The Meaning of Market Basket

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Dollars & Sense

The Meaning of Market Basket

Can workers and employers be “family”?

Market Basket workers and customers rally on August 5, 2014. (Photo: Tim Carter/flickr/cc)

What was so unusual about the recent battle at the New England supermarket chain Market Basket? Well, to begin with, workers staged a mass, sustained walkout. Also, they were neither union members nor striking in conjunction with any union campaign. Oh, and the movement received widespread community support, including a consumer boycott. The company had longstanding policies like relatively high wages and a profit-sharing plan, which workers believed were threatened by a change in top management. And workers were not directly demanding higher pay, improved working conditions, or anything like that—but the reinstatement of the company’s recently sacked CEO. What’s more, they got what they were demanding.

In other words, what wasn’t unusual about it?

The confrontation was sparked by the firing of CEO Arthur T. Demoulas (hereafter, ATD) in June. Other members of the chain’s founding family owned the majority of the company’s stock, controlled the board, and—led by ATD’s own cousin Arthur S. Demoulas—decided to sack ATD. According to the Boston Globe, the “branch of the family headed by Arthur S. Demoulas,” unsatisfied with $500 million in dividends in the last decade, “has reportedly sought as much as $1.5 billion.” For ATD’s supporters, the family feud came to represent the contrast between a brand of management that cared for workers and consumers and one that cared only about profit. Protesters at rallies numbered in the thousands. Workers who walked out persisted even when threatened with “permanent replacement.” Some managers were fired for organizing the initial protests. Market Basket customers joined the protests, motivated both by sympathy with the embattled workers and loyalty to a company beloved for its low prices. The combination of the workers’ walkout and consumer boycott brought what local news reports called a “near-complete shutdown of business for six weeks in July and August.” The standoff finally ended on August 28, with ATD buying out his rival relatives—with funding from a private equity firm and other lenders—and returning as CEO.

To be sure, Market Basket workers were defending employment conditions that they felt were threatened by the change in management. Workers in the United States, even union members, have been on the defensive for decades. There are examples of fight-backs here and there, but by and large workers and unions have been fighting losing battles, making concessions on wages, health plans, and so on for the privilege of keeping their jobs. So one can take the Market Basket battle—both the mobilization of workers themselves and the community support—as a heartening example that it’s possible to fight and win (even if the “win” basically entails defending past gains).

The workers at Market Basket fought without benefit of a union. That can be seen as encouraging, too, because the vast majority of workers in the United States are not union members. If non-union workers could not fight and win, under any circumstances, the prospects for a labor revival would be very bleak indeed. On the other hand, the fight was neither for a traditional union nor any alternative type of workers’ organization. So what the workers “won” does not include any institutionalization of workers’ organized power.

The focus on the reinstatement of ADT is a major matter of concern. On the one hand, workers effectively asserted that they should have a collective say in how and by whom the company was directed. Let’s not forget that, historically, stockholders and directors have jealously guarded the power to choose management personnel and make decisions they regarded as “management prerogatives.” Here, workers exercised, by collective action, a veto on the stockholders’ choice of the company’s top executive. Had a major U.S. union—even in the heyday of unionism in the 1950s and 1960s—effectively asserted a right to veto a change in top management, to fire one CEO and hire another, or any similar power, it surely would have been accused of attacking the very foundations of the capitalist system!

That’s certainly not what the Market Basket workers intended—not the overthrow of capitalism, nor even a general assertion of workers’ rightful power to choose (or discharge) company management. Would that their attitude had been so steely and impersonal. In fact, it was anything but. The Market Basket workers were apparently motivated by a deep loyalty to Arthur T. DeMoulas. The Boston Globe marveled at the “extraordinary show of support for a multimillionaire chief executive in an era when most corporate workers barely know their CEOs and would be loath to risk their jobs on behalf of top executives.” At demonstrations, workers chanted “ATD!” and “Bring him back!” That’s certainly not a good lesson for workers in general. Loyalty to this or that boss—far more often than not—fetters workers’ demands and willingness to fight. It leaves them open to appeals for sacrifices for the company, while they have no institutionalized authority over the running of the company and someone else enjoys the fruits of these sacrifices. With ATD taking on over $1 billion in debt to the private-equity firm Blackstone Group and other lenders to finance the buyout—a sharp departure from Market Basket’s longtime low-debt approach—it is a worrisome possibility that workers will be asked to sacrifice so the financiers get what they are due.

The kind of labor-relations practices that prevailed at Market Basket have a long history in the United States—though their heyday in America’s largest corporations is a fading memory. In fact, they have a name: “welfare capitalism.” Economic historian Sanford M. Jacoby writes, in his 1997 book Modern Manors: Welfare Capitalism Since the New Deal, that early 20th-century welfare capitalism started with amenities like company cafeterias and gymnasiums (sometimes along with a paternalistic intrusion into workers’ and their families’ off-the-job welfare and behavior), eventually encompassing employment benefits like pensions, health-care plans, and profit-sharing, plus higher job security and internal “career ladders.” The early forms of welfare capitalism, he notes, “initially prevailed in companies controlled by their founders. Observing that their firms had become large and impersonal, these men hoped welfare activities would reproduce the close ties that had existed when they knew each of their employees by name.”

Company motivations were certainly not purely benevolent. By offering benefits that other employers didn’t, employers were able to recruit more highly skilled workers, reduce turnover, and (at least for a time) stave off unionization. Welfare capitalism allowed employers to cast unions as unwelcome intruders into a close, family-like relationship. These practices declined greatly with the unionization of U.S. mass-production industry between the 1930s and the 1950s. The kinds of benefits welfare capitalists had offered were no longer gifts from the employer (and no longer made “benevolent” employers stand out from their brethren)—they were now things that workers had fought for and won for themselves.

The decline of unions since the 1950s, and the freefall since the 1970s, have certainly not brought a revival of welfare capitalism. Employers have taken advantage of union decline to claw back what workers and unions had once won, and have shown very little inclination to return those things as gifts. To the extent that welfare capitalism in an earlier age was meant as a firewall against unions, that factor is hardly present today. Employers have found other, less conciliatory means to prevent unionization.

Employers certainly bear some costs for practicing a cold-blooded, naked-greed style of capitalism. U.S. companies are notoriously top-heavy with managers and supervisors—deciding, basically, to extract worker effort by surveillance and threat, rather than by cultivating workers’ good will. It would be a mistake, however, to think that capitalists generally have been misguided in their ruthlessness, and that they would be better off practicing “high road” labor relations. The current era of bare-knuckle capitalism, after all, has on the whole been spectacularly successful for owners and top managers—as seen in soaring corporate profits, stratospheric CEO pay, and the growing income share of the “one percent.” They know what they’re doing.

The answer to that is not going to be found in workers’ loyalty to their employers, nor in employers’ benevolence, nor in the pining (even if sincere) for a win-win solution that benefits workers and capitalists alike.

It could start with the words, also from the annals of the American class struggle, “The working class and the employing class have nothing in common ...”

Alejandro Reuss

Alejandro Reuss is an economist and historian and a member of the Dollars & Sense collective.

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