Costco, Starbucks and Whole Foods break ranks on unions

Complex union legislation is up for debate in front of Congress that would give unions a remarkably good deal to set up shop in companies where there is no organized labor. The two main features of the legislations are this: workers could "vote" for unionization via cards, and not full-blown elections; and binding arbitration would settle disputes between labor and management over the set up of a initial contract with companies that have not had unions in the past -- arbitration that would always begin after 120 days if the two partied have not agree on a contract.

Business interests argue that all unions would fight for unreasonable demands for four months, and the arbitrators would set up provisions in labor's favor and against the interests of employers. Bingo: organized labor has a contract at the end of 120 days, no matter what.

Costco (NASDAQ: COST), Starbucks (NASDAQ: SBUX), and Whole Foods (NASDAQ: WFMI) have broken ranks with most large companies in what the three firms say will be a compromise with organized labor. While they will not support binding arbitration, it appears that they would like to appear "friendly" to the unions that may attempt to organized their workers. According to The Wall Street Journal, the three companies have come up with "rules" for dealing with unions. The paper writes that "the six principles included setting a fixed time period in which to hold union elections to prevent delays, providing union organizers greater access to workers at neutral locations, and stricter penalties for labor law violations."

It is not entirely clear why the three firms would take a softer stance than the rest of the business community, but it is not too difficult to hazard a guess. Starbucks, Costco, and Whole Foods have always been considered among the best large companies in terms of taking good care of their employees; it's part of the image that their PR firms have been promoting and, likely, part of the reason that many customers choose to shop with the three companies.

The three companies may find out soon that having unions can be costly, and costly labor erodes margins.

Douglas A. McIntyre is an editor at 24/7 Wall St.


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