It's been a ticket to the middle class, no college degree required, for generations of Sacramentans: a job at Raley's or another unionized supermarket.

Now unrelenting pressure from nonunion grocers such as Wal-Mart threatens to change that.

With their labor contracts up for renewal, Northern California's big unionized grocery chains – Safeway, Raley's and Save Mart – are seeking wage and benefit concessions from 60,000 workers in the Central Valley and Bay Area.

The grocers say they need to ratchet down labor costs, particularly health insurance, to compete with the likes of Wal-Mart, Target and newcomer Fresh & Easy. They say their demands are reasonable and won't impoverish their workers.

Members of the United Food and Commercial Workers acknowledge that their employers are under pressure. But they're bent on preserving as much of their pay and benefits as possible.

"You can still make a good living and live a good middle-class life in this job," said Trevor Griffin, a veteran Safeway employee in Roseville. "Destroying a middle-class job is definitely not helpful to the economy."

Griffin, 32, joined Safeway right out of high school and worked his way up to produce manager. He earns $21 an hour, plus benefits. He and his wife own their own home.

But Griffin doesn't have to look far to see the future. Wal-Mart says it plans to open a groceries-only store across the street from his Safeway.

"They're going to bring in how many $9-an-hour jobs?" he said.

Wal-Mart, the nation's largest grocer, will say only that its wages and benefits are "competitive." Labor officials say Wal-Mart and other nonunion stores pay about half as much as union stores – putting the squeeze on a blue-collar, breadwinner occupation that has flourished for decades.

"The rise of the nonunion retail grocery sector … is really eroding one of those last few family-supporting jobs for people without a college education," said Ken Jacobs, a labor expert at the University of California, Berkeley.

Deal not expected soon

"The negotiations of 2011 are among the most challenging in our history," Jacques Loveall, president of UFCW 8-Golden State in Roseville, said by email. His local is one of three UFCW units negotiating with the grocers.

A strike isn't inevitable, of course. The contract, which ran out in October, has been extended four times.

Raley's and its Nob Hill subsidiary will have their contracts expire Jan. 24; the pact for Bel Air, another Raley's subsidiary, runs through March 24. Safeway and Save Mart's contracts expire Feb. 25.

Susan Houghton, a Safeway spokeswoman, said it isn't unusual "for both sides to be this far apart at this stage in the process" and that a deal may be months away.

On that last point, labor and management agree.

"This is going to go on for a while," said Ron Lind, president of the San Jose local, during a town hall meeting with members earlier this month.

Lind compared it to Southern California's experience in 2003, when grocers' demands for cutbacks led to an epic strike.

"I have never seen anything this bad," he said.

It's not just the incursion of nonunion stores that's coloring negotiations. Soaring health care costs and a weak economy are also key issues.

Another factor: Both sides say Northern California union workers have probably the most generous contract in the U.S. grocery industry.

That makes labor a target. In a business in which profits are eked out a penny at a time, employee compensation can soak up 15 percent of revenues at a unionized store. It's a grocer's single largest controllable cost, said Moraga industry consultant Bob Reynolds.

"These are issues that should have been grasped and dealt with years ago," said Bob Tiernan, special assistant to Raley's Chief Executive Michael Teel.

The grocers wouldn't discuss their proposals in detail. But Loveall and Lind said the supermarkets want to eliminate paid health care for retirees, and force current workers to start contributing to insurance premiums. The contributions could be as high as $23 a week, Lind said.

Also, the companies want to eliminate bonus pay for working nights, Sundays and holidays, the union officials said. Workers say this extra pay can add up quickly.

Tiernan said Raley's offer to the workers "will save the company millions and is critical to our future success."

Unprofitable stores

Between 2008 and 2010, Save Mart annual revenue fell more than 2 percent, to just under $5 billion, according to Stores magazine. Raley's annual sales fell 8 percent, to just under $3.4 billion.

Raley's recently cut off health coverage for nonunion retirees over 65, saying in a letter that it is "struggling to sustain our business and maintain profitability."

Asked about the letter, Tiernan said the West Sacramento-based grocer is profitable but "many of our stores are losing money."

Safeway, which is publicly held, says it earned 30 percent less profit last year than in 2006. Profits fell another 16 percent in the first nine months of 2011, despite a strong third quarter.

Clearly the nonunion competition is having an effect. In 2008, when the current union contract took effect, a survey by Scarborough Research for The Bee's marketing department showed that just under 3 percent of consumers in greater Sacramento shopped Wal-Mart as their primary source for groceries. The three union chains had 51 percent of the business.

Now Wal-Mart claims the loyalty of 13 percent of Sacramento-area shoppers, according to Scarborough. The union chains' share has shrunk to 42 percent.

Grocery executives insist that even if the union accepts management's demands, working at a supermarket will remain a middle-class occupation. Base pay for most workers will still be as much as double what the nonunion stores pay.

Workers aren't so sure.

Dave Turner, a Raley's employee in Roseville, understands the pressures facing the company but believes it would be unfair to reduce employees "to a Wal-Mart standard."

Turner, 41, joined Raley's right out of high school. He's now produce manager at the Douglas Boulevard store in Roseville, where he earns $21 an hour plus benefits.

Raley's is a family company for Turner. He met his wife, Jeanie, on the job, back when she was a Raley's employee. They've raised two daughters, with whom they share their modest rental home in an older section of Roseville.

"It's bought me a good lifestyle to raise my girls in a nice community," Turner said.

But with one girl in junior college and the other a senior in high school, Turner isn't advising them to follow him into the grocery business.

"When I started in the industry it was a pretty good career," he said. "Twenty years later, I'm not sure I would recommend it as a career choice for someone younger."

Original Article