Wal-Mart Plays Role in Debate Over Union Health Care Benefits

The possibility of increased competition from Wal-Mart might carry less weight in negotiations as grocery store chains seek to control contributions to health care and other benefits in a new contract, the Los Angeles Times reports.

Albertsons, Vons and Ralphs during negotiations for the 2004 contract with workers represented by the United Food and Commercial Workers Union used Wal-Mart's burgeoning presence in Southern California to stress the importance of a competitive contract (Goldman, Los Angeles Times, 4/12).

The resulting contract featured a two-tier system under which new employees have longer waiting periods to qualify for health care benefits and must pay a greater share of the cost.

UFCW is seeking to eliminate that system in the current contract negotiations, and officials familiar with the contract negotiations say both sides are disputing the percentage of employer contributions to workers' health insurance (California Healthline, 3/27).

Wal-Mart accounts for less than 1% of grocery dollars spent in Southern California, while the major grocery chains control two-thirds of the market, according to the Times.

Despite Wal-Mart's low impact on the market, the grocery chains continue to use the store's non-union and low-cost model as a threat for competition.

David Hirz, president of Ralphs, said, "With nearly 200 (Wal-Mart) locations in California and plans for 40 Supercenters and expanded space at regular stores, competition is going to get even tougher in the next few years" (Los Angeles Times, 4/12).