As cities across the state want to pay danger to grocery workers, California’s grocery industry is pushing back.
Kroger, who owns several supermarket chains, said Monday he will close two stores in Long Beach in response to city rules requiring an extra $ 4 per hour ‘hero pay’ for grocery workers during the COVID-19 pandemic. The stores that are closed are a Ralphs on Los Coyotes Diagonal and a Food 4 Less store in South Street, which affects 200 workers.
“This misconduct by the Long Beach City Council goes beyond the traditional bargaining process and applies to some, but not all, grocery workers in the city,” Kroger said in a statement. ‘The irreparable damage that workers and local citizens will cause as a result of the City of Long Beach’s effort to pick winners and losers is very unfortunate. We are really sad that our collaborators and customers will eventually be the real victims of the city council’s actions. ”
The announcement comes just as the Los Angeles City Council plans to vote Tuesday on whether to follow a similar ordinance requiring a $ 5-per-hour boost for workers in grocery stores.
Long Beach has been a kind of test case for payroll, as several cities in California, including San Jose and Oakland, are also considering boosting front-line workers. The Santa Monica City Council voted last month to demand ‘hero pay’ for grocery workers, and the Los Angeles Board of Supervisors moved forward with a similar proposal.
Kroger spokeswoman Vanessa Rosales said in an email that approving mandate payouts for grocery workers in other cities could lead to more store closures. Rosales said she could not share the details on how the profit margins at the two stores will be affected, but that both were already “underperforming” even before the Long Beach ordinance came into force on January 19th.
The Ohio chain said it had spent $ 1.3 billion to reward employees and to implement security measures throughout the pandemic.
“Kroger’s decision is unfortunate for workers, buyers and the business,” Long Beach spokesman Kevin Lee said in a statement. Lee acknowledged that the two stores were “struggling for a long time” and said the city’s workforce would help the workers concerned gain access to unemployment insurance benefits, emergency health coverage, retraining funding, skills development and job placement.
The California Grocers Assn., Which represents about 6,000 grocery stores across the state, opposed Long Beach’s efforts to raise wages and filed a lawsuit against the city last month. Last week, U.S. District Judge Dolly M. Gee denied the Commerce Group’s request for a temporary restraining order to suspend enforcement of the ordinance before a court could hear the case, and a trial for February 19 instituted on the request of the association for a provisional order. to strike the law while the case is pending.
The ordinance, which will last at least 120 days, applies to chain stores with 300 or more workers nationwide and with 15 employees per store in the city, devoting 70% or more of its business to the retail of food products.
Ronald Fong, president of the California Grocers Assn., Argued that the measure is selective, excluding grocery workers for a pay rise, even while others – including nurses, EMTs, restaurant workers and public safety officials – are working on the front line. Fong also said the ordinance did not mandate that the largest grocery stores, including Target and Walmart, pay the extra $ 4. Target confirmed that the Long Beach proposal, based on its grocery sales, does not include its three stores in the area.
“You are essentially asking for a 30% increase, and putting grocers in a position to make difficult decisions,” Fong said. “Every company is worried about this.”
Fong said the association would take legal action against the city of Los Angeles and other local governments if they set similar rules.
Long Beach councilwoman Mary Zendejas, who sponsored the Long Beach risk payments ordinance, said in a statement Monday that she was “incredibly disappointed” to learn Kroger plans to close two Long Beach stores, in particular because the Food 4 Less store serves low-income people. residents.
“It is unscrupulous that Ralphs and Food 4 Less, instead of doing the right thing, will respond with litigation and retaliation against Long Beach heroes,” she said in the statement.
This is “particularly shocking”, Zendejas said, adding that Kroger insisted he could not afford the Long Beach ordinance on the temporary hazard payment, as the company’s revenue rose nearly $ 2 billion from 2019 to 2020 in the third quarter.
Zendejas said she was encouraged with the onset of the pandemic when grocery stores paid heroes to employees. Many have since discontinued these programs, even as the health crisis has worsened, she said.
“Grocery workers go in every day and are at risk of being exposed to the virus,” Zendejas said in an interview last week. “Grocery businesses are experiencing a boom in their industry, they are making profits, drawing profits on the shoulders of their employees, and they are not willing to share the profits with them.”
Neil Saunders, an analyst at GlobalData Retail, said that well-performing places should be able to pay an extra $ 4 for its workers, but for poor stores, a company like Kroger could easily point to risk-taking if the ‘last nail in the coffin. “Because the grocery store industry works by a thin margin, a significant salary increase is ‘definitely something that will undermine profitability,'” he said.
Saunders said: “Businesses do not like what they have to pay, and this can easily lead to conflict between politicians who make these rules and the companies who have to pay.”