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Healthcare is central to grocery contract talks

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Los Angeles Times

The big supermarket chains and union officials have started talks on a new labor contract. If those early contacts have been the appetizers, the players will sit down to the main course Monday, when Southern California’s biggest grocery union local meets with Ralphs Grocery Co.

Healthcare benefits will be the central issue, just as they were in late 2003, when contract talks disintegrated into a 4 1/2 -month strike and lockout. The contract hammered out at the end of that dispute covers about 65,000 workers at the Albertsons, Ralphs and VonsPavilions chains. It expires March 5.

The outcome of negotiations for a new contract will affect thousands of workers like Caine Levine, who gets paid $7.55 an hour to work the deli and meat counters at the Albertsons on Hillhurst Avenue in the Los Feliz district of Los Angeles.

“I took it for granted that the grocery industry has benefits like other employers, and that I would have to wait three months and then get covered,” he said.

But because of what labor scholars and healthcare analysts call an unusually long waiting period for new hires, Levine will have worked an entire year before his health insurance starts in about four months.

A study to be released today by the UC Berkeley Center for Labor Research and Education has found that lengthy waiting periods — as long as 18 months for individual health coverage and 30 months for family benefits — have left a large segment of the grocery workforce without adequate insurance options, said Ken Jacobs, chairman of the labor center and a coauthor of the report.

“Our findings reveal a precipitous drop in health insurance coverage for Southern California grocery workers,” Jacobs said.

Before the labor dispute, 94% of unionized grocery workers in Southern California had health insurance paid by their employers.

Jacobs said that plunged to 54% by September, according to a survey of United Food and Commercial Workers union members and an analysis of actuarial data from the Food Employers Benefit Fund, a trust jointly administered by management and labor representatives.

Jacobs estimated that 22,000 workers, or 50% of the 44,000 hired since the current contract took effect in March 2004, lacked health coverage.

About 29% of new hires qualified for employer-based health insurance, but only 7% had enrolled as of September. Others had opted for coverage through a family member or public health program or had decided to go without, Jacobs and coauthors Arindrajit Dube and Felix Su said.

With the March 5 contract deadline looming on the calendar, rank-and-file members are hoping that negotiators from United Food and Commercial Workers Local 770, which represents 17,000 Los Angeles-area grocery employees, will be able to craft a better deal when they sit down with the supermarkets.

“I don’t think our customers realize that I am working for barely a quarter over the minimum wage and have no health insurance,” Albertsons worker Levine said.

The local will meet with Kroger Co.’s Ralphs on Monday. Executives of Supervalu Inc.’s Albertsons and Safeway Inc.’s Vons, as well as monitors from the six other UFCW locals in the region, also plan to attend. Earlier this month, Albertsons met with Buena Park-based UFCW Local 324.

Although Monday’s negotiations are expected to be cordial, Local 770 President Rick Icaza said Tuesday that a “high level of distrust” remained from the last contract talks.

Icaza said health benefits would remain at the top of his agenda because the current contract had “left tens of thousands of workers and their children in the position of having to go to taxpayer-funded clinics and hospitals for their healthcare.”

Employers, however, say the union can’t evade responsibility for how the healthcare portion of the contract turned out.

“The union negotiated this deal and accepted this deal. It wasn’t anything that was forced upon them,” said Adena Tessler, a public relations specialist at Rogers Group, a Century City firm hired by the three major chains to speak about the contract talks.

In negotiations three years ago, the major chains sought to drive down their labor expenses so they could be better able to compete with discounters and warehouse retailers such as Costco Wholesale Corp., Wal-Mart Stores Inc. and Target Corp. — chains that were moving heavily into food retailing.

This time around, the supermarkets are feeling pressure from British retailer Tesco, which plans to spend $2 billion over five years to open hundreds of stores in Southern California, Las Vegas and Phoenix.

The current contract allows the three chains to institute long waiting periods, as well as offer a lower benefit package, for what the industry now calls second-tier workers — those hired after the new agreement was signed.

However, veteran employees continue to get much of the health benefits they enjoyed under previous contracts, including low co-payments and deductibles for medical, dental and vision care and no monthly premiums.

“When you look at the [employer] health plan in its entirety, the companies worked with the unions to come up with a solution that protects the rich veteran benefits while controlling rising healthcare expenses,” Tessler said.

Whatever may have happened at the bargaining table then, the contract has had wide-ranging effects, the Berkeley study found.

The decline in coverage for supermarket employees “limits access to healthcare for the workers and puts them at financial risk,” Jacobs of UC Berkeley said. “It also raises healthcare expenses for employers who wind up providing dependent coverage through a spouse or a parent and for taxpayers who pay for the public insurance programs.”

He believes that high employee turnover at the chains has made the situation chronic, “and it is getting worse.”

According to the study of actuarial data, the chains experience a 50% turnover rate for first-year workers hired under the current contract. And as newcomers replace veteran workers, the number of insured grocery employees declines every month, Jacobs said.

For their part, the chains say a large group of veteran workers left the industry during the work stoppage three years ago but that turnover has leveled off and is no greater than what other retailers experience.

(INFOBOX BELOW)

Benefits shelved

Percentage of grocery workers with health insurance

Northern California

2003*: 96%

2006*: 79%

Southern California

2003*: 94%

2006*: 54%

Health coverage for Southern California grocery workers hired after the labor dispute who are eligible for insurance

Eligible: 29%

Actually covered: 7%

*As of September

Sources: UFCW unions and Food Employers Benefit Fund and Segal Co.