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November 8, 2019
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In News

Companies pitching their values better not forget to give workers this as well

Chipotle doesn’t serve burritos, it “provides food with integrity.” Facebook doesn’t sell advertisements, it “bring[s] the world closer together.” WeWork doesn’t sublease office spaces, it “elevates the world’s consciousness” (and it might not do that for much longer).

Why do these for-profit companies insist on selling themselves as such do-gooders? In part, they want to market themselves to potential consumers. But perhaps even more so, they want to motivate their workers.

In the latest CNBC|SurveyMonkey Workplace Happiness Survey, 69% of workers said it’s “very important” to them to work for a company with clearly stated values, and 35% said “feeling that your work is meaningful” was the most important factor in their overall happiness at work. Humans crave meaningful relationships, and businesses have learned to capitalize on that emotion. By encouraging employees to see their work as fulfilling a higher purpose, they can try to retain workers by paying them in good vibes rather than dollars.

But trying to rally employees into a feeling of higher purpose at work misses something more fundamental: At root, people want to be compensated well for the work they do. Businesses that create a puffed-up company ethos but skimp on their most basic responsibility of paying their workforce well will end up with unhappy employees no matter how grandiose their company mission statement.

Defining happiness at work

In these latest survey results, workers ranked “being paid well” a distant second (21%) to “finding that your work is meaningful” in terms of what factor most determines their overall happiness at work. Those top two choices are followed by “having opportunities to advance” and “having control over how you do your work” (tied at 16% each), and finally “having colleagues who value your work” (11%).

Each of these five factors is one component that makes up the CNBC|SurveyMonkey Workplace Happiness Index; for simplicity, we refer to them as meaning, pay, opportunity, autonomy and recognition.

Source: CNBC

November 7, 2019
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In News

Stop & Shop parent company: Impact of April strike still stings as some customers who drifted to competitors stayed away

But the strike seven months ago by 31,000 Stop & Shop workers continues to be a drag. Asked on a conference call with industry analysts if it’s “fair enough” to say the supermarket chain’s market share is flat or declining, Chief Executive Officer Frans Muller said, “Yeah, it has been going down, but that was, of course, partly strike-related” and began before the strike.

November 6, 2019
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In News

Walmart’s Strategy When Wading Into Culture Wars: Offend Few

Walmart continues to use plastic bags in its checkout lines, while big competitors like Kroger are phasing them out. The company offers reusable bags at some registers, but some executives have expressed concerns that switching entirely out of plastic could delay moving customers through the checkout as quickly as possible and turn off shoppers who prefer the convenience of plastic, according to two people briefed on the discussions.

“My impression is that this is a company that does seem to care beyond the bottom line,” said Arun Sundararajan, a professor at New York University’s Stern School of Business. “But you also have to keep in mind it is still a highly efficient competitor.”

In the company’s last earnings report, for its fiscal second quarter, its revenue climbed 3 percent, lifted by a 37 percent jump in e-commerce sales. Its profit for the quarter was $5.6 billion, and its stock is up 26 percent since the start of the year.

It is perhaps no coincidence that Walmart’s public relations victories come as its rival Amazon is being battered by antitrust concerns and criticism about onerous working conditions, issues that the original big-box retailer has spent years trying to defuse, with some success.

Many credit Mr. McMillon with positioning Walmart as a socially responsible company, while also finding ways to increase sales in the United States for 20 consecutive quarters. Through a spokesman, Mr. McMillon declined to be interviewed for this article.

Publicly, he has said he wants to stay above the political fray. But when Walmart takes a stand, Mr. McMillon has tried to convey the company’s position without “spiking the football” and inflaming the other side, one executive said.

“Politics moves around,” Mr. McMillon said during an interview in 2017 in his wood-paneled, first-floor office in a converted, largely windowless warehouse in Bentonville, Ark., where the company’s top officials work. The company’s founder, Sam Walton, used to occupy the same office, and kept a rifle by the front door because he sometimes hunted after work.

