Food For Thought

Kellogg's is in the news again and no this is not about a limited-edition holiday cereal. No, Kellogg is in the news because they have decided that replacing their 1400 striking cereal plant workers who have been on strike since October 5th of this year may be what they need to do instead of working with the Unions. This conversation has become political with the Governor of Nebraska urging Kellogg to try to make amends with the striking workers. This matter has also made its way to the President of the United States who has criticized Kellogg's decision to threaten the workers with permanent replacements.

Let's take a step back and look at how Kellogg got into this predicament. What is the strike about? The workers are upset about the loss of benefits, wages, and insurance that Kellogg claimed was unsustainable. With employees taking up to $13/hr pay cuts and losing their retirement healthcare and pension, of course there is a bit of anger toward Kellogg - especially from those who have been with the company their whole career and now have nothing to show for it. Keep in mind these employees have been told that their benefits were not sustainable for Kellogg, but during the pandemic the CEO of Kellogg reportedly took a 20% increase in compensation, as did other executives. And then Kellogg let the contract with the labor union expire in October 2021 - an act that is particularly baffling considering that since the strike began salaried employees and outside workers have been in the plants in Memphis, Tennessee; Omaha, Nebraska; Lancaster, Pennsylvania; and Battle Creek, Michigan, since this action. 

So, what has Kellogg brought to the table? A two-tiered wage system that would allow all workers with at least four years of experience to move up to the higher legacy, however the union officials said that the plan wouldn't allow other workers to move up quickly enough. Consider that a new worker would have to start off at $13/hr or less and work 80-100 hours per week for 4 years before getting some level of decent benefits, and it's no wonder the union reps declined. What about Kellogg's plan to hire new workers? It's almost laughable. Kellogg may be hard pressed to replace those that they have pushed out as there will be few people willing to work 80-100 hours a week at $13/hr with no vacation or health insurance coverage. We've written about this previously as well, but there is a nationwide issue with finding labor and many companies are struggling to hire enough workers.

Can Kellogg legally replace the workers who are on strike? The answer is yes, they can. It is in the right of the company to hire new permanent employees during a strike. It is also the right of the new permanent employees to keep their jobs when the strike is over. The striking workers will get first pick on new job openings should they apply. If they move forward, will Kellogg be able to replace all 1400 people? That is unlikely. People who pay attention to news will likely not apply in order to not be strike-breakers and/or will not want to work in an environment that caused people to walk out. We'll keep an eye on this and see what happens.