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The Mega Grocery Merger That Workers Would Pay the Price For
Unionized grocery store workers rally to oppose the proposed merger between Kroger and Albertsons in Los Angeles on April 13, 2023, out of concern for less competition, increasing food prices and putting union jobs at risk. Photo by Frederic J. Brown/AFP via Getty Images

The Mega Grocery Merger That Workers Would Pay the Price For

Co-published by Economic Hardship Reporting Project and In These Times.

As a former grocery store cashier, the recent news that the Federal Trade Commission (FTC) is suing to block a merger between supermarket giants Kroger and Albertsons prompted a sigh of relief. My experience cashiering and bagging taught me just how it is critical to stop further concentration in the industry when just five companies already control over 60% of U.S. grocery sales.

First proposed in 2022, the $24.6 billion deal would be the largest supermarket merger in history and would create the second largest grocery company in the United States (after Walmart). The biggest beneficiary of the deal would likely be Cerberus Capital Management, the private equity firm that controls Albertsons. Shareholders already received a $4 billion dividend related to the proposal last year.

A private equity windfall would come at the expense of shoppers who are already paying 25% more for groceries than four years ago. Analysts say that grocery mergers contribute to price inflation because stores can increase costs when consumers have nowhere else to shop.

But the FTC’s case is not just about the cost of groceries. The Biden administration is employing a novel application of the law by focusing on how the deal would affect workers. The government’s complaint notes that the merger would lead ​to lower wages and reduced benefits” and harm unionized employees who benefit when there is competition for their labor. Academic research supports the argument. Marshall Steinbaum, Assistant Professor of Economics at the University of Utah, wrote last year that the Kroger-Albertsons merger ​is likely to increase employers’ concentrated power at the bargaining table.”

The FTC’s strategy comes after a dialogue that the agency had with organizers from the United Food and Commercial Workers International Union (UFCW). Joe Mizrahi is the Secretary-Treasurer of UFCW 3000, a local that has also been at the center of a reform movement. He described to In These Times ​many discussions” where organizers ​explained the negotiation process” to federal officials. At one session in Washington D.C., FTC officials asked detailed questions about how the union bargains with employers. ​It felt like a cross examination,” Mizrahi said. When organizers said that the merger could lead to job cuts, officials asked, ​Why couldn’t someone just go across the street and get a new job?” Organizers explained that a loss of benefits could follow. ​They could but they have a pension, and they are not going to get that at a nonunion store.” Mizrahi said that, from his perspective, the discussion was intended to help officials ​build the strongest case” for blocking the merger.

Tom Olson, a Safeway employee and UFCW Local 7 steward outside of Denver described a similar back-and-forth between the union and the Biden administration. Olson met FTC Chair Lina Khan in Denver in 2023. ​Khan listened and asked good questions,” Olson said. ​I felt heard.” And at town halls last year, Olson urged Colorado Attorney General Phil Weiser to oppose the Kroger-Albertsons deal. ​He knows how it will affect the workers.” (Weiser recently announced a lawsuit to stop the merger that cited job cuts and higher prices.)

But while workers and labor organizers have opposed the deal, it has received support from corporate actors and business executives. C&S Wholesale Grocers is buying 400 stores from Kroger and Albertsons in a bid to help convince the government to approve the merger. Olson met C&S President Mark McGowan this year at a meeting of the coalition of UFCW locals in Seattle. ​I just didn’t get a warm feeling about how he felt about taking on union contacts,” Olson said. When asked about stores unionizing, Olson says McGowan responded by claiming, ​We would fight you every step of the way.”

Olson has his own experience feeling the negative impacts of corporate mergers. In 2015, Albertsons bought Safeway where he had worked as a produce manager. The company closed outlets which forced some employees, including Olson, to move to new stores. ​They just came in and said, ​Sorry you’re going to have to go.’” At Olson’s new job, he earned less money and was not eligible for the bonus he had previously received since he was no longer a manager.

Another merger threatens more of the same — or worse. ​If the only option is to potentially go to some employer that wants to eliminate unions, then a lot of people are going to lose their healthcare and their pension,” he said.

The Albertsons-Safeway deal was a harrowing experience for Monique Hightower, a member of UFCW Local 770 in Los Angeles. Hightower lost her job at Albertsons when the two companies merged. Hightower had to move back in with her mother and clean houses to survive. ​I know firsthand what it’s like to lose your job, lose your benefits,” she told In These Times. ​I also lost my medical [benefits].” Hightower was rehired as a deli clerk about a year later. But the experience taught her that mergers are likely to be ​a difficult time for employees such as myself.”

Hearing stories of disrupted lives and a fight for survival reminded me of conversations in my own (non-unionized) store which confirmed that the danger of corporate concentration goes beyond price hikes. When prices for basic goods went up in 2021, a longtime cashier named Terri told me that she was worried about keeping food on the table. When I asked her what she thought was causing the spikes, she pointed to stimulus checks sent out during the Covid-19 crisis. ​I needed that money,” she said. ​But now we are paying for it with higher prices.”

Terri’s fear of rising prices was entirely justified given reports showing that food insecurity among grocery workers has long been a national crisis while across the country food insecurity is rising significantly. Though progressive economists have pointed to corporate profiteering as a source of the price hikes, Terri’s views reflected mainstream discussions in outlets from Vox to the New York Times.

My conversations on the job show that stopping corporate concentration in the food business is critical to protecting unionized workers like Tom and Monique as well as employees who don’t have a collective bargaining agreement. That’s because corporate mergers give employers more power while increasing the chances of job cuts and benefit losses — enriching shareholders at the expense of workers. UFCW’s effort to stop the Kroger-Albertsons deal stands to help all grocery workers in the present while providing a model for future battles.

But even more is at stake. Progressives must do a better job explaining how laws favorable to corporations cause high prices and wage stagnation in the first place and how essential industries could be made to serve the public, not just shareholders and executives. The task is especially critical because defending corporate interests is common across the spectrum of political pundits. In 2022, for example, Catherine Rampell wrote a Washington Post column blaming the ​anti-corporate populist left” for the ​conspiracy theory” that companies were to blame for price hikes.

The FTC’s case helps to make clear that corporate power is not a conspiracy theory. And fighting back requires a deep collaboration between employees, elected officials and policymakers. Workers know better than anyone how to connect individual experience to larger social and political trends. What grocery employees like Terri need is not lecturing or pandering but a union of their own that brings them into a dialogue about the origins of their problems and the mechanisms that exist to improve their lives.

 

Ann Larson is a writer and activist focused on education, debt, and low-wage work. Her writing has appeared in The New RepublicThe Chronicle of Higher Education, and other publications.

Save An Endangered Species: Journalists

Ann Larson is a writer and activist focused on economic justice. Her writing on education, debt, and low-wage work has appeared in the New Republic, the Chronicle of Higher Education, and the Los Angeles Times, among other publications. She is co-author of Can't Pay Won't Pay: The Case for Economic Disobedience and Debt Abolition and has given many invited talks on debtor activism, including at Brooklyn College, Western University, UCLA, and Harvard Law School.

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