Kroger Co. Announces Closure Of Three LA Grocery Stores in Response to `Hero Pay’ Ordinance

The Kroger Co. announced Wednesday it is closing three Los Angeles stores in response to “hero pay” ordinances temporarily giving an extra $5 per hour to grocery and drug store workers for the hazard of potential exposure to the coronavirus they face each time they come to work.

Many cities in Southern California, including West Hollywood, have recently approved “hero pay.”

None of the grocery stores to be closed are in West Hollywood, but Kroger may announce further closures in the future.

The stores that will be shuttered on May 15 are:  

  • Food 4 Less at 5420 W. Sunset Blvd., at Western Avenue
  • Ralphs at 9616 W. Pico Blvd., at Beverwill Drive
  • Ralphs at 3300 W. Slauson Ave., at Crenshaw Boulevard

The West Hollywood City Council unanimously approved hero pay for grocery workers at its Feb. 16 meeting. It approved hero pay for pharmacy workers with a 3-2 vote at its March 1 meeting.

Meanwhile, the Los Angeles City Council passed its hero pay ordinance for both grocery and pharmacy workers at its March 3 meeting on a 14-1 vote, with Councilman John Lee as the only dissenter.

The Cincinnati-based Kroger Co. has already drawn criticism after announcing on Feb. 1 that it will close a Ralphs and a Food 4 Less in Long Beach following that city’s $4 hazard pay ordinance. Those stores are set to close on April 17.

The $5 hazard pay is required for all non-managerial employees at grocery or drug retail stores with more than 300 employees nationwide, or more than 10 employees on-site, as well as retail stores, such as Walmart and Target, that dedicate 10% of their sales floor to groceries or drug retail.

The hazard pay is given in addition to employees’ base wages for 120 days. According to a report by Los Angeles’ chief legislative analyst, which cited ZipRecruiter, the average grocery store worker in Los Angeles earns $17.51 an hour. Kroger said Wednesday that the average Los Angeles area Ralphs and Food 4 Less employee rate is $18 an hour.

Kroger said in a statement Wednesday that the three stores it plans to close are “underperforming.”

“It’s never our desire to close a store, but when you factor in the increased costs of operating during COVID-19, consistent financial losses at these three locations, and an extra pay mandate that will cost nearly $20 million over the next 120 days, it becomes impossible to operate these three stores,” a Kroger spokesperson said.

Carlos Viramontes, board member of the Latino Food Industry Association, blamed politicians for the stores’ closures:

“Our members deliver the produce, pack the meat and drive the trucks that deliver everything from food to paper goods to the grocery stores. When a store shuts down, especially in areas serving predominantly Latinos and people of color, our members lose business and their workers suffer. The politicians who are ignoring the warnings and passing these extra pay ordinances are putting hard working employees and working families at risk.”

Ron Fong, president and CEO of the California Grocers Association, also criticized the ordinance.

“As we said weeks ago, extra pay ordinances will have negative consequences and harm customers and workers,” he said. “Three more store closures in Los Angeles County means workers there stand to lose their good- paying jobs with generous benefits. Customers lose access to a neighborhood grocery close by. It’s a lose-lose all the way around and it is the direct result of elected officials who are passing these unworkable and costly mandates.”

Meanwhile, Target, which is covered by the hero pay ordinances, is taking the opposite approach from Kroger. Target just announced it’s opening two new Los Angeles area stores on March 14:

  • Hollywood, 7021 Hollywood Blvd., near La Brea Avenue, in Hollywood Galaxy complex
  • Santa Monica, 420 Broadway, at 5th Street

When the West Hollywood City Council approved its grocery workers hero pay ordinance, they noted until the pandemic grocery work was not considered especially dangerous, but now it is a frontline danger.

“Right now in the middle of a pandemic, I can’t think of a more hazardous place to be than a grocery store,” said Councilmember Sepi Shyne.  

A similar sentiment was heard coming from Los Angeles City Council members.  

“Cashiers, stockers, baggers and so many more have risked their lives every day since March making minimum wage to make sure we have everything we need to stay safely at home to get through this crisis,” LA Council President Nury Martinez. “While these companies have seen massive profits, it has not trickled down to their employees. These companies can afford to pay the hazard pay, they just don’t want to.”

Councilman Paul Koretz said, “Supermarkets, as we all know, have made high profits, and yet some are threatening to close. It’s clearly out of spite or out of an attempt to leverage us.”

Kroger said Wednesday that grocery stores operate “on razor-thin profit margins.”

The Los Angeles County Board of Supervisors adopted an urgency ordinance on Feb. 23 to require $5 additional pay for national grocery and drug retail employers in unincorporated areas of the county.

Meanwhile, the city of Santa Monica approved hero pay for grocery and pharmacy workers at its City Council meeting on Tuesday night.

The California Grocers Association filed a federal lawsuit against West Hollywood as well as Long Beach and Montebello, seeking to declare hazard pay mandated by those cities as invalid and unconstitutional, contending that grocers will not be able to absorb the additional pay without raising prices, closing stores, reducing hours or laying off employees. A federal judge denied the association’s bid to temporarily overturn the Long Beach ordinance.

Los Angeles’ chief legislative analyst (CLA) determined that potential economic impacts of the ordinance include temporary increases of labor costs as a percentage of the company’s sales, potential higher prices for consumers, potentially delayed store openings, renovations and wage increases or promotions for employees, potential pressure on struggling stores that could lead to stores closing and reduced hours for some employees.

However, the CLA also determined that the higher wages could also benefit other city businesses, as more people would have extra money to buy additional goods. It could also help people pay down their debts and increase their savings.

“As the CLA report makes clear, this ordinance comes with trade-offs for both retailers and employees, pros and cons with anything we do, but it should be appreciated that this effort is a temporary measure that increases wages of our grocery and retail workers,” Councilman Mark Ridley-Thomas said before the measure’s first reading on Feb. 24. “I want to underscore that it is a matter of justice.”

John Grant, president of United Food and Commercial Workers Local 770, which represents 25,000 grocery and drug retail workers in Los Angeles, Ventura, Santa Barbara and San Luis Obispo counties, praised the vote.

“We applaud the Los Angeles City Council members for doing the right thing and recognize the sacrifices our members do every day to serve their communities during a prolonged global pandemic. It’s unconscionable to see how grocery corporations have doubled their profits during the pandemic — with Ralphs and Albertsons alone raking in $6.8 billion in profits — while they still refuse to compensate the front-line workers making this windfall possible,” Grant said.

John Lee, the lone dissenter on the LA City Council’s hero pay vote, said he hoped the council could come up with a different solution than what he called “a gross overreach of government into business and what they should be paying their employees.

“At the end, I don’t want to affect the people who are going to be hurt the most by this, and that is the people who live in the poorest communities of the city of Los Angeles, the people who live in my district,” he continued.

City News Service contributed information for this story

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