“We are on our 11th administration, since Walmart was born,” Mr. McMillon added. “There will be a 12th. There will be a 13th.”

Mr. McMillon, 53, grew up in a small city in northeast Arkansas, but later moved to the northwest part of the state to Bentonville. His father was a dentist, and his mother stayed home taking care of the children. Mr. McMillon started working at Walmart in high school and went to the University of Arkansas. He worked his way up the company ladder running Sam’s Club and then the international division. Mr. McMillon was the favorite of Mr. Walton’s heirs, who own a large amount of Walmart’s stock and sit on the board.

Mr. McMillon voices Mr. Walton’s paternalistic view of Walmart as a benevolent employer and economic actor, whose size and scale can force change across the world.

“The world is a better place with Walmart in it,” Mr. McMillon told thousands of cheering employees at last year’s shareholder meeting. “The next generation needs this company.”

Mr. McMillon shared a similar lofty assessment of Walmart with the Obama administration, where some officials had a skeptical view of the big retailer.

Not long after taking over in 2014, Mr. McMillon spoke to Labor Secretary Tom Perez to say he supported stronger overtime rules that favored workers. The chief executive explained how improving the fortunes of low-wage workers would help Walmart’s bottom line by increasing the quality of service in its stores.

Many in the administration, which was also pushing for a higher federal minimum wage, appreciated Mr. McMillon’s support on the overtime rule. But some of the officials did not overlook that Walmart, which employs about 1.5 million people in the United States, remained resistant to unionizing its American stores.

The same year Walmart raised its starting wage, the company also eliminated health care coverage for tens of thousands of part-time employees. The company says it provides health insurance to 1.1 million workers and their families.

“Their strategy is to give a little here and there, but not provide the thing that is most valuable to workers, which is collective bargaining,” said Sharon Block, who ran the policy office at the Labor Department during the Obama administration and now teaches at Harvard Law School. “That is the only way Walmart workers are going to make any real gains.”

Helping shape Walmart’s public affairs strategy is Dan Bartlett, the head of communications for President George W. Bush. Mr. Bartlett is known for his pragmatism, his ability to work with both parties and his understanding of the Deep South, according to a former Walmart colleague. One of Mr. Bartlett’s top deputies was a speechwriter for Hillary Clinton during her 2008 presidential campaign.

Mr. McMillon, who earned about $23 million last year, has seen his profile grow nationally. In September, he was named the next chairman of the Business Roundtable, a lobbying group for large corporations that recently expressed the need for companies to benefit not just shareholders but also their employees and the environment.

It was the needs of Walmart employees, Mr. McMillon said, that prompted him to speak out after the racist-fueled violence in Charlottesville, Va., in August 2017. Walmart is considered the nation’s largest single private employer of Hispanics, and just as many African-American women shop at the retailer as rural white men.

Mr. McMillon, who was serving on a White House advisory board on manufacturing, publicly criticized President Trump for not condemning the white supremacists at the rally. Other executives on the advisory board stepped down, although Mr. McMillon stayed on until Mr. Trump disbanded the group amid the controversy.

“When something like that happens, we have to look at our own associates as leaders and feel good about how we are representing the company,” Mr. McMillon said in the 2017 interview.

This year, Mr. McMillon is again advising the Trump administration. In March, he and several other chief executives of large companies joined the White House’s American Workforce Policy Advisory Board, which is discussing issues around workers whose jobs are being displaced by technology.

Walmart did not issue a release about Mr. McMillon’s appointment to the board.

Source: The New York Times

November 4, 2019
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In News

Instacart delivery drivers are striking this week. Here’s why

Those five bags of groceries may take longer to get to you this week, if drivers for grocery delivery service Instacart succeed in mounting a three-day “strike” from November 3 to November 5 to demand better pay. The quotation marks are because the drivers, known as shoppers in Instacart parlance, are freelance gig workers. While there’s no job to strike from, many have vowed to not accept assignments in an effort to slow the system down.

