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Tentative Settlement Reached in Long-Running California Supermarket Strike - 2004-02-28

A long-running supermarket strike that has kept 70,000 workers off the job in California may be nearing an end. The issue that sparked the work stoppage, rising health care costs, is likely to trigger labor disputes in other industries.

After 139 days of picket lines at California's major supermarkets, federal mediator Peter Hurtgen made the announcement: "We have reached a tentative settlement in the long-running United Food and Commercial Workers supermarket strike in central and southern California," he said.

On the streets, weary strikers greeted the news with enthusiasm.

The dispute began in October, when clerks at a large grocery chain walked off the job, and two other major chains locked out their workers until the dispute was settled. Economist Jack Kyser says the key issue was health insurance, and the question of whether workers should help to pay for it.

"The root cause is that health care costs in America are going up each year at a double-digit rate, and this is putting huge pressure on the firms that are paying all of their employees' health care costs, like in the local supermarkets," he said. "So people are looking for some type of out, some type of relief."

Behind the dispute is a plan by the discount giant Wal-Mart to bring 40 new superstores to southern California to compete with the grocery chains. Wal-Mart pays lower wages and offers fewer benefits to its employees. It is the largest U.S. retailer, and its low labor costs and massive buying power allow it to offer lower prices to consumers than its competitors.

For both sides, the stakes in the labor dispute were high, and management and the union resisted compromise. The grocery companies reportedly suffered combined losses of $2 billion, and striking workers lost hundreds of millions of dollars in wages.

Details of the tentative settlement have not been released, but the union reportedly accepted a management demand that workers contribute to the cost of their health insurance. The union is said to have kept most benefits in place for current employees, but accepted a management plan to give new workers fewer benefits than veteran clerks.

Striking workers will vote on the contract offer Saturday and Sunday. If they approve it, they could be back at work in the supermarkets Monday.

A clerk, who has gone without pay for nearly five months, says the sacrifice has been worth it. "I felt like we were fighting not just for our union," she said. "I thought we were fighting for everybody else's union because health issues are a big issue not just for our union but for everybody.

Economist Jack Kyser said the issue of rising health costs is a serious problem for every industry.