Kroger closes 2 Southern California stores rather than give extra $4 'Hero Pay’
The Long Beach ordinance will remain in place for at least 120 days
Retailer Kroger announced on Monday that it would permanently close two of its Southern California stores due to what it says is a direct result of a city mandate that requires an extra $4 an hour of "hero pay" for essential workers.
A spokesperson for the grocery company told FOX Business on Tuesday that Long Beach's City Council's "misguided action" in passing an ordinance mandating Extra Pay had overstepped "the traditional bargaining process" and "only applies to some, but not all, grocery workers in the city."
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"The irreparable harm that will come to employees and local citizens is a direct result of the City of Long Beach’s attempt to pick winners and losers, is deeply unfortunate," they said. "We are truly saddened that our associates and customers will ultimately be the real victims of the city council’s actions."
The Ralphs store at 3380 N. Los Coyotes Diagonal and Food 4 Less store located at 2185 E. South Street are both set to shut down on April 17, 2021.
The Long Beach City Council -- backed by Democratic Mayor Robert Garcia -- gave approval to the "hero pay" law in January.
The ordinance applies to companies with 300 or more workers nationally and more than 15 employees in each story and will remain in place for at least 120 days, according to the Long Beach Post News.
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Garcia's office pointed FOX Business to his Twitter account but noted they would be in litigation over the matter.
Garcia wrote on Monday that that grocers "are making record profits" and that they would go to court in February to "defend the workers vigorously."
Replying to his tweet, Garcia screenshotted a report from The Brookings Institution -- a Washington, D.C., public policy nonprofit -- that noted Kroger had ended its initial $2 "hero pay" in May despite "doubling its profits and spending nearly a billion dollars in 2020 to buy back its own stock shares."
"When large corporations make record profits and double their earnings -- they need to share that success with those providing the labor. Period," the mayor tweeted on Tuesday, later commending the Los Angeles City Council for supporting $5 "hero pay" for both grocery and drugstore workers.
The devastating economic impact of the COVID-19 pandemic has ravaged key industries over the past few months, forcing airlines to cancel flights, hotels to stop taking reservations and restaurants to move business outdoors.
Millions of Americans lost their jobs -- some indefinitely -- or were furloughed, with unemployment numbers having surged to 14.7% in April.
Kroger's spokesperson told FOX Business that the company is proud of its dedicated employees serving customers on the front lines. Since March, they said that their companies had invested $1.3 billion in order to properly implement "dozens of safety measures" and "reward associates."
"We began implementing these safety measures early in the pandemic and since then we have only strengthened our vigilance and resolve," they said.
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"We also continue to support our associates through benefits like paid emergency leave and our organization’s $15 million Helping Hands fund that provides financial support to associates experiencing certain hardships due to COVID-19," the spokesperson said.
"This extra pay is in addition to the total compensation package Ralphs and Food 4 Less has long offered to our associates, which includes competitive wages, strong health care coverage, and reliable pension benefit."
"Despite these challenging circumstances, as Southern California’s grocer, we remain committed to serving our communities and we are thankful for our dedicated associates who serve our customers every day," they said.
Kroger was not the only company against the Long Beach City Council's actions.
The Golden State's Grocers Association filed a lawsuit that claims, like Kroger, the decision interferes with the collective bargaining process between grocery stores and workers unions and that it would be detrimental for both grocers and consumers in the long run.
“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,” the association’s CEO, Ron Fong, said in a Tuesday statement to SFGate.
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Kroger's spokesperson also pointed FOX Business to a recent Op-Ed from The Los Angeles Times Editorial Board that hit local politicians for excluding certain front-line employees, some "essential" big-box stores, and even their own staff from their hazard pay proposals, and said there had been no "meaningful attempt to consider the impacts of requiring employers to boost pay by as much as 30%."
The solution to help front-line workers, they argued, would be to require and enforce safer workplace conditions.