Instacart says it has more than 130,000 shoppers in North America, so it’s a long shot that strike organizers will rally enough people to make a dent in its business. (They have not provided an estimate of how many people will participate.) But the strike draws attention to complaints that span the gig economy: As pay declines from the salad days when startups paid generously to attract talent, workers are relying more on tips to make up the difference. Meanwhile, seeing how delivery costs add up, customers are less inclined to leave good tips.

In an open letter addressed to Instacart’s CEO and founder Apoorva Mehta and signed by 212 shoppers, Instacart workers catalogue the ways their pay has changed and implore the CEO to listen to their grievances. But having fought a losing battle for better pay, Instacart shoppers are now fighting for better tips, demanding that the company change the default tip in the customer ordering app from 5% to 10% of the cost of the groceries. “You have demonstrated a pattern of behavior as CEO of eviscerating our pay and pirating our tips,” the workers write. “It would cost you, Apoorva, absolutely nothing to restore our previous tip defaults to at least 10%.”

Of course, customers would still be free to change the tip to any amount they want, including zero. And Instacart states clearly in its app that “Tips are always optional.” Shoppers are merely demanding the possibility to make a little more money.

WHY TIPS MATTER

Tips have been a topic of contention since Instacart changed the pay formula in late 2018, which workers say left them getting less money for the same work. Earlier this year, shoppers protested the company’s practice of counting tips toward its guaranteed minimum payment of $10 per assignment. In one extreme case, a shopper was paid $10.80, $10 of which was tip—meaning that Instacart only contributed 80 cents.

Stinging from bad press, Instacart introduced a new pay model with guaranteed minimums, regardless of tips, ranging from $5 to $10, based on the assignment. Minimum-payment orders typically come in at $7, based on dozens I’ve reviewed, and can require a lot of work for the money. One typical $7 order I saw required the shopper to pick out, check out, and deliver 47 products.

Instacart sweetens the deal by tacking on a default tip of 5% the value of the groceries, or $2, whichever is higher. Shoppers often use this estimated tip amount when they decide whether an assignment is worth taking.

The shopper would have to pick out and check out 47 products for a $7 fee, and no tip.

But customers can change the tip anytime from the moment they place the order until three days after delivery. The customer set a zero tip on the $7 assignment I mentioned above. And as I reported last month, customers often reduce or even eliminate tips after they get the order.

Some tips may be cut for poor service; but consider a comparison to waitstaff. How awful would the service in a restaurant or bar have to be to not tip a server? And they have a safety net: If waitstaff’s base pay plus tips does not at least equal the legal minimum wage, the restaurant has to kick in the difference (that’s because they’re salaried workers).

Minimum wage laws don’t apply to freelance workers like Instacart shoppers. For most of the year, labor rights group Working Washington has been fighting for Instacart and other gig companies (like DoorDash) to pay a guaranteed minimum of $15 per hour, plus reimbursement for miles driven.

Gig companies balked, until California passed a new law that would force them to make their contractors into employees, subject to minimum wage law and many other protections. Instacart has now joined DoorDash, Lyft, and Uber to propose a ballot initiative that would exempt them from the law in exchange for concessions including a guaranteed minimum hourly wage.

One way or another, workers in California may get more reliable income and the ability to earn tips on top of that for great service. But for gig workers at Instacart, DoorDash, and other companies in the rest of the country, tips are essentially an integral part of their pay.

Without a decent tip, many of these assignments may not pay enough to incentivize drivers to take them on. So whether or not the strike works, low pay and low tips for drivers mean you may still be waiting longer for your delivery orders in the future.

Source: Fast Company

November 4, 2019
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In News

Kroger, not Walmart, is Amazon’s toughest grocery price rival

Amazon tops other U.S. online retailers on price by an average of 20% across 16 key product categories, but in grocery it’s Kroger — not Walmart — that stands as the No. 2 price competitor, a study by Profitero finds.

The e-commerce analytics firm’s “Price Wars: A Study of Price Competition” report, released Tuesday, compared the daily prices of 12,500 products across 20 retailers from July to September.

