San Diego Economy and My Son's Union Job

After about a year of looking for work, my youngest son (M) got two job offers within a matter of a week.  The first was with a fast food outlet and the second with a grocery chain.  Signs that the local economy is picking up?  I hope so.  The alternate explanation is that hiring by local stores, ramping up for Christmas, left other openings in the economy.

My son shares my political philosophies, but he didn't hesitate to take the union grocery job as the better offer of the two.  It didn't help that the fast food outlet seemed to have challenges with its hiring process, a week after their offer, he still didn't have a start date.  I am leaving store names off this story to respect his privacy.

Meanwhile, the grocery chain made it clear that the sooner he joined the union the better it would be, so it was off to Mission Valley.  They asked him to donate to their political fund, which he declined; but it was good to see that no undue pressure was placed on him.

When he came home, I told him that now that he had joined the union, I expected him to go on strike if it came down to it.  By joining, he had made a promise and keeping one's word is more important than our personal political beliefs.  I have lived through the 2003-2004 grocery strike in this city and think the union made a terrible decision; but that is irrelevant to M's personal circumstances.  The 2003-2004 strike went on far too long, and I believe the union suffered long term damage.

If the union could provide more reliable and more productive workers, they would be doing employers a service that justifies higher wages over the non-union competition.  But no one argues this is the case, do they?

I am hoping that the local economy is turning around; people have suffered long enough over the last four years.

Grocery Workers Voting on Contract

I would urge any grocery workers who may read my blog to vote in favor of the deal reached between the union leaders and the grocery chains that operate Ralphs, Vons and Albertsons. The contract preserves their own health care fund, although I am not sure how affordable it will remain under Obamacare. Although there might never be a good time for a strike, the following U-T headline indicates that striking now would be especially unfortunate:

Poverty rate in county hits 30-year high

More county residents faced financial hardship last year than at any other time in the past three decades, a record reflected in the poverty rate’s sharp rise and stagnating median household incomes, according to new data from the U.S. Census Bureau.

I am also afraid that the housing market will also remain down until the government stops intervening, as predicted in today's Wall Street Journal.

Economists, builders and mortgage analysts are predicting the weakened U.S. economy will depress housing prices for years, restraining consumer spending, pushing more homeowners into foreclosure and clouding prospects for a sustained recovery.
Home prices are expected to drop 2.5% this year and rise just 1.1% annually through 2015, according to a recent survey of more than 100 economists to be released Wednesday. Prices have already fallen 31.6% from their 2005 peak, as measured by the Standard & Poor's Case-Shiller 20-city index.

Our current problems starting with the mess in the secondary mortgage markets, partly the result, partly the cause of an overheated housing market. Continued efforts by government to prop up the market will cause more economic weakness which will in turn continue to push people into poverty. Somehow, keeping home prices high is compassionate.

Exit question, does a double dip in housing prices forecast a double dip recession?

Good Timing for a Grocery Strike? UPDATE

Yesterday's U-T headline announced that San Diego County's unemployment rate had increased to 10.5% during the "summer of recovery."

Unemployment in San Diego County ticked up in July to 10.5 percent, up from a revised 10.4 percent in June, reaching a high not seen for nearly a year, according to data released Friday by the state Employment Development Department.

So imagine my surprise this morning when I read that local grocery workers had voted to go on strike against Vons, Albertsons and Ralphs. One would think that the supermarkets will have no problem getting replacement workers.

More than 90 percent voted to reject the supermarkets' offer, which could affect scores of stores in San Diego County and across Southern California. The vote was open to more than 62,000 workers across Southern California, but union officials did not reveal the exact turnout, only saying it was a "record high."

I presume the key issue is the desire on the part of the grocers to have their employees pay more for their health insurance. Union President Mickey Kasparian, from the same article:

Under the grocery chain’s proposal, some workers would go from having no paycheck deductions to having an average of $92 per month deducted for health insurance, although it would vary depending on family size and other factors, Kasparian said.

Is this the result of the passage of Obamacare? I don't have hard evidence to prove that, but I wouldn't be surprised. Businesses are facing rising health care costs since the passage of the bill that we needed to pass to see what was in it. Everything I have read about the negotiations for the grocery workers lead me to believe that health care costs are the key sticking point. Costs are going up and neither side wants to pay for them.

Meanwhile, the stores are getting ready for a strike, some are putting up signs asking for applications for replacement workers. Since my youngest son has been having trouble finding work, he took the opportunity to go to one of the local stores to fill out such an application. He said it was a difficult endeavor, because he didn't want to ask current employees how to apply to be a replacement worker. Instead, he made his way to the manager's office to fill out an application there. Even though there were media reports of signage asking for replacement workers, this Vons in Clairemont had no such signs. The manager gave out a standard employment application form, no different than under non-strike conditions. Perhaps they are hoping for an 11th hour settlement and don't want to unnecessarily upset current employees.

I lived through the grocery strike eight years ago (2003-2004), and remember the unions not doing very well when the results were in. From the lib.com website.

59,000 UFCW members voted on the three-year contract over the weekend of February 28-29. By any standard, the settlement must be considered an important employer victory. While the supermarkets did lose $2.5 billion in income during the strike, they established a precedent for many pending contracts around the country, and not merely for supermarkets. Wall Street greeted the settlement, and Safeway stock prices remained firm throughout the strike.

The new contract provided for a two-tier system. Current employees will receive no pay increase for the first two years of the contract, but will receive a ratification bonus. In the third year, they will begin making monthly payments for the family health plan. New employees will have lower wages and will receive only limited health coverage. The two-tier contract will thus open the way for pushing older employees out the door. Finally, the contract allowed the supermarkets to fire up to 630 UFCW members for “misconduct” on the picket lines within 36 hours of ratification.

I personally crossed the picket line and was interviewed on local TV about why I did so. The answer was simple, we needed groceries for a party and didn't feel excessive sympathy for the worker's position. At the time, Walmart was starting to move into the grocery business and the big grocery chains needed to contain costs in order to compete. I think the problem for the grocery store workers is that it doesn't appear that high levels of education or training are necessary to perform their work. As a result, they will constantly be under competitive pressure. This is not meant as disparagement, I am on friendly terms with many unionized grocery workers and they treat me very well. They work in a field where economists would say there are low barriers to entry into that workforce, unlike health care, for instance. Ultimately, the price I pay for my groceries is a good part of the consideration of where I decide to shop. Regardless of their helpfulness, prices that are too high will send me elsewhere.

I sincerely hope the strike ends soon, but I don't see how the workers are in any better position to win concessions than they were eight years ago. Further, I wonder how they will explain to their unemployed neighbors that they went on strike because their health care costs went up. Isn't that true for almost everyone?

UPDATE

Apparently, Verizon workers are returning to work without a contract, although negotiations will continue. The striking Verizon workers are in the land line portion of the business, which is under great strain because of the shift to wireless. This makes their situation similar to the grocery workers, being in an industry of increasing competitive pressure. That they felt it necessary to return to work is not a good omen for our local UCFW folks. Health care costs were also a big part of this strike as well. Seems Obamacare isn't a good deal for private sector unions.