FOX Business Contributor Dr. Janette Nesheiwat provides insight on ‘FOX Business Tonight’
Retail chain Kroger closed two stores in California on Saturday after Long Beach City approved a coronavirus hero-approval ordinance.
Hero payment orders compensate employees in retail stores and pharmacies with 300 or more workers due to the dangers of the COVID-19 pandemic. In Long Beach, eligible employees saw an increase of $ 4 per hour in their wages.
Democratic Mayor Robert Garcia approved the ordinance in January. Other California cities have taken similar measures, with Los Angeles approving “hero pay” at $ 5 an hour in March.
Local leaders and union workers applauded the move, but the measure was not entirely supportive: the California Grocers Association immediately issued an order for the salary increase, but a federal judge denied the attempt.
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U.S. District Judge Otis D. Wright II concluded that an order would be “an extraordinary remedy” for the association’s complaints, the Long Beach Post reported.
In response, Kroger began closing stores in cities where there was a ‘hero payment’. The retail chain has announced plans to close two Long Beach locations in February, grabbing workers and union protesters.
Kroger claims the stores are “underperforming” and that employees have been given the chance to relocate to other locations, FOX Los Angeles reports.
Garcia contradicted this, referring to a report by The Brooking Institute in which he noted that Kroger had doubled its profits and “spent almost a billion dollars in 2020 to buy back its own shares”.
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The mayor has threatened to sue Kroger on the Long Beach closures, though it is not clear on what grounds he would do so.
FOX Business has reached out to Garcia’s office for comment, which is pending.
A Kroger spokesman told FOX Business in February that the Long Beach City Council’s misconduct ‘in the ordinance exceeded the’ traditional bargaining process ‘and’ only applies to some, but not all, grocery workers in the city. ‘
The company plans to close three Los Angeles locations on May 12, citing “hero pay” as the key factor in its decision.
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“The mandate will add $ 20 million in additional operating costs over the next 20 days, which will make it financially unsustainable to continue the three underperforming places,” Kroger said in a statement.
“Despite our efforts to overcome the challenges we have already faced in these places, the extra payment mandate makes it impossible to run a financially sustainable business …,” the statement said.
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Despite the controversy, the terms of ‘Hero pay’ appear to have been approved in more cities in California, while Malibu and Whittier will vote on the measures.
FOX Business’ Julia Musto contributed to this report.