Profitero_Grocery_Price_vs_Amazon_chart_Oct2019.png

For grocery items, Kroger averaged 1.6% more expensive than Amazon on 156 exactly matched products, Profitero said. Next were Jet.com, a Walmart subsidiary, at 3.5% more expensive (133 matching products and Walmart at 6.2% more expensive (172 products), followed by Instacart grocery retailers at 10.7% more expensive (137 products) and Target at 11.6% more expensive (153 products). (See chart above.)

“No retailer studied beat Amazon on price in grocery during the period studied,” Boston-based Profitero said in the Price Wars report. “Interestingly, supermarket leader Kroger, and not Walmart, was the closest to Amazon’s pricing in grocery.”

Kroger is “getting aggressive in grocery,” Profitero observed in announcing its latest pricing study.

“In past studies, Jet.com was Amazon’s toughest rival when it came to grocery pricing, but Kroger has emerged as the clear No. 2 price leader in online grocery, trailing Amazon by 1.6%,” Profitero stated. “Among the retailers studied, Target.com offered the least competitive pricing for online grocery when compared to Amazon.”

In other supermarket product categories examined by Profitero, Target finished second to Amazon in pricing for pantry items, at an average of 6.6% more expensive on 121 exactly matched products. Following Target were Walmart at 8.5% more expensive (83 products), Walgreens at 32.3% more expensive (235 products) and Jet at 33% more expensive (121 products).

Walmart came in No. 2 to Amazon in household supplies, averaging a 3.5% higher price on 162 matched products. Next were Target at 4.5% more than Amazon (120 products), Jet at 5.9% more (131 products), Walgreens at 20.8% more (33 products) and CVS Pharmacy at 60.6% more (16 products).

In the growing pet supplies category, online retailer Chewy.com averaged 0.4% higher pricing than Amazon on 182 matched products, while Walmart was close behind at 1.3% more expensive on 177 items, according to Profitero. Those retailers were well ahead of No. 3 Target at 6.6% more expensive (152 products) and No. 4 Petco at 21.2% more expensive (176 products).

“While ‘online generalists’ like Amazon, Walmart, Jet and Target continue to compete aggressively with one another on price, category specialists appear to have entirely abandoned item-by-item price competition,” study author Keith Anderson, senior vice president of product strategy and insights at Profitero, said in a statement. “Instead, they are competing on value beyond price, offering memberships, personalized services, personalized promotions and private-label products consumers can’t find elsewhere. This is the recipe for how retailers — and even brands selling direct-to-consumer — can compete long term in this age of algorithmic-driven pricing.”

Across all 16 product categories, Walmart was second to Amazon with average pricing of 4.1% more expensive, followed by Target at 10.6% more than Amazon and Jet at 11.3% more than the e-tailer. The three categories with the highest prices indexed above Amazon by Walmart.com, Target.com or Jet.com were home furniture, home storage and pantry.

Still, Profitero noted, Amazon faces tough competition in many categories. For example, Walmart.com narrowly trailed Amazon in average pricing for baby (+0.2%), pet supplies (+1.3%), and toys and games (+1.7%). In addition, Chewy.com’s pricing in pet supplies was only 0.4% more than Amazon’s, and Jet.com had average pricing of just 0.6% more than Amazon in office supplies.

Drug chains, meanwhile, are leveraging their convenient locations despite much higher pricing than Amazon.

“Buffered by their vast network of local stores and prescription businesses, pharmacy retailers are also avoiding direct price competition on the same items. In vitamins and supplements, for example, CVS was 64.5% more expensive than Amazon and Walgreens 60.9% more expensive,” according to Profitero. Following Amazon on average price in vitamins and supplements were Walmart (+4.6%) and Target (+8.1%).

