Sunday, November 6, 2016

Striking for Benefits

A few years ago, the strike by Southern California grocery workers against the state's major supermarket chains was almost 5 months old. The main issue was employee benefits, and specifically how much (if any) of the employees' health-care costs the employees should pay themselves. Based on their existing contract, Southern California gro­cery workers had unusually good health benefits. For example, they paid nothing toward their health insurance premiums, and paid only $ 10 co-payments for doctor visits. However, supporting these excellent health benefits cost the big Southern California grocery chains over $4 per hour per worker.

The big grocery chains were not proposing cutting health-care in­surance benefits for their existing employees. Instead, they proposed putting any new employees hired after the new contract went into effect into a separate insurance pool, and contributing $1.35 per hour for their health insurance coverage. That meant new employees' health insurance would cost each new employee perhaps $ 10 per week. And, if that $10 per week weren't enough to cover the cost of health care, then the employees would have to pay more, or do without some of their benefits.

It was a difficult situation for all involved. For the grocery chain em­ployers, skyrocketing health-care costs were undermining their com­petitiveness; the current employees feared any step down the slippery slope that might eventually mean cutting their own health benefits. The unions didn't welcome a situation in which they'd end up representing two classes of employees, one (the existing employees) who had excel­lent health insurance benefits, and another (newly hired employees) whose benefits were relatively meager, and who might therefore be unhappy from the moment they took their jobs and joined the union.

  1. Assume you are mediating this dispute. Discuss five creative solutions you would suggest for how the grocers could re­duce the health insurance benefits and the cost of their total benefits package without making any employees pay more.
  2. From the grocery chains' point of view, what is the downside of having two classes of employees, one of which has supe­rior health insurance benefits? How would you suggest they handle the problem?
  3. Similarly, from the point of view of the union, what are the downsides of having to represent two classes of employees, and how would you suggest handling the situation?

Source: Based on "Settlement Nears for Southern California Grocery Strike," Knight-Ridder/Tribune Business News, February 26, 2004, item 04057052.

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