My apologies to the grocery stores and my readers; day two of the St. Louis UFCW strike settlement

In this article buried in the online edition, but with a front page headline in the Saturday print edition, the St. Louis Post-Dispatch provides a more balanced view of the new contract. With the headline “In effect, the revised offer gives workers more money up front,” the paper explains how the deal did not involve major employer concessions, thereby admitting (without saying so) that in their haste to scoop the story, they presented a very biased version of the new contract.

Sorry to say, in my haste yesterday to scoop the story, I fell for the Post’s distortions hook, line, and sinker. For that, I apologize to my readers and to the grocery stores, whom I supported with my business during the strike. There’s something to learn here about journalism, as well as labor relations.

Here in bold is the original story, with the day 2 corrections in brackets:

“[T]he proposal includes several improvements over the rejected contract.”

["With the help of a federal mediator, both sides ultimately crafted an agreement that did not change the cost of the contract but contained enough changes to convince union members to accept it."]

So if the cost is the same, it’s debatable to what extent it can really be called an “improvement.”

“Among the provisions are:

An increased ratification bonus of 45 cents multiplied by the hours paid in the 52 weeks preceding the strike for all employes, including courtesy clerks.”

["The new contract increases the ratification bonus to 45 cents for each hour worked in the past year, up from 20 cents. However, the companies will delay wage increases for 21 weeks in each of the next three years. For example, a full-time worker who was to receive a 25-cent-an-hour raise in June next year now will get that raise in November next year. The companies, in effect, simply gave the workers more money up front. But once again, the overall cost of raises remains the same, compared with the previous proposal."]

“A raise for anyone paid at $9.00 an hour or above of 25 cents an hour in 2004, 2005, and 2006.”

This was no “improvement”: it was exactly the same raise offered before, but now delayed to November instead of June.

For an employee who worked 40 hours every week of the past year, the bonus increase is $520 ($.25×40x52). The cost of deferral of the three $.25 annual raises from June to November (21 weeks) is $630 ($.25×40x21×3). With a present value calculation, the numbers do look like pretty much a wash.

“A raise for courtesy clerks of 10 cents an hour in 2004, 2005 and 2006.”

[The new agreement also gives baggers 10-cent-an-hour raises in each of the next three years, up from 5 cents in the old proposal. But only baggers now on the payroll will get the higher raise. Supermarket executives say there is significant turnover among baggers, so the impact of the raises will be negligible.]

Negligible? Relatively minor, perhaps, but if each store only gives an extra 5 cents to 15 20-hour-a-week baggers for just one year, that’s $7800 per store. With over 100 stores, that’s could be over $1 million.

“Elimination of the $200-$400 deductible in medical benefits.”

“Restoration of lower caps on the cost of prescription drugs at $25 for a 30-day supply and $75 for a 90-day supply.”

["Under the new contract, the companies eliminated the annual deductibles. But they offset that by requiring workers to pay the full cost of brand-name prescription drugs if cheaper, generic versions are available. The companies previously offered to cap a worker's out-of-pocket cost for drugs available in both generic and brand-name varieties at $75 for a 30-day supply, $175 for a 90-day supply. The new contract removes those caps. Now a worker who chooses to buy a 30-day supply of a brand-name drug must pay the greater of $7, or 25 percent of the price plus the difference in cost between the name brand and generic. For a 90-day supply, the worker must pay the greater of $14, or 15 percent of the price plus the difference between the name brand and generic.

In an exclusive interview, Marlene Gebhard, president of Shop 'n Save Warehouse Foods Inc., said the goal was to steer workers toward less-expensive generic drugs. 'On the prescription side, what we wanted to do is to sort of urge them in a different way to be better managers' of their benefits, she said. 'They are quickly going to recognize the need to buy generics.'

As a result, the companies' contribution to the union health plan is the same as the previous contract that workers rejected. By eliminating the deductibles, the union and companies removed a key obstacle to ending the strike and lockout."]

I can’t believe they didn’t have an incentive for use of generics before. I’ve had that in my plan ever since I can remember. This shows how far behind the times this plan was in adopting reasonable cost control measures that have negligible impact on employees and are absolutely normative in the non-union world. Probably the same is true of many other union plans. They should also have a ‘formulary” to discourage use of higher-priced name brand drugs when lower cost ones (also not generic) are available. it’s amazing that this use of name brand drugs was so common that the unnecessary cost was sufficient to fund elimination of the deductible. Too bad they didn’t think of this before the strike!

The deductible issue raises an important point. A plan needs to be tailored to the financial capabilities of the workers. Deductibles save significant money on premiums, but impose unreasonable burdens on lower wage workers such as these grocery workers. It’s tough to cough up $200 for an unexpected medical situation on $12.00 an hour (plus or minus). And it provides a less balanced incentive than various types of copayments — once the deductible is paid, it’s no longer a reason to be cautious about using medical services.

“Other improvements also were included for current and retired employees.”

[Retirees pay 1/2, not 2/3 of healthcare.]

That seems more than a negligible change.

Overall, on day two of the settlement, it looks much more like both sides “won,” as I had anticipated.

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