3 LA grocery stores run by Kroger will close after City Council OK’s ‘Hero Pay’ ordinance

Kroger Co. will close three Los Angeles stores following the City Council’s vote last week to require large grocery and pharmacy retailers to pay employees an additional $5 per hour in hazard pay amid the coronavirus pandemic.

A Food4Less at 5420 W. Sunset Blvd., and two Ralphs, one at 9616 W. Pico Blvd. and the other at 3300 W. Slauson Ave., will close on May 15, the grocery giant announced on Wednesday, March 10.

The company, based in Cincinnati, has already drawn criticism after announcing on Feb. 1 that it will close a Ralphs and a Food4Less in Long Beach following that city’s $4 hazard pay ordinance. Those stores are set to close on April 17.

Los Angeles City Council members approved their ordinance 14-1 March 3, with Councilman John Lee as the only dissenter.

All non-managerial employees will receive the $5 pay bump at grocery or drug retail stores that have 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 will remain in effect for 120 days. The average grocery store worker in Los Angeles makes $17.51 an hour, according to a report by Los Angeles’s chief legislative analyst, which cited ZipRecruiter. Kroger said Wednesday that the average L.A. Ralphs and Food4Less 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,” a Kroger spokesperson said, “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.”

Several Los Angeles City Council members cited moral reasons for extra compensation to grocery store frontline workers and criticized companies that threatened to close stores due to hero pay ordinances.

“Fair compensation is the very least that our grocery store workers deserve after all they have done for us,” Council President Nury Martinez, who introduced the original motion with Councilman Mitch O’Farrell, said during the council’s discussion of the ordinance on Feb. 24.

“Cashiers, stockers, baggers and so many more have risked their lives every day since March (2020) making minimum wage to make sure we have everything we need to stay safely at home to get through this crisis,” she said. “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.”

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

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

The California Grocers Association filed federal lawsuits against Long Beach, West Hollywood and Montebello, seeking to declare hazard pay mandated by those cities as invalid and unconstitutional, arguing 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’s chief legislative analyst determined that the potential economic consequences of the ordinance include temporary increases of labor costs as a percentage of the company’s sales; 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.

The legislative analyst also determined, however, that the higher wages could 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.

Leave comment

Your email address will not be published. Required fields are marked with *.