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LA Times: Kroger says it must close two Long Beach stores due to hazard pay ordinance

BY: SUHAUNA HUSSAIN

Published in the Los Angeles Times on February 1, 2021

As cities across the state look to require hazard pay for grocery workers, California’s grocery industry is pushing back.

Kroger, which owns several supermarket chains, said Monday it would close two stores in Long Beach in response to city rules mandating an extra $4 an hour in “hero pay” for grocery workers during the COVID-19 pandemic. The stores slated for closure are a Ralphs on Los Coyotes Diagonal and a Food 4 Less store on South Street, affecting 200 workers.

“This misguided action by the Long Beach City Council oversteps the traditional bargaining process and applies to some, but not all, grocery workers in the city,” Kroger said in a statement. “The irreparable harm that will come to employees and local citizens as a direct result of the City of Long Beach’s attempt to pick winners and losers, is deeply unfortunate. We are truly saddened that our associates and customers will ultimately be the real victims of the city council’s actions.”

Neil Saunders, an analyst at GlobalData Retail, said that locations performing well should be able to absorb an extra $4 in pay for its workers, but for weak stores, a company like Kroger could easily point to hazard pay as the “final nail in the coffin.” Because the grocery industry operates on thin margins, a significant pay increase is “certainly something that’s going to erode profitability,” he said.

“Businesses resent being told what they have to pay, and that can easily lead to conflict between politicians who make these rules and the companies who have to pay,” Saunders said.

View the full article in Los Angeles Times.