Grocery store chain Kroger announced that it was shutting down five stores in Southern California after cities approved ordinances requiring retailers to pay a “hero pay.”
Kroger closed two stores in Long Beach on Saturday: a Ralphs and Food 4 Less in Long Beach, California. Kroger, which is the largest supermarket chain in the U.S. with nearly 2,800 stores in 35 states, stated that the city-mandated $4 “hero pay” increase was to blame for the store closings.
“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,” said a spokesperson for Kroger several weeks ago, the Epoch Times reported. “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.”
In January, the Long Beach City Council and the city’s Democratic Mayor Robert Garcia approved a “hero pay” ordinance that increased wages by $4 per hour. The COVID-19 pandemic-related pay increase included employees of pharmacies and retail stores with 300 or more employees in the southern California city.
The California Grocers Association attempted to stop the pay increase but was denied by a federal judge in February. U.S. District Judge Otis D. Wright II concluded, “CGA utterly fails to address why the ordinance is not an appropriate means for … fairly compensating grocery workers for the hazards they encounter as essential workers.”
Union leaders claimed that Kroger is punishing workers and the communities.
The closures will impact an estimated 200 workers, according to KTTV-TV. Kroger said that employees of the doomed stores were given the chance to transfer to other locations. The grocery store workers union claims that the transfers could mean long and expensive commutes.
Last month, the Los Angeles City Council approved an emergency ordinance to require grocery stores, retailers, and pharmacies with more than 300 employees nationwide, or more than 10 employees on-site, to offer employees an additional $5 per hour in hazard pay during the coronavirus pandemic.
Kroger reacted by planning to close three Los Angeles locations on May 12, citing “hero pay” as the main factor for shuttering the doors.
“The mandate will add an additional $20 million in operating costs over the next 120 days, making it financially unsustainable to continue operating the three underperforming locations,” Kroger said in a statement. “Despite our efforts to overcome the challenges we were already facing at these locations, the extra pay mandate makes it impossible to run a financially sustainable business that ensures our ability to continue serving the Los Angeles community at those three locations with reliable access to affordable, fresh groceries and other essentials.”
“We are proud of our role as a leading employer in Los Angeles and remain committed to our dedicated associates on the frontlines serving in our 65 other area locations,” the supermarket chain said.
Two Los Angeles City Council members introduced a motion to investigate Kroger for closing the three L.A. stores.
“The city has an interest in considering whether it should take legislative action to address these closures and potentially future closures of other grocery stores especially in areas of the city that are commonly known as Food Deserts,” the motion introduced by Democratic Councilmen Marqueece Harris-Dawson and Paul Koretz said.