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From wages to health care

When their contract expired in fall 1974, nearly 2,000 union Kroger workers in the West Virginia area stayed off the job for three weeks in a dispute over wages.

That was the last strike of any real consequence for state Kroger workers until 3,300 employees began picketing Oct. 13. In the current strike, which enters day 35 today, the sides disagree on wages, but the primary issue, as it is in labor talks across the country, is who will pay for surging health-care costs, which registered double-digit increases in each of the past four years.

"It is the single most vexatious bargaining issue right now," Peter J. Hurtgen, head of the Federal Mediation and Conciliation Services told The Philadelphia Inquirer last month. "Employers and unions can't control costs. They can only argue and push back and forth about who absorbs the costs."

News stories about the 1974 Kroger strike in West Virginia mention health care only in reference to employees getting dental coverage. The main hurdle was the union's demand for a 21 percent average wage increase compared with Kroger's 12 percent offer. The sides settled on an 18 percent increase.

"It used to be that we worked to put more money in pension plans than health care," said Nelson Graham, regional coordinator of United Food and Commercial Workers Local 400. "Not anymore."

In West Virginia, union leaders say Kroger's contract offer would result in lost benefits, leaving workers to make up the difference. Similar concerns caused about 70,000 grocery workers in Southern California to strike for more than a month. About 4,000 Kroger workers have worked without a contract while negotiators try to iron out a deal in Indiana.

"Health care is the predominant issue, there's no doubt about that," said Archie Fralin, a Kroger spokesman in Roanoke, Va.

The strike in West Virginia began Oct. 13 when union leaders, citing an independent actuary, said employees would lose benefits under the company's plan to increase its annual contribution to the workers' health-care fund by 8 percent each year. When the strike began, company officials said their proposed increase would ensure Kroger workers keep better benefits than other grocery workers in the state.

In a videotaped message two days before the strike, Kroger Mid-Atlantic President Pete Williams asked workers to accept the company's proposal to help the company compete with Wal-Mart. Since 1999, the company's health-care costs for West Virginia employees increased by 56 percent and profits declined 17.4 percent, Williams said.

"Even with the proposed increases, I think the plan design will probably need to be modified some time in the future in order for the fund to remain solvent," Williams said. "I think the company's final offer is fair and will keep you and your co-workers among the highest compensated employees in our industry in West Virginia."

Williams made the recording before the strike. If they walked off, he said, he would close the stores and "reopen as many stores as we believe we can economically operate" when the strike ends.

Health care was a major issue in tense talks for a contract between Verizon and nearly 80,000 East Coast workers earlier this year. The workers were members of the Communication Workers of America, and CWA's President Morton Bahr at one point said he had never dealt with "more vicious management" in 41 years in the labor movement.

Verizon employees continued to work for one month without a contract before negotiators reached an agreement in early September. The contract affected 2,300 West Virginians and about 1,200 Charleston workers. Verizon is the state's eighth-largest employer.

"There's no doubt rising cost is a big thing," said Elaine Harris, a Charleston-based CWA international representative. "When you look at the profits companies are making, can they afford it? We believe they can."

CWA and the International Brotherhood of Electrical Workers agreed to Verizon's request for "greater ability to negotiate directly with health-care vendors, which combined with increased employee co-payments and other changes, should save the company about $500 million," according to a company release in September.

During bargaining sessions two weeks ago, Kroger proposed switching West Virginia workers to Blue Cross Blue Shield. The change would save millions, thanks largely to discounts the old provider didn't have for workers at Charleston Area Medical Center.

But it wasn't enough to ensure that workers keep their current benefits with Kroger's proposed 8 percent increase, Graham said. Graham and other union leaders base that statement on a report by Milliman USA, an actuarial firm that has worked for Kroger's third-party-administered employee health-care fund for more than a decade.

Milliman's projections are based on a 12 percent rate of increase it expects in health-care costs over the next four years. Another actuary, George Morrison of Towers Perrin in Cincinnati, said with the switch to Blue Cross, the company's proposal would ensure employees maintain current benefits using what he calls a more accurate 10 percent rate of increase.

Morrison testified Thursday before a three-judge panel from the state Bureau of Employment Programs about providing unemployment benefits to striking workers. The employees, Kroger says, are ineligible because they voluntarily left their jobs. Union officials say employees were forced to strike because the company refused to budge on health care.

Stephen Wood, Kroger's chief negotiator, testified the company was considering cost-cutting techniques besides the switch to Blue Cross. One was an audit of employees' dependents covered by the company's health plan.

Nationally, companies are requiring employees to pay more to keep their families covered. Verizon workers who agreed to a contract two months ago must now pay a $40 monthly fee for employees whose working spouses decline comparable health-care coverage at their own company.

The percentage of fully subsidized family medical premiums dropped to 15 percent in 2003, down from 27 percent two years ago, according to a Kaiser Family Foundation Study.

Under the previous contract, full-time Kroger employees and their families were covered without upfront co-payments. Workers with less than a year weren't covered. Part-time workers got benefits, but their families weren't covered until the employee had six years with the company. At that point, they would pay $45 a month for dependent coverage. Retirees paid $150 monthly co-payments.

All those groups would see their benefits cut under the company's proposal, Graham and other UFCW officials have said.

Labor leaders, such as Graham and Harris, say similar labor battles will keep surfacing, though they add that they think companies like Kroger and Verizon are profitable enough to pay the full cost of employee health care.

Although Kroger's Williams said the West Virginia area was losing ground to Wal-Mart, Cincinnati-based Kroger reported a net income of $1.2 billion last year, a 15.5 percent increase from 2001.

"In labor negotiations now, the first day you talk about health-care coverage, and the last day you talk about health-care coverage," said Jim Bowen, president of the West Virginia Labor Federation. "It's the No. 1 issue and the last issue. The costs are spiraling, and health insurance considerations come ahead of everything else."

Staff writer Kate Long contributed to this story. To contact staff writer Paul Wilson, use e-mail or call 348-5179.


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