Monday, Kroger announced that it will be closing two locations in Long Beach due to a recent local ordinance passed by the city that increases worker pay by $4.
On January 19th, the Long Beach City Council voted unanimously to approve the first “hero pay” pay bump for grocery store workers due to the safety and health risks they face while working during the COVID-19 pandemic. For 120 days, supermarket employees in stores that have at least 300 employees nationwide and more than 15 in Long Beach will receive an additional $4 an hour. The Council did not financially back the plan however, forcing grocery stores to pay it themselves.
“Grocery workers working during the COVID-19 emergency merit additional compensation because they are performing hazardous duty due to the significant risk of exposure to the COVID-19 virus,” the ordinance said. “They are working in these hazardous conditions now and will continue to face safety risks as the virus presents an ongoing threat for an uncertain period, potentially resulting in subsequent waves of infection.”
Long Beach’s action helped influence pay bumps and pay bump proposals across Southern California, with Montebello recently passing a similar version in their city, with Los Angeles and Pomona currently having proposals under consideration.
Mayor Robert Garcia praised the move last month, noting, “These folks that are working at these markets and these grocery stores are heroes. 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.”
However, many business owners and groups, most notably Kroger and the California Grocers Association (CGA), were up in arms over the decision. The CGA specifically noted that the ordinance violated workers rights, as it interfered with the collective bargaining process between stores and workers. And with another $4 an hour per employee, labor costs per store would go up by 28%, an unreasonable figure to the CGA.
“There’s no way grocers can absorb that big of a cost increase without an offset somewhere else, considering grocers operate with razor thin margins and many stores already operate in the red,” explained CGA President and CEO Ron Fong in a statement.
The day after the ordinance was passed, the CGA filed a lawsuit against the city.
Ralph’s, Food 4 Less close in Long Beach
The added costs to struggling stores forced Kroger to announce the closures on Monday. One Ralph’s and one Food 4 Less will now be closing on April 17th.
“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,” Kroger, the parent company of both stores, said in a statement. “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.”
The city gave a short statement to the decision on Monday, noting that it was “unfortunate for workers, shoppers and the company.” Mayor Garcia also expressed displeasure at Kroger’s decision.
“The Kroger corporation is closing two markets in Long Beach because our city is requiring temporary hero’s pay for grocery workers during this pandemic,” tweeted the Mayor on Monday. “Grocers are making record profits. We go to court this month and we will defend the workers vigorously.”
The Kroger corporation is closing two markets in Long Beach because our city is requiring temporary hero’s pay for grocery workers during this pandemic. Grocers are making record profits. We go to court this month and we will defend the workers vigorously. https://t.co/Q7H8jRp6iF
— Robert Garcia (@RobertGarcia) February 1, 2021
However, many businesses and business groups said in response that this was to be expected from an ordinance that was passed without any business or employee input. Kroger itself noted that it already had company employee assistance programs for COVID-relief in full swing before the announcement.
“This is a worst-case scenario,” explained Long Beach Area Chamber of Commerce President Jeremy Harris on Tuesday. “This is an example of government overreach and it’s ultimately employees paying the price.”
Others noted that the ordinance was the straw that broke the camels back in deciding to close stores.
“Kroger said they were struggling at these stores, grocery stores always have low margins, COVID-19 added some pressures, and the area doesn’t really scream growth,” Southern California adaptive reuse consultant Henry Grigoryan told the Globe. “Drastically raising employees pay against your will with no help from the government was the last straw. That’s what did it.”
“And a lot of other grocery chains are worried too what this will mean. It’s only temporary, but that doesn’t mean it can be renewed or made permanent. Then what? These two are the first to close because of this, but they won’t be the last, especially if Los Angeles passes it.”
While there is a lawsuit against the ordinance by the CGA, a decision in the organizations’ favor will likely not reverse Kroger’s closure decision.