In other categories found at supermarkets, Target was 2.2% more expensive than Amazon in beauty care. Next were Walmart (+7.7% versus Amazon), Walgreens (+34.8%) and CVS (+52.3%). The difference was narrower in baby, with Walmart’s average pricing just 0.2% more expensive than Amazon’s and Target’s at 6.1% more expensive. Walgreens was next at 23.8% more expensive than Amazon in baby.

Other categories in Profitero’s 12-week price analysis included appliances, electronics, music CDs, office electronics and supplies, sports and outdoors, and tools and home improvement.

Source: Supermarket News

October 28, 2019
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In News

Locals concerned over proposed grocery tax increase in Utah

Shoppers across Utah are starting to voice concerns about a proposed tax increase to food at the grocery store.

The latest tax plan unveiled on Friday by Rep. Francis Gibson, R-Mapleton, and Sen. Lyle Hillyard, R-Logan, would nearly triple Utah’s sales tax on groceries, helping the state raise approximately $250 million.

“This actually would impact me quite a bit,” shopper Terry Taylor said. “I just bought some chicken, stuff for spaghetti, and maybe some microwave dinners for the week and it was nearly 70 dollars… I couldn’t imagine doing that with a family. If I had two or three kids, that grocery bill would skyrocket.”

The proposal would increase the sales tax rate on “unprepared food and food ingredients” from 1.75% to 4.85%

“It’s very hard for people,” shopper Cindy Jehued said. “I’m low income… We all need food! We all need to survive!”

“We should be doing something to uplift them and make their life easier,” shopper Darin Mann said. “I think this tax plan is a really bad idea.”

The Republican lawmakers who released the plan have branded the overall proposal as a $75 million tax cut, thanks to a proposed reduction in income tax. Low-income families will be eligible for a grocery tax credit to offset the increased sales tax and additional service taxes impacting a wide variety of industries. They believe almost every Utahn will be taking home more money at the end of the year.

“I can’t file taxes, so it don’t matter to me,” Jehued said. “I get social security… Please don’t raise the taxes too high!”

Jean Hill, the government liaison for the Catholic Diocese of Salt Lake City said they opposed a food tax.

“A tax credit does not resolve the problem for someone who does not make enough to file a return,” she told FOX 13.

If you would like to tell lawmakers how you feel about the proposal, the legislature has scheduled the following public hearings on Capitol Hill.

  • October 22, 2019 at 4:30 p.m.
  • November 7, 2019 at 4:00 p.m.
  • November 21, 2019 at 5:00 p.m.

Bill Tibbetts, the director of low-income advocacy group Coalition of Religious Communities, has asked supporters to attend those meetings.

“Parents working two low wage jobs are far too busy to show up for meetings like these and share their struggles with legislators,” Tibbetts wrote. “We need to show up on their behalf and remind elected officials that families living from paycheck to paycheck need tax relief now– not once a year.”

Read the full proposal here.

Source: Fox 13 Now

October 28, 2019
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In News

Kroger’s Decline

Early in 2019, Kroger’s was listed by a top retail research firm as the fourth-largest grocer in the world. Yet, the year that began with such a proud status, has seen the brand endure a difficult period in the US. The company announced plans to lay off hundreds of employees with concerns that the turnaround plan presented earlier in the year may not drive the needed changes.

Looking at Kroger visits nationwide from September 2017 through September 2019 only reinforces the notion. Comparing visits to the baseline for the period shows significant dips throughout 2019. Yet, there are promising signs. Kroger visits in August 2019 were 2.2% above the baseline for the period, beating out August 2018’s 0.4%.

Interestingly, digging into specific locations shows a key element that could potentially help the brand recover – location optimization. We analyzed several different locations with the same key competitor and found that brand dominance was evenly split. The key differentiator? How close the Kroger location was to its target audience. When Kroger saw an advantage in the number of visitors that came within a tighter True Trade Area, it had more overall visits. When this advantage was flipped, the competitor had a higher rate.

