A corporation has decided to close down two of its supermarkets in Southern California after a local ordinance ordered the company to pay grocery workers hazard pay for providing essential services during the Wuhan coronavirus (COVID-19) pandemic.
Kroger Co., one of America's largest retail companies, made the decision to shut down two of its stores – a Ralphs and a Food 4 Less – in Long Beach, Los Angeles County, following the passage of the city council's "hero pay" ordinance. The company announced its decision on Monday, Feb. 1. It has four other Ralphs and two Food 4 Less stores in the city that will continue to operate.
The Long Beach City Council voted unanimously during a Jan. 19 meeting to mandate a 120-day wage increase of $4 an hour for the employees of supermarkets that employ at least 15 residents of Long Beach and 300 people nationwide.
Mayor Robert Garcia, a strong proponent of the ordinance, said that many grocery stores like the ones owned by Kroger Co. were not paying their employees adequately enough to justify them working during a pandemic. Some supermarkets gave their employees hazard pay for the first few months of the outbreak but later phased it out.
"These folks that are working at these markets and these grocery stores are heroes," said Garcia. "This is nothing new. They have received this type of additional pay in the past and if they deserved it in the past, they deserve it today."
"Grocers are making record profits," claimed Garcia on his Twitter account. "We go to court this month and we will defend the workers vigorously."
The Long Beach City Council is not the only local government in California to mandate a wage increase for essential workers during the pandemic.
The Oakland City Council on Tuesday approved a $5 hourly hazard pay increase. The Santa Clara Board of Supervisors voted to draft a $5-per-hour hazard pay measure for essential workers including grocery store employees, which will be up for a vote as early as next week. The city council of Montebello, a suburb of Los Angeles, voted to require large drug stores and grocery stores to provide workers with an extra $4 per hour for the next 180 days.
Several other cities are considering similar proposals, including Pomona in Los Angeles County and San Jose in the San Francisco Bay Area. (Related: California restaurants to remain open despite lockdown orders as owners try to survive government tyranny.)
Kroger Co. says closures due to financial struggle of the two stores
Kroger Co. immediately released a statement after it heard of the Long Beach City Council's recent vote. Their statement read:
"As a result of the City of Long Beach's decision to pass an ordinance mandating Extra Pay for grocery workers, we have made the difficult decision to permanently close long-struggling store locations in Long Beach. 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."
When asked if Kroger would shut down more stores in other cities that order hazard pay for grocery workers, Ralphs Director for Corporate Affairs John Votava said in an email: "These misguided mandates could put any struggling store in jeopardy of closure."
"Kroger's decision is unfortunate for workers, shoppers and the company," said the city in a statement released in response. It mentioned how the two stores were struggling for some time.
Long Beach Vice Mayor and City Council member Rex Richardson said he doesn't entirely believe Kroger when it said that the temporary wage bump would make its two stores unprofitable. But he did concede that the Food 4 Less that will be shut down, which is in his district, has struggled in recent years due to five big-box grocery stores opening nearby.
Richardson said in a phone interview with local news outlet Long Beach Press-Telegram that his job now is to see to his constituents who will be affected.
"As a council member, I don't have a lot of time to sit back and pontificate about whether some corporate executive who made an extra billion dollars last year is upset about a city council decision," he said. "I'm not shaken. I just think it's important that residents know that one way or the other, they're going to be okay. We're going to be okay. Our community is making progress."
Richardson said he is already working to determine the city's next steps, which is why he is talking to local employment service company Pacific Gateway to provide the impacted workers with unemployment benefits and other services. He is also speaking with the city's Economic Development Department to discuss what will be done with the soon-to-be-vacated properties.
Ordinance comes as supermarkets and other essential businesses struggle to get by
There has been some resistance to the ordinance. The California Grocers Association, a trade association representing retailers in the state, filed a lawsuit against Long Beach.
According to the lawsuit, Long Beach's ordinance is unconstitutional because it interferes with the collective bargaining process between the unions representing grocery store workers and the stores themselves.
The city argued that the lawsuit is baseless and is similar to other temporary wage bumps that courts have upheld.
The association's president and CEO Ron Fong said in a statement that the $4-per-hour increase in Long Beach represents a 28 percent increase in labor costs for grocers. He argued that the cost of this drastic wage bump needed to be offset somewhere else, especially if the stores were not profiting or were operating on "razor-thin margins."
"The Long Beach City Council put politics ahead of families and jobs in the middle of a pandemic," said Fong. "This was entirely avoidable."
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