Scott Walker would love Whole Foods Market – forcing employees to “vote” for increased benefit contributions…

By now, many have seen the video of Wisconsin Governor Scott Walker promising billionaire widow Diane Hendricks to “divide and conquer”, as a means of pursuing right-to-work legislation in Wisconsin. The effects of “right-to-work”, even as a philosophy, leads to treatment of employees that is inherently unfair. Even as a company like Whole Foods Market (WFM) presents a “corporate conscience” to the public – they are currently forcing employees (“Team Members”) to partake in a “benefits vote”, selecting which increases in employee benefit contributions they wish to make. All this while WFM is enjoying unprecedented growth and profitability. It is a stark and hypocritical example of how workers making $13/hour are valued less than the $4 products on the shelf – and what adoption of right-to-work would mean to workers. Whole Foods is a very profitable company. Based on the company’s own 10k filing with the SEC, WFM’s growth and profitability is outpacing the cost of medical insurance (more on that later). Yet employees were required to attend a 30- minute class in April to educate them as to why the “vote” to cut benefits is so important. The choices and proposed cuts will affect everyone – especially those with more years’ experience and families to support. Increased benefit contribution will cost employees between $500-$3000/year (estimated). The average wage for a WFM employee is about $13/hour.

The cover page of the “Your Complete Guide to the Benefits Vote Primary” (complete pdf linked) booklet state the case: “The Vote …supports our stakeholder philosophy and principle of shared fate. The concept of shared fate describes how we all have an equal stake in the company’s success.” Whole Foods’ core value #3 is “We support Team Member happiness and excellence.” What does this “shared fate” mean to employees that WFM cares for so much – and does WFM share in it’s success? The basic premise for this “vote”, and subsequent benefits cut is as follows:

  1. Cost increases over the past three years of 10.2% on average.
  2. WFM paying 90% (10% Team Member) of health costs, expected to increase to 91%/9% in 2012.
  3. Health Care costs to WFM will amount to $193.3 million (projected) in 2012.

The numbers WFM presents are accurate. The context in which they are presented are a farce. As WFM is a publicly traded company, all the following information is available in the 10k filing link above. Taking the 10.2% cost increase at face value, that is a total cost increase, not per capita increase. When a company grows, and adds more employees, its total health insurance costs will increase as a result of insuring more employees. For the same time period, WFM is projecting a sales growth of 13-15%. This includes a growth of 18-20% in “earnings per share” to investors in WFM stock – many of whom reap the benefits of team members’ labor without actually working in a WFM store.

In 2007, WFM profits (after taxes and expenses) totaled $182.7 million. Four years later, in 2011, profits totaled $342.6 million – nearly double in 4 years.  For the first sixteen weeks of 2011, total profits were $88.7 million; for the same period in 2012, profits totaled $118.3 million. Store expenses have decreased by 38 points in 2011(page 22 of the 10k pdf above) including 28 points due to wage cuts. In real numbers, most stores have executed 3% cuts in labor over the past fiscal year, resulting in most employees seeing a 5-8% cut in wages (due to hours being cut).  As a percentage of sales, WFM costs are decreasing, sales and profits increasing. This includes the cost of insuring employees. The cost of health insurance, as a percentage of sales will remain well under 2%. In fact, for fiscal years 2010 and 2011, costs to WFM totaled $101.1 million and $109.4 million (pg 40 of the 10k filing). This amounts to 1.1% of sales for both years. Projections would put the cost at about 1.1-1.3% for 2012. According to the IRS data, the national corporate average is 1.6%, putting WFM at the low-end of health costs as a percentage of sales. In fact, page 33 of the 10k filing indicates that all payroll, benefits, and bonuses due team members have remained at about 2.7% of the total sales – sales totaling $10.1 Billion in 2011.

Employees have no choice in the vote. At one store, when vote participation was lagging, employees were taken off their work stations and forced to vote on the clock, by team and store leadership. The “Benefits Vote Worksheet” (full pdf link) outlines the proposed cuts, choices, and costs to employees of each. Cuts are assigned points – all employees were instructed to keep selecting cuts until they reached 15 points. They were then allowed to submit their vote. The final vote will take place in June, with employees having no voice or choice – their benefits will be cut while Whole Foods continues to grow and reap record profits; holding a virtual monopoly on the organic grocery business.

Whole Foods founder John Mackey is a self-proclaimed disciple of Milton Friedman and his extreme free market theories of economics.  The “Benefits Vote” is proof that the current Board of Directors has been hand-picked because they agree with Mackey’s philosophy. The Board and Executives of WFM chose the well-being of investors and the stock market over the “happiness” of Team Members who create the wealth these investors (“stakeholders”) enjoy.  WFM could choose to make a slightly lower return on investment, have slightly lower growth in profits over the next three years, and hold the line on cutting benefits and pay to Team Members. But they didn’t. At a time when the economy is difficult for employees working every day just to make ends meet, WFM recognizes profitability and investment return over the day-to-day financial well-being of its Team Members. There will be denial of this fact from WFM leadership to be sure, but the facts are undeniable. WFM is in a position to maintain current benefit levels.

It is the choice of the Board and Executives not to do so. The labor struggle in Wisconsin is the most critical in out lifetime. It will determine whether workers have a place at the table to help determine the conditions they work in; or they will be indentured servants – working only at the behest and whim of the few that control capital, and subsequently workers’ lives. The farce that is being put on as “choice” by Whole Foods in the “Benefits Vote” is no choice, and is no vote. They are being asked to choose which finger to sever – and that is no choice.

This message should be sent to every public and private union worker in America. Beware “right to work” – it is no right at all – only to live as a slave to capital.


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