"We've done everything possible to compete, but we still can't take $17-an-hour labor rates."

Who said that? A representative of Koch Foods? Prestage Farms? Lincoln Premium Poultry? Cargill?

In fact, it was the late John W. Teets, quoted in a Businessweek article in 1983. Teets was CEO of Greyhound Corp., which at the time took in 44% of its revenues from meatpacking, when he was interviewed for the article, titled "The Slaughter of Meatpacking Wages."

Also in 1983, Teets sold the Armour plants to ConAgra for $2 billion, part of a wave of meat industry deals around that time that wiped out union contracts paying $10 to $19 an hour in favor of wages that were half that. The trend, though, had begun in the '60s, with Iowa Beef Packers' refusal to sign on to what was then the master contract for the industry — one of a number of first-ever steps IBP took that led to the meat industry structure we have today.

Is the industry better off for all that?

In a macroeconomic sense, the fact that U.S. consumers spend less of their household budgets on food eaten at home (6.5% in 2014, according to ERS) than any other country on the planet is a cushy financial pad in times of uncertainty. Average citizens of the Ukraine (37.7%), Mexico (23.3%) or Pakistan (41.4%), for example, cannot as easily adjust to financial shifts. And meat routinely is the single costliest food item in the market basket, and so would be a big reason for that 6.5% data point. In that sense, meat is part of the rising tide that lifts all the boats.

But low, often non-union labor costs have not shielded meat processors from the effects of drought (beef, 2012), high feed costs (poultry, pork, 2008), trade wars (pork, 2019), historically tight labor markets overall (everybody, 2018, 2019) and crackdowns on undocumented immigrant employees (pork, 2018, poultry, 2019). The damage done to companies' balance sheets in these times certainly would have been worse if their sunken labor costs were higher, but let's take a look at how low, structurally, wages in the industry are compared to 40 years ago.

That $17-an-hour wage that was unmanageable in 1983 would be the equivalent of $43.79 an hour now. The $6.50 an hour that workers were offered at some companies, according to Businessweek, after their union contracts were broken in the early '80s would be $16.74 an hour now.

In Nebraska, new company Lincoln Premium Poultry is paying a $15 starting wage, an amount that executives promised county officials in 2017 would have "a positive economic impact" in the area. Sanderson Farms earlier this year bumped up its starting wage on the line to $15 per hour. The mean hourly wage for the meat industry nationwide, according to the Labor Dept., is just under $14 an hour. Overall, by some measures meat company workers have lost ground.

In that light, the lawsuit filed last week by three former poultry line workers against 18 chicken processors, several of their subsidiaries and two consulting firms claiming the defendants had conspired to fix and depress compensation paid to some workers since 2009, is unsurprising. I don't know if the plaintiffs will end up qualifying for the major class action status they seek, or if specific charges outlined in the 77-page initial complaint will prove true. The underlying "we've been shafted" sentiment, however, is apparent.

I haven't even touched on benefits. Health care costs that were $1,550 per capita in 1983 ($4,037 in 2019 dollars) were $10,739 per capital in 2017, according to calculations by the personal finance website The Balance. And does anybody, even government agencies, even offer a pension anymore?

Meat companies say that American-born workers won't do the jobs in the production facilities that immigrants will. They say that although they screen for illegal immigrants as best they can, they don't have the tools necessary to stop a determined undocumented job-seeker from circumventing the safeguards.

Looking at the trends in compensation in the industry over the long-term, it is conceivable we could see a wave of lawsuits around the issue of compensation in the coming years.

"The rawness of the maneuvers to extract concessions amounts to total war on the workers," said Lewie D. Anderson, director of the UFCW's Packinghouse Division, in 1983. History has shown that the meat companies prevailed.

Or have they?

The deep roots of the industry's labor woes

Join for free* to continue reading.