercial Workers (UFCW) union and the Stop & Shop grocery chain—face a March 3 deadline that could provoke a large scale strike or lockout affecting 40,000 workers.
Standing in the way of an agreement at this point are certain provisions of the Affordable Care Act set to go into effect in 2014, says Rick Charette, president of UFCW Local 1445, based in Dedham, Mass. Charette—who leads a coalition of five UFCW locals representing grocery workers in Massachusetts, Rhode Island, Connecticut and New Hampshire—says the problems appear intractable, and negotiators are desperate to find a solution.
“I’ve been around labor contract negotiations for 40 years and this is the worst I’ve ever seen,” Charette said in an interview this week with Working In These Times. “It’s a nightmare” that has been created not by corporate pressure to cut labor costs, but by the fumbling bureaucratic requirements of federal health law, he says.
Stop & Shop faces increased health insurance costs as high as $250 million over three years should all 40,000 UFCW workers continue receiving the same health care insurance benefits as under the current contract (which expired Feb. 17 but has been extended for two weeks), according to Charette. The increased costs are mostly created, he explains, when the Obamacare requirement that medical benefit caps be eliminated prompts insurance companies to raise rates to cover the greater costs.
“What is just crazy about this is that Stop & Shop is one of the few food retailers out there that has had good insurance for part-timers—most grocery companies don’t provide anything at all,” says Charette. “It punishes the companies that are trying [to do] the right thing.”
Stop & Shop’s proposed solution to the problem has been to eliminate coverage for thousands of part-time workers, but UFCW is not ready to agree to that, Charette says. “The theory is that part-timers are, by definition, low-income workers, and therefore they will qualify for government subsidies for individual health insurance under Obamacare. Well, that’s a nice theory, but what does that mean in practice for our members?" he asks. "Nobody seems to know."
“When we backed Obamacare, we were told that if we had good health insurance and wanted to keep it, we could," Charette adds. "What happened to that?”
The dilemma for the Stop & Shop worker is indeed a very real and vey difficult one, according to Ken Jacobs, chairman of the University of California, Berkeley's Labor Center. The same pressures on the low-income, part-time workers in New England are being felt around the country, he says, and the issue will certainly rise in public prominence over the next year, as the 2014 deadline for elimination of caps approaches.
“This is sort a special problem that applies to part-timers who meet the government definition of low-income,” Jacobs says. “The unions that are going to feel it the most are UNITE HERE and UFCW, and some parts of SEIU,” he predicts. Since there is no Obamacare requirement that many part-timers be covered by employer-based insurance plans, many companies will take the path of least resistance and push these workers out into government-subsidized programs for the working poor.
“The issue of health coverage for workers in the food retailing industry has not been created by Obamacare—it has been at the very center of [grocery industry] labor relations for years,” he notes. The 2003 Southern California grocery strike—the largest of its kind in U.S. history—had its origins in health care insurance issues. “And look what happened there," Jacobs says. "It was a huge strike and the workers lost a lot of their health care benefits."
“At the end of the day, it may be better for everyone concerned” to eliminate employer-based coverage for most of these low-income grocery workers, says Jacobs. “If the cost is so onerous that the employer cannot compete, then subsidized individual insurance seems to be a logical alternative.”
Any resolution of the New England Stop & Shop insurance issue could set a national precedent in the grocery chain sector, adds Jacobs. Stop & Shop's parent company is the Dutch-based international retailer Ahold, which owns hundreds of other stores in New York, New Jersey, Pennsylvania, Maryland and Virginia. Any settlement in New England could create a model for those other areas, he says, and a company-wide Ahold solution will, in turn, have a knock-on effect for other gigantic chains like Safeway, Kroger and Supervalu.
The potential national impact of the outcome of the negotiation has created intense pressure this week as the New England talks between UFCW and Stop & Shop enter a decisive phase.
Charette tells Working In These Times that the five union locals are planning on mass meetings across the region for this coming weekend. If a settlement is in hand, union leaders will ask for a ratification vote. Otherwise, they will ask for a strike authorization vote and prepare for a huge confrontation. The union leader confessed it was impossible to predict the outcome.