I thought you might be interested in the The Last Stand for the Middle Class Is Taking Place in a Parking Lot in Massachusetts - Esquire. You can view it at, http://www.esquire.com/_mobile/blogs/news/market-basket-fight?src=email
The Last Stand for the Middle Class Is Taking Place in a Parking Lot in Massachusetts
One supermarket proved it can provide employees with a livable wage, annual bonuses, and a retirement plan. They can beat Walmart's prices. They can turn a profit, too. So why was its CEO just forced out?
By Chris Faraone
JULY 29, 2014
By Suzanne Kreiter/The Boston Globe via Getty Images
Americans have grown to accept that corporations will invariably take advantage of their low wage workers, and executives have done nothing recently to pretend like this isn't the case. When asked if his multinational beast would fight a federal hike in employee compensation, Walmart U.S. President Bill Simon told reporters in May, “We are not opposed to a minimum wage increase, unless it's directed exclusively at us.” Compassionate stuff.
It's a dangerously low bar set by the nation's largest retailer — don't expect your bosses to support an acceptable living wage for workers, let alone bonuses or a 401k, or even respect.
That's why, for those viewing from afar, the story of Market Basket — a Massachusetts company currently in the throes of a corporate overhaul — must seem completely unbelievable.
Here's the most unusual part: Protesting employees are demanding the return of their beloved CEO, ousted by a board focused solely on the bottom line. After store workers were fired for skipping shifts to rally outside Market Basket headquarters last week, their then-chief executive, Arthur T. Demoulas, said in a statement, “This is not about me. It is about the people who have proven their dedication over many years and should not have lost their jobs because of it.”
Now, after two weeks of letting produce rot and leaving shelves unstocked, the demonstrators and their growing army have won the support of everyone from disaffected shoppers to reporters all across the country.
But why does this matter to those ogling from outside New England?
Market Basket's formula proves that executives and managers and cashiers can all profit, together. Employees get the benefits of a 15 percent profit sharing plan provided by Market Basket, while the groceries the store sells are less expensive, on average, than Walmart's. As for the register: Market Basket rang in $4.6 billion in revenue last year, and is the 127th biggest privately owned company in America.
And it proves that none of this matters in the American economy if those at the top aren't getting more than enough. Executive pay is the only beast America's brand of the free market is designed to feed in 2014. CEOs made 331 times what an average worker made in 2013, and it's clear that there will be no exceptions.
The American economy no longer exists to support a thriving middle class, or to help the weakest among us attain a livable wage for an honest day's work. It is solely in existence to add to the pile of wealth for the unchecked at the top.
That's why it's gained traction in, of all places, the parking lots of a supermarket chain all throughout New England. If Arthur T. fails in his attempt to buy the company back, and the cousin who booted him sells out to a conglomerate as expected, there's a chance this grand experiment will disappear forever. It would become a bellwether for a corporate America that has created a caste for itself, where workers can only expect to be treated fairly until the rug they have made is eventually pulled out from beneath them.
If this is, in fact, the story of the beginning of the end for the American middle class, here's Part One.
Jonathan Wiggs/The Boston Globe via Getty Images
The turmoil engulfing Market Basket did not start as a rallying cry for the dying American middle class. It is, in fact, only the latest theater in a complex multigenerational battle that's a better fit for HBO than it is for an economics textbook, and it’s been dutifully outlined every step of the way from local blogs to legal publications.
The original Demoulas family grocery opened in Lowell, about thirty miles northwest of Boston, in 1917. After building their business into a small empire, the founding couple, both Greek immigrants, sold the company to their sons, George and Telemachus Demoulas, in 1954. After George passed in 1971, Telemachus took charge, thereafter earning the increasing ire of George's son, Arthur S. Demoulas.
You can hardly blame the media for its fascination. The costly and perpetual lawsuit and appeals war between Demoulas factions is said to be one of the ugliest civil spats in state history, with the opposing sides now helmed by similarly named arch enemy cousins, Arthur S. and Arthur T. Demoulas, the latter a son of Telemachus. Despite the very public airing of their soiled laundry, Market Basket business boomed. But after the state's highest court forced Arthur T.'s side to pay more than $200 million to his nemeses in 2000, the decision only led to more infighting among shareholders over the chain's seventy-one locations.
This June, the majority board allegiance shifted toward Arthur S., who axed his cousin upon assuming control of the company, therefore prompting widespread worker protests and customer boycotts. So remember: Before this was a lightning rod for workers' rights, it was simply fisticuffs at the family barbecue.
Suzanne Kreiter/The Boston Globe via Getty Images
It's important to note that neither co-star in the Market Basket drama is entirely innocent. Though the recently ousted Arthur T. is widely regarded as the hero and his cousin Arthur S. is the perceived antagonist, both have scraped the bottom of the ethical barrel in their dealings with each other. That said, the Batman Vs. Joker narrative rings demonstrably true from the perspective of the vocal majority of employees.
