Nov. 2, 2003, 6:33PM

Wal-Mart will get its comeuppance


Why would the world's biggest retail firm, America's largest private employer, a company adding "Supercenters" at pell-mell pace and registering a staggering $6.67 billion in profits last year, knowingly stoop -- as a federal jury in Pennsylvania is now being told -- to hiring janitorial firms staffed by meagerly paid, benefit-denied, illegal immigrants?

Last week's raids and the charges that Wal-Mart broke federal law with knowledge of high executives ought to be a total surprise. But they aren't. Call it, if you will, the price -- or consequence -- of a no-holds-barred drive for supremacy.

This amazing corporation, now employing 1.4 million Americans, is the dominant retail force in most of the regions where its 1,512 retail stores, 53 "neighborhood markets," 1,344 Supercenters and 528 Sam's Clubs operate. It represents one of the great success stories of American capitalism.

With assets of about $20.5 billion each, the widow and four children of founder Sam Walton constitute the richest family on Earth, Forbes magazine reports.

Not since the 19th century robber barons, whose ruthless bids for monopoly power paved the way for the nation's antitrust laws, has any single firm impacted America quite so deeply.

The story is already legend: communities coast-to-coast drawn, like moths to a flame, by Wal-Mart promises of phenomenally low prices, new jobs and enriched local tax coffers.

Many communities even coughed up financial incentives to attract Wal-Mart -- and still do, like a vote last month in little Tawas City, Mich., to pledge as much as $1 million in forgone property taxes in exchange for a new Wal-Mart facility. Local officials ignored citizen queries of why the world's richest firm couldn't finance its own expansion.

All along, critics have groused that Wal-Mart stores imperil historic Main Street retail areas and exacerbate sprawling development patterns. But Americans' love of low costs -- goods as much as 40 percent cheaper than the competition's -- has muted opposition.

Still, as Wal-Mart grows, its impacts -- like the alleged employment of miserably paid illegal immigrants -- are likely to be getting much more attention.

Why? First, there's the Supercenter boom. Begun in the early '90s, Supercenter expansions, making Wal-Mart not just America's prime retailer but its prime grocer, are so rapid that in some regions the stores are popping up everywhere. The virtually total geographic coverage of these super-stores suggests disturbing single-firm dominance in the nation's food chain.

Then there's pay. Known for its dead-end jobs, Wal-Mart is clearly dragging down pay and benefits for millions of workers. The company doesn't release figures, but start-up Wal-Mart workers aren't likely to get more than $6.25 to $8 an hour. A big chunk are part-time -- clearly by design -- and an amazing 500,000 quit each year. Nearly half the company's workers make less than $15,300 a year, the federal annual poverty income for a family of three.

Result: Wal-Mart workers must often turn to food stamps, apply for the federal government's Earned Income Tax Credit and turn to states for child support payments. Wal-Mart gets to "sell for less" because it shifts the costs to all taxpayers. When you buy for less at Wal-Mart, you're paying: It's just a question of out of which pocket.

Then there's health. Part-time Wal-Mart workers have to wait two years, full-time employees six months, for insurance -- and even then the coverage has high premiums and deductibles. The result, charges United Food and Commercial Workers (AFL-CIO), which has been trying to organize Wal-Mart: "Nearly 700,000 Wal-Mart workers are forced to get health insurance from government or through spouses' plans, driving up health costs for all of us."

As insurance for all Americans turns into a hot political issue, Wal-Mart's dereliction on health coverage for its army of workers will be hard to ignore.

Realism says it will be tough to deter a retailer so huge it's able to pressure suppliers for extra-low prices. Globally, Wal-Mart buys so many goods produced by inexpensive foreign labor that it's become the world's largest importer of Chinese-made goods.

Nor will it be easy to prevent potential "Wall-Mart-ization" of food retailing -- now especially acute in Southern California, where 70,000 grocery workers are striking major local chains (Vons, Pavillions, Ralphs and Albertsons). The companies are demanding a 50 percent cut in workers' medical coverage, plus a two-tier wage system denying new employees the rather solid middle-class wages now paid the region's grocery workers. Though still highly profitable, the companies claim potential Wal-Mart competition is forcing their hand.

Unionists now fear that Wal-Mart, globalized and dominant, is poised to lead a downward spiral of worker wages and benefits across the United States. Labor's chances of organizing Wal-Mart itself seem dim given the firm's overwhelmingly unskilled, fast-turnover work force.

But the raids by federal immigration authorities are a reminder: Eventually, through all of American history, unfettered power gets curbed.

Peirce is a syndicated columnist who specializes in city and state affairs. ([email protected])


 Copyright 2003 Houston Chronicle

  Nov. 7, 2003, 12:11AM

Unions allowed to make workers' medical decisions


Workers in Texas can't sign away their rights to sue their employers before they've been injured on the job -- unless they're represented by a labor union.

Two years ago, the Texas Legislature prohibited companies from using so-called pre-injury waivers because legislators feared that the waivers, which were then growing in popularity, would gut the workers' compensation system.

Because workers' comp is optional in Texas, the legislators reasoned, why should an employer buy the expensive insurance coverage if he could get the same legal protections by just requiring employees to sign waivers promising not to sue?

While some employers such as Memorial Hermann Healthcare System in Houston and Tyson Fresh Meats in the Texas Panhandle are now asking their employees to sign a waiver after they've been injured on the job -- and refusing to pay their medical bills if they don't -- some employers don't have to.

That's because a federal appeals court ruling last year allows companies to get union-represented workers who aren't covered by workers' compensation insurance to sign away their rights before they are injured.

