Kroger – Albertsons Mega Merger Will Mean Higher Prices, Job Losses In Wyoming, Say Union Reps

in News/wyoming economy/Business

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By Renée Jean, Tourism and Business Reporter
renee@cowboystatedaily.com

National grocery giants Kroger and Albertsons have announced a multi-billion merger the companies say will lower prices by a collective $500 million and boost employee wages and benefits by $1 billion. 

But workers for affected stores in Wyoming and Colorado have a much different take on what the deal means for them, particularly in the West.

‘Corporate Greed’

Trish Musich, who’s worked at the Albertsons store in Rock Springs for 25 years, also is the steward for the United Food and Commercial Workers Union Local 7, which represents 25,000 grocery workers.

While mergers make a splash for the corporations, Musich told Cowboy State Daily the ultimate result historically is higher prices for customers, worse conditions for workers, shuttered stores and job losses.

“In 2000, my town had four grocery stores, not including Walmart,” Musich said in an email. Two markets “became a casualty of Kroger, and we’ve only had two grocery stores since, meaning job loss, less choice for consumers and higher prices for everyone. 

“That is what is about to happen again if this merger goes through,” she said. 

Musich said Kroger and Albertsons workers are worried about the fallout from the pending merger.

“Corporate greed has cost this little town much over the last two decades,” she said. “We are not a bag of chips that can be bought or thrown in the trash. We are Wyoming’s working families, and our state’s communities deserve better.”

Prepare For Closures

Kim Cordova, president of UFCW Local 7 and vice president of UFCW International, told Cowboy State Daily a quick look at a map Albertsons and Kroger have provided in their press release about the merger shows what’s about to happen in Wyoming and Colorado. 

“The map shows you how concentrated and how many stores overlap in the Western part of the U.S.,” she said. “I mean, Southern California, (Colorado) Wyoming, New Mexico, Arizona, Texas — Safeway and Albertsons control the market and Kroger. 

“In some of our areas throughout both (Wyoming and Colorado), they control almost 100% of the grocery market.”

Cordova believes the merger will create a duopoly, where just two entities, Walmart and Kroger/Albertsons, control most of the food supply chain, along with fuel, pharmacies and other products.

Cornering The Market

That reduction in competition will mean the companies won’t have a much incentive to keep prices low. 

“We’re already suffering the high cost of inflation,” she said. “And now you’re going to have just two giant behemoths in control of our whole country’s food supply chain.”

Albertsons and Kroger have indicated in investor calls and press materials that they would sell or close about 400 stores as a result of the merger. They’re also prepared to “spin-off” some stores into a new and “nimble” subsidiary called Spinco to make the deal more palatable to federal regulators. 

But Cordova said the workers she represents have heard that same song and dance through three other mergers in the past few years. Each time, the promise was that prices would be lower and wages higher. 

But that’s not what she’s seen happen. 

Consolidation

In 2014 when Albertsons’ parent company bought Safeway stores, the first thing that happened was the closure of 33, and ultimately 45, underperforming stores, Cordova said. 

The subsidiary, meanwhile, ultimately went bankrupt. 

“They’re not going to let that competitor thrive,” Cordova said. “They sell them a lemon, basically. And so, what happened is (grocery chain) Haggen ended up filing bankruptcy, and in the meantime all those workers lost their jobs.”

Wall Street and consumers were told that the result would be lower prices as the larger company leveraged greater purchasing power. 

“That never happened,” Cordova said. “That was in 2014, and we haven’t seen prices drop.”

Instead, Haggen’s bankruptcy left food deserts, which meant longer drives for consumers — another added expense on top of the groceries that also steadily increased in price. 

Feds Need To Approve

Cordova is glad to hear the U.S. Senate has already decided to hold a hearing on the $24.6 billion takeover of Albertsons, and said she plans to testify when the time comes. 

The union also is already working on an analysis of the deal, and UFCW Local 7 and other unions affected by the merger deal have hired an antitrust lawyer to help make their case with lawmakers and federal regulators, she said.

Biden’s Policies

The union may even find an unexpected friend in the White House. In July 2021, President Joe Biden issued an executive order cracking down on corporate consolidation.

Among the most recent outcomes of that order is the ability to buy hearing aids over the counter at drug stores, which was previously prohibited. 

Biden’s order directed leading antitrust agencies, the U.S. Department of Justice and Federal Trade Commission to challenge not only new mergers that are bad for consumers, but prior ones as well. 

Particular areas of focus were identified as labor, agricultural, health care and the tech sector. 

‘This Is A Big Deal’

The Albertsons-Kroger merger comes at a time when grocery stores in general have made massive profits, Cordova said. 

Now that the pandemic is easing, it’s an opportune time for Albertsons Companies to get some return on investment for its prior purchase of stores. But Cordova believes that gain will be at the expense of consumers and workers. 

It’s also coming at a time when grocery store workers face increasing job and food insecurity. 

Cordova believes the merger, if allowed, undermines the description of grocery store workers as “essential,” a term that was used often to describe them during the first months of the COVID-19 pandemic.

“We surveyed our numbers across the Western part of the country and, you know, there were so many of these workers who suffer from food insecurity, who are part of the working homeless,” she said. “I mean ,if you’re making $20 bucks an hour, $21 dollars an hour or whatnot, and some people who are making closer to minimum wage, and I mean you work for these large employers, and they’re homeless while they’re working. 

“Can you imagine being hungry working in groceries and having food insecurity? This is a big deal.”

Kroger and Albertsons didn’t immediately respond to Cowboy State Daily requests for reaction to the labor unions’ concerns.

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