Grocery workers in California see wages shrink Study cites trend of major chains in state to return cash to investors

Joanna Lopez rests her eyes as her son Isaac eats his breakfast in Hayward, Calif. on Thursday, June 5, 2014. Lopez has difficulty making ends meet while only making $9.20 an hour at Wal-Mart. Joanna Lopez rests her eyes as her son Isaac eats his breakfast in Hayward, Calif. on Thursday, June 5, 2014. Lopez has difficulty making ends meet while only making $9.20 an hour at Wal-Mart. Photo: James Tensuan, The Chronicle Photo: James Tensuan, The Chronicle Image 1 of / 12 Caption Close Grocery workers in California see wages shrink 1 / 12 Back to Gallery

A new look at California's $98 billion grocery industry shows it is a microcosm of the state's wealth inequality gap.

While a private-equity firm is buying Safeway for $9 billion, 1 in 3 grocery workers is on some form of public assistance. While grocery chains are cash machines for investors, nearly 1 in 5 workers has cut back on meals because he or she couldn't afford to buy food.

Those are some of the results from one of the largest surveys of California's 383,900-member grocery workforce, scheduled to be released Monday. Conducted by the Food Labor Research Center at UC Berkeley and UC Davis Professor Chris Benner, the study, based on interviews with 925 grocery workers statewide, shows how much has changed in an industry that long promised stable, middle-class jobs.

These days, the 124-page report found, "workers who sell food in California are almost twice as likely as the general population to not be able to afford to eat the food they sell." This new generation of low-wage grocery workers uses $662 million worth of public assistance benefits annually, according to the report.

"A generation ago, these were entry-level jobs where you could work your way up," said Jim Araby, executive director of the United Food and Commercial Workers Western States Council in Oakland, which has 160,000 members in California and commissioned the study. "But these days, people's ability to do that is shrinking."

Now, Araby said, he is seeing more grocery workers like Joanna Lopez. She is a 26-year-old single mother of two who has worked for three years at Walmart, which has roughly 3 percent of California's grocery business.

Food stamps

Though the Hayward resident has worked in the grocery section for a year, she receives food stamps. At least once a month, she goes to a food bank because she can't cover expenses with her wages of $9.20 an hour.

"I try not to cut back on food for my kids," Lopez said. "If I have to, I let the phone get cut off. Or I don't put gas in my car."

Sometimes, to save gas money, she asks her dad, a retired truck driver, or her mom, who works in a nearby sugar warehouse, for a ride to work. Lopez couldn't survive if she didn't live with her parents, who care for her children while she works. She said her children's father is not in the picture.

With the help of a federal education grant, she is taking animation classes at Academy of Art University in San Francisco. She said she dreams of someday "working at Pixar or Disney."

Perhaps in an earlier era, Lopez could have envisioned a lifelong career path in the grocery business. But now, because of increasing competition from big-box stores like Target and Walmart and nonunion ethnic markets like El Super, wages have fallen and the average worker remains at his current job for 1 3/4 years, according to the study.

From 2000 to 2012, the study found that the median wage at a union grocery store decreased from $19.38 to $15.17 an hour. Roughly 1 in 4 of California's grocery workers belongs to a union.

Often, union leader Araby said, during contract negotiations, retailers will point to market pressure from big-box stores, which can sell food at lower prices because they don't pay as well. But Saru Jayaraman, director of the Food Labor Research Center at UC Berkeley and a primary author of the report, said that pressure is overblown.

Walmart and Target have just slivers of California's grocery market, "but other companies look at that (low-cost) model and use it as an excuse in bargaining to drive down wages," Jayaraman said.

Meanwhile, the report lauds Costco, which has captured the largest share (13.3 percent) of California's grocery business while paying workers above the norm.

"What it says to me is that they have discovered that it is possible to compete - and treat your workers well," said Benner, a professor of community and regional development at UC Davis. "The ability to have a low-turnover, higher-skilled workforce actually works in the labor market. The argument that says you have to compete on low wages is wrong."

Chains chided

The report chides California's larger grocery chains - particularly Safeway and Albertsons/Supervalu - for directing a majority of cash back to investors rather than back to the workforce.

Industry analysts say that shouldn't be surprising.

"The investors don't want them to start passing out money like it's a charity," said David Livingston, a Wisconsin grocery industry analyst who has monitored the business for 32 years. "This is not a co-op. These are not nonprofit businesses. They're here to make money."

Livingston says the looming specter of private-equity firm Cerberus Capital Management, which owns Albertsons/Supervalu, purchasing Safeway for $9.4 billion doesn't bode well for workers or shoppers.

"They're looking to milk the cash flow," said Livingston, who was not involved in the study. "They're not buying them to make Safeway a better grocery experience. It's just the opposite. Their obligation is to their investors - and that's to milk the cash flow and cut the expenses. So life is going to be a little more uncomfortable for employees and customers."

Safeway spokeswoman Teena Massingill said the Cerberus deal would benefit those on both sides of the checkout counter at Safeway and Albertsons.

"The merger creates a considerably larger network of stores and distribution centers that, through cost savings and operational efficiencies, will improve our ability to compete by providing customers with lower prices, a better product assortment and an improved shopping experience," she said.