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.
- 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.
- 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?
- 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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