One example below shows a scenario in Ohio where Kroger sees just 6.1% more traffic than a key competitor over the measured period. They see similar breakdowns of Household Income and Family Size among other key metrics but see the biggest difference in distance traveled. In this case over 52.7% of visitors live within 2 miles of the Kroger location, whereas only 38.3% do for the competitor. And the difference becomes more pronounced in visit leads as the travel distance comparison becomes more pronounced.

Conclusion

As with many brands that go through a difficult period, the image created can sometimes make it seem like there is no way out. Yet, the data strongly indicates that the Kroger brand still resonates powerfully and that a return to glory is by no means off the table. Instead, there are strong indications that the key to its future success will rest on its ability to optimize its retail footprint. Identifying the right locations to expand and then focusing on an allocation that emphasizes finding these right traits may be the key to the turnaround.

Source: Placer.ai

October 28, 2019
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In News

Wegmans Has Come to Brooklyn. Why Are New Yorkers Losing Their Minds?

The promise of the regional supermarket is ultimately the assurance of consumption without pretense or profile. It is hardly possible to walk into a Whole Foods without feeling reduced to the most banal parody of your tastes and habits. Few of us though, have ever walked into a King Kullen and felt like a cliché.

King Kullen is relevant here because the Smithsonian Institution recognizes it as the first supermarket in the country. It met certain criteria, delivering different kinds of foods in separate departments, all of which customers could access themselves, at discounted prices in vast spaces. Before this model evolved, shoppers bought groceries by handing lists to clerks who stood behind counters and gathered items for them.

In 1930, King Kullen opened its first store in a vacant garage occupying 6,000 square feet in Jamaica, Queens. It eventually expanded east, dominating postwar Long Island.

That same year Wegmans opened a store in Rochester, more than three times larger. It used vaporized water to crisp vegetables and featured a cafeteria with seating for 300. It would colonize upstate New York and spread northward and southward on the East Coast, specializing in a kind of thrift-minded novelty.

Wegmans stores are enormous — the Brooklyn location will be 74,000 square feet — and they are laid out like European food halls. The average grocery store stocks approximately 40,000 products; Wegmans offers 50,000 to 70,000.

Despite that glut, Wegmans counters some of our disaffection with retail capitalism. The business is family run, still after several generations. There is no Jeff Bezos figure at the top holding on to his money as if it were a handgrip that would kill him if he let go. Wegmans consistently ranks among Fortune magazine’s Top 10 companies in terms of worker satisfaction.

That status, as David Ehrenberg, the president and chief executive of the Navy Yard pointed out, is rare for retail operations that all too frequently offer poorly paying jobs with few opportunities for advancement.

This is why, nearly a decade ago, when supermarket chains submitted proposals to the city for the chance to open in an area serving both gentrifiers and thousands of public housing residents, Wegmans won.

Wegmans was selected in part for its community-oriented management style (consider the contrast to the decadent, self-dealing practices of WeWork, another recent occupant of the Navy Yard).

In conjunction with the Navy Yard’s employment center, the company hired more than 200 of the 500 workers it will have in total from outreach events held at or very near the Farragut, Ingersoll and Walt Whitman Houses.

Little about retail culture in New York is integrated either in terms of race or class. The Ikea in Red Hook, Brooklyn, provides a rare exception where you will find many people unlike you in the checkout line. Wegmans will sit similarly on the outskirts of a diverse group of neighborhoods that have not coalesced seamlessly. Will a grocery store make the difference?

Source: The New York Times

October 21, 2019
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In News

Kroger announces new date labeling protocol for private label products

  • Kroger announced a new plan to standardize date labels for its private label food products aimed at providing consumers with easier-to-understand information about quality and safety, according to a press release.
  • Earlier this year, Kroger began transitioning its food products to one of two date labels. “Use By” indicates the deadline by which a consumer needs to eat a product, while “Best if Used By” tells when the product’s quality and freshness begins to diminish.
  • The program is part of the retailer’s Zero Hunger | Zero Waste social impact initiative, which aims to erase food waste across the company by 2025. Roughly 20% of food waste is attributed to misunderstood date labeling, according to food waste research group ReFED.

