OPINION:
Unions might not be completely to blame for the bankruptcy of the grocery store operator Great Atlantic & Pacific Tea Co., known as A&P — there were other reasons — but they certainly made it more difficult for the company to survive. Last month, A&P filed for bankruptcy for the second time in five years, but this time, it looks like it may be done for.
It’s a shame. The 156-year-old company was the first national supermarket chain in the country, and has survived the Great Depression, two world wars, and the recent Recession, but it appears the company lacked the needed flexibility to adjust its labor costs due to its high percentage of unionized employees.
For example, 93 percent of the A&P workforce of 28,500 are represented by one of 12 different unions — many of which have “bumping rights,” according to USA Today. Bumping rights occur during a reduction in the workforce when a more senior employee’s job is eliminated — instead of them losing their job, they “bump” a lower-level employee, taking their job, but keeping their oftentimes higher salary. These actions led to a domino effect at A&P. They hindered the company’s ability to close stores that were hemorrhaging money while preserving the profitable cost structure of stores that remained open.
Presently these bumping rights are impacting A&P’s ability to sell off some of its stores. As a result, this month, A&P asked U.S. Bankruptcy Court Judge Robert Drain for permission to suspend employee bumping rights since a purchasing agreement with three potential bidders barred the company from honoring these provisions, but union lawyers are currently blocking these efforts.
Prospective buyers of A&P in this low margin business also don’t want to take on some of A&P’s current obligations such as its collectively bargained pensions. Who can blame them? They want to make a go of it and be able to compete with other chains that do not have high legacy costs. Once they have established their profitability, the owners of these acquired stores will have the breathing room to revisit the level of wages and benefits they pay. Highly publicized bankruptcies, like A&P and the 2012 demise of Hostess Brands, impact the unions’ ability to sell their product. The question they raise is whether the “we versus they,” inflexible and oftentimes combative union model of the 1930s is outdated. After all, how can a company that must pay the costs involved to negotiate and apply 35 different collective bargaining agreements with 12 different unions remain competitive in a low margin industry? To what extent did these agreements and the work rules they spawned sap the company’s entrepreneurial spirit so necessary to compete and prosper?
Big Labor’s failure to answer these questions is one of the reasons why union membership is at an all-time low and steadily declining each year. Only 6.6 percent of private-sector workers are unionized today, according to the Bureau of Labor Statistics, and according to a 2009 Rasmussen poll, just one out of every 10 non-union workers would vote for a union.
Today’s workers are looking for a better option.
According to the Heritage Foundation, survey after survey shows that employees want to play a role in their company’s decision-making, and would like employee involvement programs where workers and their supervisors can meet to discuss workplace issues. Unfortunately, this type of collaboration is largely illegal as a result of the National Labor Relations Board’s broad interpretation of the prohibition against company unions in the National Labor Relations Act. The result: unions have essentially monopolized the availability of the on-the-job involvement employees seek.
Currently, unions aren’t recruiting enough new members in the private sector to replace those they lose when unionized workplaces go bankrupt. But instead of looking inward and asking what role they played in the demise of these companies, Big Labor is seeking ways to force workers into a union. We see this with the recent militantly pro-union rulings of the Obama Administration’s National Labor Relations Board, which enacted a rule drastically shortening the amount of time for a union election. Aptly referred to as “ambush elections,” the rule allows unions to catch employers by surprise so that the only story their employees will hear before they vote is the union story. This story can include promises of increased wages and benefits that the employer cannot reasonably afford. Already the unions have increased the number of election petitions they file, leaving the doors of American businesses wide open to unwanted union infiltration.
Organized labor continues to offer a product to workers they no longer want while preventing many workers from achieving the dignity and respect of workplace involvement they desire. Simultaneously, unions impose a business model on employers that makes it difficult for them to adjust to market realities and survive. Alternatives are surely needed to protect the workplace and preserve jobs that the union model of the 1930s does not provide. If the labor movement cannot adjust the union model to 21st century workplace realities, it will continue to shrink but not before untold damage is done to the American economy that working people rely upon.
• Heather Greenaway is a spokesperson for the Workforce Fairness Institute.
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