Union Pushes for $15-an-Hour Wages at City Market

When Patrick Kearney moved to Burlington in 2016, the only place he wanted to work was City Market, Onion River Co-op. The member-owned grocery store has a bargaining unit. As a union man through and through, Kearney wanted in.

Kearney came with 11 years of experience at a Hanover, N.H., co-op where he and his coworkers had tried, and failed, to organize a union. Kearney assumed it would be different in Burlington, where being a card-carrying member of City Market is a symbol, if not a stereotype, of holding the city’s progressive ideals.

Surely the co-op culture — one of profit-sharing and charitable giving — would mean employees were valued. The Burlington fixture known as City Markup could certainly pay employees a livable wage when a bottle of Queen City-made kombucha costs seven bucks.

Right?

Kearney, who is 68, earns $12.51 an hour as a produce stocker at City Market’s South End store. According to a financial analysis he compiled in January, just over half of City Market’s 270 union members make less than $13 an hour. The lowest-paid among them, such as baggers and third-shift cleaners, make $11 an hour — just 22 cents more than Vermont’s minimum wage.

Kearney and his fellow union negotiators say that’s not enough to live on, particularly in Vermont, where earners have to make more than twice that wage to afford a modest two-bedroom apartment, according to the National Low Income Housing Coalition. Kearney said he likes many of City Market’s ideals but that management doesn’t practice what it preaches when it comes to the workforce.

“They have not made employees’ welfare a priority,” he said.

The wage question has made for protracted negotiations with co-op management ever since the union’s contract expired in June. Workers are pushing for a three-year agreement that would give the lowest-paid employees a $15-an-hour wage by July 2021.

But City Market’s leadership says that rate is wholly unsustainable. They countered with $12.44 an hour. Leaders say the co-op’s generous benefits make up for lower wages.

“We are trying to find a way forward,” general manager John Tashiro said last week.

City Market workers aren’t alone in catching the Fight for $15 fever. A majority of Vermont lawmakers supported a $15 minimum wage proposal this legislative session, but House and Senate leaders couldn’t resolve their differences on the issue before adjournment. Gov. Phil Scott vetoed a similar measure in 2018. And nationally, the $15 minimum wage question has become a benchmark on which to judge the field of Democratic presidential nominees.

That’s exactly why City Market union vice president Meaghan Diffenderfer doesn’t think the ask is out of touch.

“[City Market] is seen as this precedent-setter,” said Diffenderfer, who is 25 and makes $13.80 an hour in the co-op’s finance department. “If folks are going to look to us about what other markets should be paying, we should live to the co-op values and provide a good wage.”

Colleen Knowles, the union president and a produce stocker, says her rent for a two-bedroom in Burlington’s Old North End consumes more than half of her monthly income, even with a roommate. She makes $12.20 an hour, a fact she displays during work hours on a giant pin affixed to her T-shirt.

“I am very thinly scraping by,” Knowles said. “It’s completely unacceptable that management is allowing its employees to live like this.”

Union members say City Market’s starting wages aren’t in line with accepted standards such as Burlington’s $14.44 livable wage rate. That’s how much contractors seeking to do business with city government must pay workers, but the requirement doesn’t apply to private companies. Nor are co-op wages at or above the $13.34 an hour that the Vermont Legislative Joint Fiscal Office calculated is what a member of a two-person household must earn to afford their basic needs.

Founded in 1973, the co-op is member-owned and has long prided itself on its guiding principles of independence, social responsibility and equality. The company donated nearly $377,000 to local nonprofits last fiscal year, according to its 2018 annual report. The bulk came from its Rally for Change program, which asks customers to round up their totals at the register for a local charity such as the Chittenden Emergency Food Shelf.

City Market also shares its profit with member-owners, though the patronage refund program is on hold while it pays off a $10 million loan for the South End store, which opened in 2017.

The original 16,000-square-foot store on South Winooski Avenue has been a downtown institution since 2002. Workers formed a union two years after it opened. Members are represented by the United Electrical, Radio & Machine Workers of America.

