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TU Marketing Discussion


Title: Striking for Benefits

This Is a Hypothetical task

When the Southern California grocery workers went on strike against the state’s major supermarket chains, the main issue was employee benefits, and specifically how much of their health-care costs the employees should pay themselves. Based on their existing contract, the workers had unusually good health benefits. For example, they paid nothing toward their health insurance premiums and paid only $10 co-payments for doctor visits. However, supporting these excellent health benefits cost the big Southern California grocery chains over $4 per hour per worker.

The big grocery chains were not proposing cutting health-care insurance benefits for their existing employees. Instead, they proposed putting any new employees hired after the new contract went into effect into a separate insurance pool, and contributing $1.35 per hour for their health insurance coverage. That meant new employees’ health insurance would cost each new employee perhaps $10 per week. And, if that $10 per week wasn’t enough to cover the cost of health care, then the employees would have to pay more, or do without some of their benefits.

It was a difficult situation for all involved. For the grocery chain employers, skyrocketing healthcare costs were undermining their competitiveness; the current employees feared any step down the slippery slope that might eventually mean cutting their own health benefits. The unions didn’t welcome a situation in which they’d end up representing two classes of employees, one (the existing employees) who had excellent health insurance benefits, and another (newly hired employees) whose benefits were relatively meager, and who might therefore be unhappy from the moment they took their jobs and joined the union.

(Witten and copyrighted by Gary Dessler, Ph.D.)


1.Assume you are mediating this dispute. Come up with three creative solutions you would suggest for how the grocers could reduce the health insurance benefits and the cost of their total benefits package without making any employees pay more. Why?

2.From the perspective of the grocery chains, what could be the downside of having two classes of employees, one of which has superior health insurance benefits? How would you suggest they handle the problem?


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