As cities across the state seek to demand risky payments for grocery workers, California’s food industry is responding.
Kroger, which owns several supermarket chains, said on Monday it would close two stores in Long Beach in response to city rules that set an extra $ 4 an hour in “hero pay” for grocery workers during the COVID pandemic. -19. The stores scheduled to close are a Ralphs on Los Coyotes Diagonal and a Food 4 Less store on South Street, affecting 200 workers.
“This erroneous action by the Long Beach City Council goes beyond the traditional negotiation process and applies to some, but not all, grocery workers in the city,” Kroger said in a statement. “The irreparable damage that will come to local officials and citizens as a direct result of the City of Long Beach’s attempt to pick winners and losers is deeply regrettable. We are really sad because our associates and customers will end up being the real victims of the actions of the city council. “
The announcement came at a time when the Los Angeles City Council plans to vote on Tuesday whether to follow a similar law that requires an increase of $ 5 an hour for workers in supermarkets.
Long Beach served as a kind of test for paying for dangerousness, as several California cities, including San Jose and Oakland, are also considering increases for frontline workers. The Santa Monica City Council voted last month to demand “hero pay” for grocery workers, and the Los Angeles County Board of Supervisors moved forward with a similar proposal.
Kroger spokeswoman Vanessa Rosales said in an e-mail that approval of hazardous payment obligations for grocery workers in other cities could lead to further store closures. Rosales said he could not share details about how the additional payment affected profit margins at the two stores, but said they were both “underperforming” even before the Long Beach decree went into effect on January 19.
The Ohio network said it spent $ 1.3 billion to reward workers and implement security measures during the pandemic.
“Kroger’s decision is unfortunate for workers, buyers and the company,” said Long Beach spokesman Kevin Lee in a statement. Lee acknowledged that the two stores had been “struggling for a long time” and said the city’s workforce would help affected employees gain access to unemployment insurance benefits, emergency health coverage, financing for retraining, development of skills and job placement.
California Grocers Assn., Which represents about 6,000 supermarkets across the state, opposed Long Beach’s efforts to raise wages, filing a lawsuit against the city in federal court last month. Last week, US District Judge Dolly M. Gee denied the commercial group’s request for a temporary restraining order to halt enforcement of the decree before a court could hear the case and scheduled a February 19 hearing on the request. the association of an injunction to suspend the law while the case is pending.
The ordinance, which will have a minimum duration of 120 days, applies to store chains with 300 or more employees nationwide and with 15 employees per store in the city, which allocate 70% or more of their business to food retailing.
Ronald Fong, president of California Grocers Assn., Argued that the move is selective, highlighting grocery workers for a pay rise even while others – including nurses, paramedics, restaurant workers and public security officers – work at the front. Fong also said the decree did not require the largest food retailers, including Target and Walmart, to pay the extra $ 4. Target confirmed that, based on its sales of groceries, the Long Beach proposal does not include its three stores in the area.
“You are essentially demanding a 30% increase, putting grocery owners in a position to make some tough decisions,” said Fong. “Each company is concerned with this.”
Fong said the association would take legal action against the city of Los Angeles and other local governments, should they enact similar rules.
Long Beach City Councilor Mary Zendejas, who sponsored the Long Beach Hazard Act, said in a statement on Monday that she was “incredibly disappointed” to learn that Kroger planned to close two Long Beach stores, mainly because the Food 4 Less store caters to low-income residents.
“It is unfair that, instead of doing the right thing, Ralphs and Food 4 Less respond with litigation and retaliation against the heroes of Long Beach,” she said in the statement.
It is “especially shocking,” said Zendejas, that Kroger is insisting that it cannot afford the Long Beach temporary risk payment decree, considering that the company’s third-quarter revenue increased by nearly $ 2 billion from 2019 to 2020.
Zendejas said she was encouraged at the start of the pandemic, when supermarkets provided workers with a hero payment. Many have already ended these programs, although the health crisis has worsened, she said.
“Grocery workers come in every day and risk their lives by being exposed to the virus,” said Zendejas in an interview last week. “Food companies are experiencing a boom in their industry, are making profits, record profits, on the shoulders of their employees and are not willing to share the profits with them.”
Neil Saunders, an analyst at GlobalData Retail, said that well-performing locations should be able to absorb an extra $ 4 in paying their employees, but for weak stores, a company like Kroger could easily point out the payment risk as ” final nail in the coffin. ” As the food industry operates at narrow margins, a significant salary increase “is certainly something that will erode profitability,” he said.
“Companies resent knowing what they should pay, and it can easily lead to conflicts between the politicians who make these rules and the companies that have to pay,” said Saunders.