Joe Armendariz is Executive Director of the Santa Barbara
Industrial Association and the Santa Barbara County Taxpayers
of the World, UNITE!
Memo to the United Food and Commercial Workers: You can't have
Labor without Capital!
[Joe Armendariz] 10/15/03
Big Labor never seems to understand this fundamental, economic
truism. Admittedly, I am no fan of labor unions. What was, perhaps,
a once necessary by-product of the early 20th Century, has become
an irrelevant, anachronistic, old-economy-relic, writ large.
grocery store employee "lock-out", more aptly
referred to as "walk-out", is indicative of Big Labor's
inability to understand the significance of market-forces and
its role in determining prices, including wages. And while we
are on the subject of wages, health benefits, which are simply
non-taxable wages, are inextricably linked to the prices charged
for the groceries sitting on store shelves. Higher wages and
better benefits for the stores employees means higher prices
to the consumer.
will tell you, as you sheepishly walk across their wispy
picket line, the strike is about "solidarity" and
the need to stand up to the greedy store owners. In fact, the
opposite is true. The strike is about the corruption of Big
Labor and its refusal to accept the stubborn fact that their
society is no longer necessary. The wall to wall news coverage
of this anti-capitalistic, political exercise, will hopefully
prove to be nothing more than Big Labor's last gasp at relevancy
and the long anticipated swansong by this tired, anti-consumer
And consumers should make no mistake about it, by walking-out
on employers and inconveniencing customers, the employees have
fired a shot across the bow of every hard-working family in California
struggling to put food on their table. Simply put, if UFCW gets
its way, the price for groceries sold at the stores employing
their members will go up. It is Econ 101 and there is no way
news for millions of consumers, and subsequent bad news for
the 70,000 exploited union members, is non-union
stores will quickly gain a larger market share at the expense
of unionized stores and as a result, the 70,000 members of
the United Food and Commercial Workers union, who spent their
standing around grocery store parking lots, carrying their
postcards on a stick instead of serving the customers who pay
will eventually get laid off.
Now, none of this is really the fault of the stores employees.
Joining the union is something over which they have no choice
in the matter. However, I do say shame on those unionized employees
who are too quick to grab the microphone from news crews and
regurgitate Big Labor's workers-of-the-world-unite, anti-capitalism,
rhetoric. But, for the most part, these union dupes are the exception,
not the rule.
Where this all becomes utterly ludicrous is in the negotiation
process itself. The United Food and Commercial Workers union
is arguing for the wrong thing. And because they are inherently
an anachronism, the type of benefits they are fighting over are
as well. In the first place, let's be clear; the union is being
totally unreasonable. There isn't an employer, particularly in
California, who hasn't been forced to revisit their company's
defined-benefit, group-health-insurance contract, in order to
try and save money.
Group insurance premiums, since 1998, have been going up at
an average annual rate of between 18-24% and even higher in certain
if that weren't the case, an employer-based system that spends
health care dollars on a set of defined benefits
is as much of a relic as the labor movement itself. What UFCW
should be fighting for, instead, is an alternatively-funded
(self-funding), defined-contribution plan that follows the
employee and allows
them to leverage the contribution and secure the type of coverage
uniquely suited to their particular situation and from a much
bigger menu of choices. The options should be expanded to include
pre-paid managed care plans (IPA's), an in-network-only, preferred
provider option (INPPO), exclusive provider option plans (EPO),
a point of service plan (POS), and perhaps most important of
all, a high deductible plan that makes the employee eligible
for a tax-advantaged medical savings account (MSA).
If such a model were already in place (which would require the
relaxation of a blizzard of crushing regulations), there would
be no need to argue over the employers demands, regarding an
employee helping to cover increasing insurance costs. Because
each employee would already be empowered with their own self-shopping
mechanism with which to help navigate the always evolving insurance
type of alternative funded, ultra-choice, defined contribution
model in place, employees can simply re-shop for their health
coverage within the existing plan(s) and make whatever changes
they deem appropriate to lower their individual costs. It is
also worth mentioning, that the overwhelming percentage of
employers, who do provide group health insurance, contribute
nothing to the cost for an employees family. And with the escalating
costs in workers compensation, liability insurance, and taxes,
companies in California, who are providing health insurance,
are perfectly justified in looking for ways to cut labor costs.
Why should the grocery stores be any different?
this walk-out is about the intellectual and political corruption
of an increasingly militant Labor Movement, and its
refusal to accept the stubborn fact that their role in society
is no longer required. The employees who are forced to join
unions will ultimately suffer at the hands of a brutally efficient
marketplace where the price of food is set not by greedy-white-males
in smoke filled rooms, but by the laws of supply and demand.
The same goes for wages. In 2003, the consumer is king and
the Labor boss has no clothes.