Kroger’s initiative falls in line with the U.S. Food and Drug Administration’s push to standardize date labels. The organization notes that a profusion of labels like “use before,” “best by” and “sell by” printed on food labels are not a reflection of whether or not a product is safe to eat, and has created confusion among consumers.

According to the FDA, American throw out roughly one third of the food they buy, and 20% of that comes as a result of uncertainty over date labels.

Industry groups like the Grocery Manufacturers Association and the Food Marketing Institute have also been pushing for standardized date labeling. As of December 2018, 87% of CPG products used a standardized “best if used by” label. Now, the trade groups predict that 98% of products will use the standardized version by January 2020. Consumers appear to readily accept the new protocol, with 85% describing the streamlined dating system as helpful, according to a survey from GMA and FMI.

Food waste has become a big discussion topic for retailers that want to improve their sustainability efforts while reducing their environmental impact. In 2017, Kroger committed itself to eliminate food waste by 2025. This includes efforts like 90% diversion from landfills and perishable food donations as well as composting.

As part of the effort, Kroger launched a $1 million innovation fund to help launch startups aimed at solutions that could address hunger and food waste. So far, the company has cut food waste by 9%, while increasing its landfill diversion rate for supermarket food waste by 13%.

Source: Grocery Dive

October 15, 2019
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In News

The push to unionize cannabis workers, explained

Weed workers across the country are unionizing, and California just made it easier for them.

On Friday, Gov. Gavin Newsom signed into law a requirement that all cannabis stores enter into so-called “labor peace agreements” as soon as they have 20 or more employees.

California is now one of two states — New York is the other — that requires licensed weed shops to make a deal with a formal labor union in which managers promise not to stop workers from joining a union. And in exchange, organizers won’t encourage labor strikes against the company.

Labor unions have been pushing for these agreements in recent years, as more and more states decriminalize marijuana. They say they want to make sure the $6 billion industry doesn’t exploit workers, who are often paid below the minimum wage or given marijuana instead of wages.

They also see it as a pathway for workers to form a labor union and boost membership. When unionized, cannabis workers have ended up negotiating annual raises, health insurance subsidies, and higher-than-average wages, according to the United Food and Commercial Workers International Union, which has been organizing cannabis workers across the country since 2011.

California has required cannabis shops to sign labor peace deals ever since 2018, after voters approved a ballot measure that legalized recreational marijuana sales. There was just one problem: the law didn’t include a way to enforce the deals, because it didn’t give businesses a deadline to make them.

The new law, signed Friday, gives businesses 60 days to do so. If they don’t, workers can file a complaint with state labor regulators.

This will “provide employees with clarity on when an employer is failing to comply with the laws and a complaint needs to be filed,” said Reggie Jones-Sawyer, the California assembly member who sponsored the bill, according to the industry news site Cannabis Wire.

While the new law represents a small tweak to the current law, it will help unions make inroads in one of the fastest-growing industries. It also represents an unusual approach to labor organizing.

Labor peace deals, explained

The emerging legal marijuana industry is relying on a rare labor strategy once used to organize shipyard workers and casino employees. They’re known as labor peace deals, or LPAs.

Each deal varies from workplace to workplace, depending on what both sides negotiate, but they tend to have some things in common.

First, company managers agree not to dissuade workers from unionizing, and they often agree to give employees’ contact information to labor organizers. They also give unions access to the workplace to meet with employees, as long as organizers don’t disrupt work.

In exchange for access, labor organizers agree not to vilify a company or say negative things about an employer to its workforce. The unions also agree not to encourage workers to go on strike or picket.

As the term suggests, these deals are meant to keep the peace during what can often become a tense unionization process. But the setup only works when employers aren’t trying to stop workers from organizing all together.

For the legal marijuana industry, these deals are sometimes mandated under state law. Aside from California, New York requires its medical marijuana dispensaries to sign labor peace deals. In Illinois, which recently legalized recreational marijuana, the state will consider whether a business has signed such a deal when determining which shops can get a license.