In what's now known as the Margarita Navarro decision -- from the meat boner who got carpal tunnel syndrome and unsuccessfully sued the Excel plant in Plainview over workplace safety -- the 5th Circuit Court of Appeals ruled pre-injury waivers are valid if they're incorporated into a union agreement. The court ruled that the federal law that regulates labor agreements pre-empts state law.

Unions that represent meatpacking and chicken processing plants are now finding that companies are eager to take advantage of that new Navarro ruling.

"I hate it," said Johnny Rodriguez, president of the United Food and Commercial Workers Union Local 540 in Dallas who was the union representative involved in the Navarro case against Excel.

"I hate it tremendously, but what do you do when a company exempts itself, which they have a right to do?" Rodriguez said. Company representatives are presenting the pre-injury waivers as a requirement, and if the workers won't go along, they can strike.

But a lot of members don't understand what they're giving up and would never strike over such a thing, said Rodriguez, who represents slaughterhouse and meat processing workers at Excel, Tyson and Pilgrim's Pride.

Many are undocumented workers who won't come forward because they're afraid, Rodriguez said. And many come from countries that don't provide benefits to workers anyway.

At Pilgrim's Pride Corp.'s chicken processing plant in Lufkin, union-represen-

ted employees who agree not to sue the company receive several times more in medical, wage, death and funeral benefits when they're injured at work.

Under the company's Partner Protection Plan, an injured employee who agrees not to sue in advance could receive up to $250,000 in medical care as well as 85 percent of his wages, up to a maximum of $800 a week, for up to 156 weeks.

An employee who wants to retain his rights to sue would receive only a maximum of $50,000 in medical care and only 70 percent of his wages, up to a maximum of $300 a week, for up to 26 weeks.

The plan, which went into effect June 17, 2001, requires those who were hired before that date and who had previously elected the premium benefits to promise not to sue.

And ex-employees who return to Pilgrim's Pride must also retain any premium benefits.

Stephanie Hancock, risk management analyst for Pilgrim's Pride in Pittsburg, said employees signed those pre-injury waivers when the courts and the Texas Legislature viewed them as valid contracts.

The Texas Legislature may have taken action later, but the contracts were already drawn up, Hancock said.

Only new employees can make a choice after they've been injured at work, according to the plan documents. However, another section of the document requires employees to make a choice the same day they receive the documents, which essentially makes the program a pre-injury waiver program, a union representative said.

Hancock said that while the provision in the official plan documents appears to be conflicting, employees hired after June 17, 2001, aren't asked to choose the level of benefits until after they've been injured.

It's not hard for employees to choose, said Red Gomez, president of the United Food and Commercial Workers Union Local 408 in Houston, pointing to the option that pays the higher benefits.

Rick Levy, legal director for the Texas AFL-CIO in Austin, said that while the Navarro decision was unfortunate, it was based on a case that occurred before the Texas Legislature made pre-injury waivers illegal.

"It's very likely the court would have come to a different decision -- which it should -- if it was brought up today," Levy said. And companies that try to claim pre-injury waivers are valid as long as they were signed before the Texas Legislature outlawed them are on equally shaky legal ground, he said.

He added that he'll be carefully watching the way the law is applied and looking for a way to get it overturned.

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 Copyright 2003 Houston Chronicle

  Nov. 6, 2003, 11:49PM

Safeway chief bears brunt of union's frustration, ire Reuters News Service

NEW YORK -- In the midst of a bitter strike that has hobbled supermarkets across Southern California, one executive has emerged as the man unions love to hate: Steve Burd, chief executive of Safeway, the nation's third-largest grocer.

Known for playing hardball with unions, Burd, 53, has become a central figure in a bitter industry strike and lockout, now in its fourth week.

Union officials chose to call a strike against Safeway's Vons chain early last month because Burd and his negotiators had taken the hardest line on health care costs, the major issue behind the dispute, affecting almost 900 stores.

But in a further retaliation against Safeway, the United Food and Commercial Workers, which represents 70,000 striking and locked out workers, last Friday began shifting picketing away from Kroger's Ralphs chain as it sought to break the bosses' solidarity.

Ralphs had locked out workers in a joint negotiating ploy with Safeway and Albertsons and Kroger. The three leading U.S. supermarket chains are covered by the same master contract under the 1.4 million-strong union.

But the union has made it clear it has the biggest beef with Burd and wants to step up pressure on him and Safeway. The union last Friday ran full-page ads in the Wall Street Journal, urging readers to "Stop CEO Steve Burd's Mismanagement."

"Safeway's hardened approach toward labor reflects deeper management problems," John Sweeney, president of the 13 million-strong American labor federation AFL-CIO, which backs the striking employees, said last week.

Burd, a former management consultant, joined Safeway in 1992 as president and became CEO a year later.

In the 10 years before his Safeway tenure, he developed a reputation as "Mr. Fix-it."

He helped CEOs turn around their companies' financial performance during his time at Kohlberg Kravis Roberts & Co., a New York investment firm, which once controlled Safeway after a leveraged buyout in 1986.

Soon after being hired, he expanded Safeway through a string of acquisitions in the late 1990s, including Houston-based Randalls. Now, turning around Safeway has required Burd to extensively cut costs, pitting him against the unions.

Burd has called the strike "an investment in our future," leading unions to accuse him of wanting to make workers a "scapegoat for management's missteps."

Safeway declined a request for an interview with him.

Burd has become one of the most vocal supermarket industry chiefs, as the sector feels the pressure from the expanding Wal-Mart Stores, now the largest player in the $680 billion U.S. supermarket industry.

Burd recently vowed that Safeway would not back down from its cost-cutting efforts.

"These other grocers are more happy to have Steve Burd out there, taking arrows from the unions," said Neil Stern, a partner at McMillan Doolittle, a Chicago retail consultant.


 Copyright 2003 Houston Chronicle