www.sacbee.com

Rise of discounters may imperil a well-paying way of life.
By Dale Kasler -- Bee Staff Writer
Published 2:15 am PST Sunday, March 5, 2006
Patrick Hardy has made a career as a supermarket butcher: a decent, 
middle-class, $21-an-hour career.

Now it's in peril. Ralphs Supermarkets is closing its eight 
Sacramento-area stores in about a month, including the Auburn 
store where Hardy manages the meat department. Some 400 workers 
will be left unemployed, and their prospects for finding other 
supermarket jobs at comparable wages are uncertain.

"We are coming to the end of an era," said Hardy, 46. "The whole 
industry's going into the pits."

The traditional supermarket business is being transformed around 
the country - and its unionized work force is suffering for it. Under 
assault from nonunion discounters like Wal-Mart Stores Inc., as well 
as low-price warehouse clubs, the big chains are closing stores and 
pressuring their unions into contract concessions.

Wal-Mart's labor costs, for example, are about 30 percent lower than 
the unionized grocers. The company is the nation's leading seller of 
groceries.

In Sacramento, Ralphs' departure isn't the only issue confronting 
workers. There's also speculation that the new owner of Albertson's 
Inc. in Northern California is planning store closures as well. The 
owner, Wall Street investment fund Cerberus Capital Management, 
says it doesn't plan to shut stores.

All told, closures and contract concessions are threatening to turn 
supermarket employment from a middle-class career into a low-
wage, high-turnover job.

"You're going to end up with a 7-Eleven work force," said Nelson 
Lichtenstein, a labor historian at the University of California, 
Santa Barbara.

Historian Roger Horowitz of the University of Delaware said the 
supermarket industry's woes are "part of a very troubling 
phenomenon. It's the progressive decline of what used to be called 
the blue-collar middle class."

Not every traditional supermarket chain is crumbling. Raley's, 
the largest grocer in the Sacramento area, will soon open new 
stores in Elk Grove, Natomas and Folsom.

Ralphs officials insisted that their departure from Sacramento 
reflects one company's struggle in one particular market - not 
the end of a way of life.

"We still think it's a good job," spokesman Terry O'Neil said 
from Ralphs headquarters in Compton. "We just didn't make it 
up in your part of the state."

Ralphs entered Sacramento when it purchased several Albertsons 
stores in 1999.

"Good careers are still available in our industry," said Peter 
Larkin, president of the California Grocers Association. "Good 
pay, good benefits, and I expect that to continue."

But Jacques Loveall, president of Local 588 of the United Food 
and Commercial Workers, which represents employees of Ralphs 
and other grocers in greater Sacramento, said workers' job status 
is under attack.

"I certainly see the threat," Loveall said.

After negotiating a new contract last year that provided significant 
cost-saving concessions, he pledged to resist pressure for additional 
rollbacks when the contract expires in 2007.

Supermarket work was a low-wage job until the 1930s, when 
grocery giant A&P recognized unions for the first time, 
Lichtenstein said.

Today, base pay still isn't great - most of the 16,000 members of 
Local 588 are paid $8 to $20 an hour, for example. But the wages, 
combined with a generous health plan, translate into a good 
standard of living.

"People with a high school education can get decent family-
supporting wages and benefits," said UC Berkeley labor expert 
Ken Jacobs. "That's what's really under threat of erosion right now."

Orangevale resident Patricia Brown started as an $8.25-an-hour 
cashier at a south Sacramento Albertsons in 1975. She was 21, 
a graduate of Mira Loma High School and found she liked the work.

At 51, she works at the Ralphs in El Dorado Hills. She makes 
$19.08 an hour as a senior clerk - a classification that enables her 
to perform nearly every job in the store.

"It's not a real simple job, it's not an easy job," said Brown, who 
is a union steward. "It's a physically demanding job, and emotional - 
you're dealing with the public."

While her husband invests in rental properties for a living, it's her 
job that provides the stable economic foundation, she said. The 
family, which includes two children in college, depends on her job 
for health insurance. She had planned to retire in about four years 
with a full pension.

With Ralphs closing, she isn't sure she'll be able to maintain the 
same standard of living. Because of contract rules, she may take a 
significant step back in pay even if she lands another supermarket 
job. The family is putting vacations on hold and cutting back on 
other expenses, she said.

"The dream is shattered - that you would be able to work for a
company, build a nest egg and retire and live comfortably forever 
after," she said.

Brown believes Ralphs is leaving Sacramento because it 
mismanaged its stores. Like many in the UFCW, she said grocers 
are exaggerating the Wal-Mart threat in order to ratchet down wages.

The grocers "want to be like Wal-Mart," she said. "They're envious; 
they want the low wages."

Most analysts, however, believe the threat from Wal-Mart and 
other discounters is for real. Wal-Mart already has opened four of 
its combination grocery-general merchandise stores, known as 
Supercenters, in greater Sacramento, and more are on the way. 
That's likely to put more downward pressure on pay and benefits.

"Traditional supermarkets cannot continue to afford to pay the 
kind of money they pay their employees and compete," said 
George Whalin of Retail Management Consultants in San Marcos.

Employees got their first taste of this in early 2004, when a 
massive strike in Southern California ended with workers 
making substantial concessions. This paved the way for 
concessions in other areas, including greater Sacramento. 
Local 588 members last year signed a new contract that kept 
wages intact but introduced health care deductibles and higher 
medical co-payments.

In addition, newly hired employees will have to work four 
times as long as existing workers to reach the top pay scales.

The new contracts in Sacramento and elsewhere narrowed the 
difference in labor costs between the unionized grocers and 
Wal-Mart. But many of the traditional grocers are still struggling, 
as demonstrated by Albertsons' sale and the Ralphs shutdowns.

The Sacramento job market is healthy, with job growth perking 
at 3.2 percent a year. The manufacturing industry is improving, 
having created 2,300 jobs in the past year.

As for grocery work, however, Ralphs workers may have to find 
other occupations. "They might have to retool and retrain," said 
David Lyons, labor market consultant at the state Employment 
Development Department.

Patrick Hardy took a meat-cutting class in high school in Dublin 
and found his calling - a skilled trade he likens to being an 
electrician or plumber. He's been a butcher ever since, first at 
packinghouses and then at supermarkets.

As a full-time meat cutter, he makes about $48,000 a year, putting 
the Roseville resident firmly in the middle class of affluent Placer
County, according to Franchise Tax Board data.

But the new reality hit home during a recent counseling session 
with EDD representatives.

"They basically told us you're not going to find a $21-an-hour 
job to start out," Hardy said. "This was a big sticker shock to me."

The Ralphs shutdowns represent a kind of double whammy for 
Hardy. His ex-wife Elissa, with whom he shares custody of their 
three children, works at a Roseville Ralphs.

Patrick is applying for jobs at other stores, but Elissa is looking 
for scholarships to go back to school. Her goal, after nearly 30 
years in the supermarket business: a career in criminal justice.

"The grocery business is dead," said Elissa, who makes $19.08
an hour as a senior clerk. "It's not going to be what it was. I've 
got to find something new."

About the writer:
* The Bee's Dale Kasler can be reached at (916) 321-1066 or dkasler@sacbee.com.