Sen. Chris Pearson (P/D-Chittenden), a Burlington resident and City Market member, has long lobbied for a $15 minimum wage, and he cosponsored the Senate bill that would have achieved it by January 2024. He supports the workers’ fight because, he said, it’s difficult to get by in Chittenden County with anything below that.

“The bottom line is, when you’re working full time, you should be able to afford to live in your community,” Pearson said. “I hope that is the focus of their discussion, and if not, co-op members need to really be made to understand what’s happening in our supermarket.”

But Tashiro, the general manager, said the calculus also has to take worker benefits into account.

City Market pays 90 percent of health care premiums for employees making $15 or more an hour and kicks in an additional 5 percent for those in the $12.01 to $14.99 range; anyone who makes less doesn’t contribute a cent. City Market management, however, has proposed reducing those contributions in contract talks, Tashiro said.

All workers can accrue up to four weeks’ paid vacation to start, and they receive a 6 percent 401k match after a year and an 18 percent employee discount.

City Market raked in $48 million in sales in 2018, but Tashiro said there isn’t much to spare after the co-op pays its bills. Like many retailers, City Market typically has a 3 percent profit margin, but all of that is being poured into the construction loan for the South End store. The co-op is expected to operate at a loss for the next few years.

City Market’s board of directors doesn’t sit at the bargaining table — it only ratifies the finished contract — but members are kept apprised of sticking points. Board president Faye Mack said the co-op offers more robust benefits than many retailers but also recognizes that Burlington is an expensive place to live.

“I believe both sides are really committed to try to figure out what the best salary structure is for sustainable employment,” she said.

Union member John Donoghue acknowledges that City Market benefits are generous, saying he’s known several co-op workers who have defected to other downtown businesses only to come crawling back for the free health care. Still, “City Market doesn’t offer those benefits,” Donoghue said. “We as a union negotiated for them.”

Donoghue, who makes $19.64 an hour as a graphic artist for the market, knows Burlington’s affordability problem isn’t City Market’s alone to solve. But he thinks the co-op should use some of its goodwill capital to at least try.

“We strive to be a leader in the community,” Donoghue said. “It seems to me a good opportunity for the co-op to be a leader in the community in this way, too.”

Erin Sigrist, president of the Vermont Retail & Grocers Association, a lobbying outfit that opposes the $15 wage, says it’s not as simple as awarding employees a raise. That money has to come from somewhere, she said, and businesses can only boost their profits in so many ways. They need to attract new customers, upsell existing ones or lure them in more frequently, or they can raise prices on goods — a hard sell in an age when online retailers are bankrupting local brick-and-mortar stores.

“[This] needs to be a discussion about a total compensation package,” Sigrist said. “There are so many employers out there that are providing valuable benefits that translate to more than just a $2 increase per hour.”

But the base wage matters to Kearney. He said City Market wages are too low to keep anyone for long and suspects the co-op’s business model relies on this, since workers leave well before they top out the wage scale. City Market does award annual raises, but using management’s proposed wage scale, it would take an entry-level bagger six years to hit the $15 mark, Kearney said.

“What are you supposed to do in the meantime?” he said. “How do you save for retirement? How do you keep up with your rent and fix your car?”

He believes in the Fight for $15, but Kearney isn’t sure he can stick it out long enough to reap the benefits should the union succeed. Kearney figures that he and his wife, who works at Zabby & Elf’s Stone Soup downtown, only have enough saved to live on for two years after they retire.

After 51 years in the workforce and never making a livable wage, Kearney says he feels like he’s in an inner tube heading for a steep waterfall — staying afloat but on a path to ruin. He hopes that by the parties’ next negotiation session on September 6, management will have found a way to pay employees what they need.

“They have a budget, and they decide how to spend it,” Kearney said. “We’re just saying it’s our turn.”

Correction, August 28, 2019: A previous version of this story misstated the reason the minimum wage bill did not pass earlier this year.

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This article appears in Aug 28 – Sep 3, 2019.

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