Arthur T. is famous in New England for his personal flair. Stories include him granting months of paid sick leave to cancer-stricken workers. Arthur S.? Notably less generous. In one instance, after Arthur T. replenished nearly $50 million in employee profit shares that bottomed out in 2008, the Arthur S. contingent cried foul.
A comparable dispute came last year when, to his cousin's consternation, Arthur S. moved to pay out $300 million in dividends to shareholders. Protesting employees fear that losing Arthur T. will lead to liquidation and, then, an erosion of Market Basket's benevolent company culture. Part of that culture, for example, is ensuring guaranteed annual raises, a high starting salary, vacation time and a profit sharing plan for employees at the supermarket.
And those protestors are probably right. As was just reported this past Friday, Arthur S. has entertained a sale to the private equity behemoth Cerberus, which already owns such major grocery store chains as Shaw's, Safeway, Star Market, Acme, Jewel-Osco, and Albertsons.
Suzanne Kreiter/The Boston Globe via Getty Images
Late last month, under mounting pressure from fast food worker advocates, the Massachusetts legislature passed a hike that will raise the Commonwealth's minimum hourly wage to $11 by 2017. It's a relative win for service employees, but in the struggle between bees and business coalitions, the public was subjected to repeated baseless claims by everyone from food industry flacks to lawmakers about the crippling potential of providing living wages.
This is even in liberal Massachusetts, so it's surprising to learn that an enterprise like Market Basket has been so successful without financially strangling its workforce. According to the so-called experts, that kind of equitable math isn't supposed to add up in America. After all, the leading food retailer nationwide is Walmart, and Walmart encourages its employees to go on food stamps to get by.
Jessica Rinaldi/The Boston Globe via Getty Images
As it turns out, the Market Basket formula does work. In a recent study of Massachusetts grocery store chains, the nonprofit Washington DC-based Center for the Study of Services found “DeMoulas Market Basket’s prices averaged about 22 percent lower than the average prices at the Shaw’s stores [they] checked and 10 to 21 percent lower than the prices at the Stop & Shop stores.” Despite paying starting full-timers $12 an hour and having many career employees on the payroll who make six figures, the survey found that Market Basket had, on average, lower prices than all of their competitors — including Walmart.
Despite such presumably tight profit margins, Market Basket pays its roughly 19,000 workers yearly bonuses that often equal up to several months worth of salary, plus invests the equivalent of 15 percent of every paycheck into a retirement plan. At the same time, the company is impressively profitable. Shareholders have pocketed in excess of $1 billion since 2000, while the business is currently the 127th biggest privately owned American company according to Forbes. In 2013, Market Basket reportedly rang in $4.6 billion in revenue.
Jessica Rinaldi/The Boston Globe via Getty Images
The worker and supporter rally outside the Market Basket headquarters in Tewksbury last Friday was the largest yet. Some waved makeshift company flags made out of plastic shopping bags. An ocean of homemade and custom-printed T-shirts reflected an unflinching dedication to Arthur T. Drum circles and brass players stoked the crowd; at one point a propeller plane flew over the parking lot with the horde's top demand spelled out in tow: “ARTIE T SAVE MARKET BASKET BUY THEM OUT.”
Inside, store shelves across the region are reportedly less than twenty-five percent stocked, while an assistant manager at one location told the Boston Globe his supermarket lost about $1.1 million in sales over this past week of demonstrations. As a result of lost revenue and news of rotting trailers full of food abandoned in the upheaval, a minority of reflexive conservative sillies have broken from the chorus of economists who suddenly have kind things to say about profit-sharing. But while they claim that Market Basket customers who shop elsewhere for too long might trade allegiances forever, the emerging cynics fail to recognize how deeply personal this whole ordeal is to those involved —employees and patrons alike.
They're not morons. Every one of them seems to understand that if Arthur S. unloads the supermarket to private equity, Market Basket as they know it will cease to exist.
Meanwhile, the controlling board members remain stuck in a rote corporate mindset. They hired JP Morgan Chase & Co. to advise them in regards to buyout offers, including one by Arthur T., of which there are rumored to be several in the $2.8 billion to $3.3 billion range. Last week, while thousands of workers were picketing in Tewksbury, the board met at the white shoe Boston law firm Ropes & Gray. Proving they've paid no attention whatsoever to the grievances or facts afoot, the Arthur S. side issued a statement to the press criticizing “the negative behavior of certain current and former associates,” and claiming, “It is now clear that it is in the interests of all members of the Market Basket community for normal business operations to resume immediately.”