Labor unions, such as the United Food and Commercial Workers International Union, have been pressuring states to pass these laws. They see it as a way to boost union membership in a rapidly growing industry.

As the marijuana industry grows, so does union demand

Ten states have fully legalized marijuana sales in recent years, for both medicinal or recreational consumption. About another dozen states allow sales for medical use. As more and more states pass laws allowing businesses to set up shop, the demand for workers will continue to rise.

It’s hard to determine how many people work in the cannabis industry. Because selling marijuana is still illegal under federal law, the US Department of Labor doesn’t track job growth in the industry. But New Frontier Data, a cannabis market-research and data-analysis firm, estimates that the legal industry employs at least 250,000 people who work directly with the plants. That includes people working in dispensaries, coffee shops, bakeries, patient identification centers, hydroponics stores, and growing facilities.

And the growth of marijuana dispensaries is a trend that labor unions are paying attention to.

The United Food and Commercial Workers International Union, better known for organizing supermarket employees, is the now the “most powerful cannabis union” in the country, representing more than 10,000 workers in 14 states, according to Rolling Stone magazine.

“It has negotiated contracts with major operators like MedMen, helped legitimize the movement for cautious politicians, and hammered out pro-worker provisions in multiple state legislatures,” writes Josh Marcus for Rolling Stone.

In fact, it was UFCW that forced the federal government to enforce labor rights for cannabis workers. In 2013, workers at a medical marijuana company, Wellness Connection of Maine, walked off the job that winter, protesting the company’s use of pesticides. The company repeatedly retaliated against workers for trying to unionize with the UFCW, and disciplined several workers who participated in the walkout, according to the National Labor Relations Board, which enforces federal collective bargaining laws.

In October 2013, the company settled the case. By doing so, the NLRB acknowledged that cannabis workers were protected under the National Labor Relations Act — the 1935 law that gave workers the right to unionize.

“Only by sticking together, we were able to find the strength to speak out about the gross violations that we saw at work,” Ian Brodie, a former Wellness employee, said in a statement after the settlement was reached. “By fighting for our union, we are protecting our customers and shaping the medical marijuana industry into a safe and well regulated industry that provides good jobs and needed medicine for our community.”

Cannabis companies like unions more than most employers do

It’s unusual for a company to advertise the fact that its employees are unionizing. But in the legal marijuana industry, that’s normal — a sign that the company is a legitimate business, and not a shady operator growing marijuana in someone’s garage.

In August 2018, employees for the Have a Heart dispensaries signed the first collective bargaining agreement for cannabis workers in Washington state. The company even wrote a press release to announce it: “We consistently strive to have a positive impact in the neighborhoods where we do business, and we see our partnership with [UFCW Local 21] as part of our commitment to creating a safe and empowering workplace,” wrote CEO Ryan Kunkel.

The contract, which covers about 135 workers in the Seattle area, includes comprehensive health care benefits, annual raises, and higher-than-average pay rates for the industry, according to the release. Recreational marijuana sales are fully legal under Washington state law.

Then, last week, cannabis workers in Pennsylvania signed the state’s first collective bargaining agreement in the industry, according to UFCW Local 1776. They work for Pennsylvania Medical Marijuana Solutions, a subsidiary of Vireo Health, which operates in 11 markets with legal cannabis.

The new contract sets base wages for employees and provides them with affordable health care benefits, guaranteed annual raises, generous paid time off, and an employer-funded retirement plan.

Wendell Young, president of the union affiliate, described the contract in a press release as a “great win for the future of all workers in the cannabis industry.”

The CEO of Vireo Health, Kyle Kingsley, issued his own statement too, and it suggests that cannabis companies see unions as effective partners in advocating for marijuana legalization.

“We believe that a unionized workforce is key to our company’s success and look forward to partnering with UFCW to support legislation, such as legalizing adult-use cannabis, that will help create thousands of new middle-class jobs across the Keystone State,” he wrote.

Source: Vox