Workers Say Kmart Short-Changing Them

By MIKE CLARY

March 31, 1996 12 AM PT

SPECIAL TO THE TIMES

GREENSBORO, N.C. — When Kmart Corp. was scouting for a location to build a regional distribution center, the company found a site on this city’s East Side big enough for a warehouse that could contain 35 football fields, and a ready source of labor in the adjacent community. Perfect.

To sweeten the deal, city, county and state officials also chipped in about $1 million worth of incentives, including sewer lines and a highway interchange.

But four years after the distribution center opened, Kmart is embroiled in an ugly fight here over the fact it is paying its employees up to $5 an hour less than it is paying at its 12 other distribution centers nationwide. The workers say it is no coincidence that their center is the only one that is unionized and that a majority of the employees here are black.

The union has organized a boycott of Kmart that has spread beyond Greensboro, and black churches in town have united behind the union.

While conceding that pay scales in Greensboro are lower than at other distribution centers, Kmart officials say the $9-an-hour top wage is in line with what other local employers pay for similar work. The company also accuses the Union of Needletrades, Industrial and Textile Employees (UNITE), which represents most of the 550 workers, of failing to bargain in good faith and inflaming the dispute with charges of racism.

“That is their way of playing the race card. It’s a lie,” said Peter Palmer, a Kmart vice president for labor relations at the company’s Troy, Mich., headquarters.

But in an era when downsizing has led to widespread anxiety over job security, a local union’s fight with a retail Goliath has struck a chord here. “I think we have to resist this trend where big business profits go up while people get pushed down,” said the Rev. William Wright, 48, president of the Pulpit Forum, a group that represents about 80 Greensboro churches, most of them black.

UNITE executive vice president Bruce Raynor, chief negotiator in the Greensboro talks, said Kmart was trying to cash in on cheap labor in a region where workers rarely organize. “They thought they could get away with it because they were minority workers and it was Greensboro,” he said.

The company’s strategic mistake was that it “has allowed the dispute to evolve into a national battle,” he said.

With contract talks mired, UNITE has launched a boycott of Kmart stores and staged a series of demonstrations that have sparked a revival of civil rights activism in Greensboro, where in 1960 four black college students staged a historic sit-in at a segregated Woolworth’s lunch counter. Members of the National Assn. for the Advancement of Colored People, local clergy, college students, blue-collar workers, state legislators and an aide to Gov. Jim Hunt have all been arrested for civil disobedience at four recent Kmart store protests.

Last weekend, UNITE organized protests in several cities, including Atlanta; Houston; Memphis, Tenn.; Chicago; Cleveland, and Norfolk, Va. In Atlanta, police arrested 41 protesters, including Wright.

Although talks between Kmart and the union are scheduled to resume this week, neither side seems willing to compromise. And the protests continue.

Eighteen people, including Wright and Raynor, were arrested Saturday for trespassing in front of a Kmart store after a march and rally in downtown Greensboro, which drew 300 participants.

“The boycott was the only way we could get their attention,” said Deborah Compton-Holt, 44, one of five Kmart workers who have filed suit against the company, alleging they were passed over for promotion because of race. “I don’t like not being able to shop there, to get my 10% discount. I want my stock to go up. But if they are not paying me what I should get, then we have to deal with them through the god they believe in--the god of greenbacks.”

According to Kmart, wages in Greensboro have risen, from an entry-level hourly rate of $5.75 when the distribution center opened in April 1992 to $7.25 today. During that same period, however, the top wage paid to warehouse workers, with at least three years of experience, has risen only 50 cents, to $9.

“Generally speaking,” said Kmart in a statement, “the company sets its initial wage scales based upon the local labor market. Wage increases are made taking into consideration the company’s profitability, increases in the cost-of-living index and competition for labor in the area of the operation.”

Kmart executives also dismiss the charges of racism. Kmart says 42.5% of its work force at its Newnan, Ga., distribution center is black, as is 55.8% of the work force in Ontario, Calif. “Both distribution centers are among the highest paid in the Kmart distribution center system,” the company stated.

The union contends that the $14-an-hour top wage at the Georgia facility, in an area with a cost-of-living index lower than Greensboro’s, is evidence that Kmart’s rates here are unfair. Kmart responds that “the Newnan distribution center’s wages are the result of operating for over 28 years.” But then why are wages at Kmart’s new Colorado facility higher than the older Greensboro center? Raynor asks.

Workers voted in the union by a 2-to-1 margin in September 1993. After two years of talks, the union still has no collective bargaining agreement with Kmart, but the workers remain on the job. On March 1, the union accepted a 50-cent hourly increase for all distribution center workers but vowed to continue battling for parity with other centers by promoting further boycotts.

Protests began in the spring of 1994 when 60 union members and supporters ran out onto the Forest Oaks Country Club to disrupt the Kmart-sponsored Greater Greensboro Open. The company has since pulled out of the $1.25-million tournament.

Last fall, using the historic, now-abandoned Woolworth’s store as a backdrop, the union announced the boycott and staged the first in a series of demonstrations at Kmart stores. The movement has steadily gained support through the Pulpit Forum and from several of the college campuses in the area, particularly Guilford College, a private, Quaker-affiliated school with a history of social activism.

The local NAACP has also picked up the union’s banner, last month returning to Kmart a $10,000 donation they had solicited for a crime-prevention program. President Harold Cotton explained that he feared accepting the donation might be interpreted as an attempt to buy influence with the civil rights organization when it was allied with the workers.

Kmart spokeswoman Maria Seyrig said that although demonstrations at various stores “have been disruptive to the stores, customers, and associates,” there is no evidence that sales have been affected.

But some Greensboro business leaders fear that if the boycott drags on, and the city becomes known as a hotbed of union activism, other potential employers will be scared away from this city of 190,000. Chamber of Commerce President Peter Reichard defends Kmart’s wage and benefits package and asserts that “the race card was injected by outside groups.” Reichard faults Kmart “for not doing a good job of telling its story.”

Indeed, as Reichard suggests, Kmart executives may have been preoccupied in recent months with survival. The nation’s second-largest retailer has been battered by two straight years of declining earnings and recently a shareholders group that includes both UNITE and the International Brotherhood of Teamsters said the company’s long-term prospects were so poor that Kmart should be sold or merged with another firm.

In the first two months of this year, however, earnings are up, and Kmart says the company’s financial woes are history.

Times researcher Anna M. Virtue in Miami contributed to this story.