Why Is Kroger Closing Stores Instead of Paying Hazard Wages for Its Employees?

The grocery store chain has shuttered several stores when local municipalities demanded that workers get extra pay during COVID.
February 19, 2021, 4:36pm
Supermarket workers hold placards in protest in front of a Food 4 Less supermarket in Long Beach, California on February 3, 2021, after a decision by owner Kroger to close two supermarkets rather than pay workers an additional $4.00 in "hazard pay" for th
Supermarket workers hold placards in protest in front of a Food 4 Less supermarket in Long Beach, California on February 3, 2021, after a decision by owner Kroger to close two supermarkets rather than pay workers an additional $4.00 in "hazard pay" for their continued work during the coronavirus pandemic. (Photo by FREDERIC J. BROWN/AFP via Getty Images)

Grocery store employees have been some of the most at-risk essential workers during the COVID-19 pandemic, so some local governments have decided they deserve a temporary raise. 

The only problem is that grocery stores are fighting those pay increases tooth and nail, suing cities to stop those laws from being enforced, or in the case of the country’s largest grocery chain, shutting down stores entirely.

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Kroger announced the closure of two Quality Food Centers (QFC) stores in Seattle this week, effective April 24. Though the company said in a statement to VICE News that the stores were “long struggling” and “underperforming,” it took the opportunity to blame city legislation passed last month mandating an extra $4 per hour in hazard pay for grocery workers through the end of the pandemic. 

“Unfortunately, Seattle City Council didn’t consider that grocery stores, even in a pandemic, operate on razor-thin profit margins in a very competitive landscape,” QFC wrote. “When you factor in the increased costs of operating during COVID-19, coupled with consistent financial losses at these two locations and this new extra pay mandate, it becomes impossible to operate a financially sustainable business.”

This is the second time Kroger has closed stores and cited hazard pay, or “hero pay” ordinances mandating wage increases for workers. In January, it announced the closure of two Food 4 Less and Ralph’s locations in Long Beach, California. In that case, Kroger said the stores were “long-struggling” but blamed the city council’s “misguided action” to institute hazard pay for workers. 

"After all the hard work I've done to feed the needy families and everything and risk my life and my family's lives at home and they don't want to pay $4 extra an hour for four little months," Robert Gonzalez, a worker at the Food 4 Less, told ABC7 earlier this month. “And then it’s over.”

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"What is the reason for this? You're going to hurt the elderly, the homeless people. We give donations every week to the homeless and needy families and they want to take that away."


What is hero pay and what happened at Kroger? 

The concept behind hero and hazard pay is simple: grocery workers have long been underpaid, and during the pandemic, their work is necessary to keep society functioning. But they are at a high risk of exposure, so they deserve a raise.

In the beginning of the pandemic, Kroger and other companies, including Amazon, implemented temporary hazard-pay increases; at Kroger, the increase was an extra $2 per hour, which, an anonymous employee wrote for VICE last year, still made him feel “disposable.” (The company also accidentally overpaid some workers and initially asked them to return the extra money, before backing down after a public outcry.) 

But last May, as the pandemic raged on, Kroger said it would end the temporary raise

QFC, the grocery chain owned by Kroger, claims in a “fact sheet” it shared with VICE News that it only makes $2 in profit for every $100 in sales, after the costs of goods, labor, and other expenses. It said the $4 per hour increase passed in January would all but eliminate the stores’ profits. 

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The company has invested more than $1.5 billion since the pandemic began to “reward our employees and keep our stores safe and will continue to do so,” a spokesperson told VICE News. Referencing the store closures in Seattle and Long Beach, they continued that the “decision to close any store is never taken lightly and is made on a case-by-case basis based on the financial soundness of each individual store.” 

But parent company Kroger appears to be doing just fine—better than fine, even. Kroger’s profits shot up 90% during the first two quarters of 2020, according to the centrist Brookings Institution think tank, and the company announced a stock buyback initiative totaling up to $1 billion in September.

“This $4 an hour thing that passed really set it off — to me it's retaliation,” Jeff Alexander, 65, a meat-wrapper at one of the soon-to-be-shuttered QFC locations, told the Washington Post. “They talk about, ‘well, we appreciate your hard work,’ but when it is time to talk about money it’s a whole different story.”

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Why did local governments step in? 

After companies like Kroger ended voluntary hazard pay raises, some local governments have stepped in to force companies to pay their essential workers more. In addition to Seattle and Long Beach, Oakland and San Jose are some of the larger cities to back similar measures. 

Earlier this month, the Los Angeles City Council unanimously backed a move to draw up an emergency ordinance requiring an extra $5 an hour in hero pay, which would make it the largest city in the country with mandatory hazard pay for grocery workers. 

“Requiring hazard pay fairly compensates grocery workers for putting themselves at risk, and also risking their family’s health and the financial burdens they may face should they contract COVID,” Seattle City Councilmember Teresa Mosqueda, who spearheaded the hazard pay effort in Seattle, said last month.

What About Other Grocery Store Chains? 

In contrast to Kroger, other grocery stores have embraced hazard pay for their workers.

Trader Joe’s—which has taken its own share of criticism over worker pay and safety during the pandemic— announced earlier this month that it would implement a nationwide temporary hazard pay increase instead of a planned mid-year raise for employees. 

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PCC, a Seattle-based grocery co-op, announced after the ordinance passed in Seattle that it would implement the hazard pay for all 1,500 of its workers across 15 locations, not just its eight stores in Seattle. 

But Kroger isn’t the only grocery store fighting hazard pay ordinances. The California Grocers Association, an industry trade group that says it represents more than 300 retailers totaling 6,000 stores, has sued several California cities, including Oakland and Long Beach, in an attempt to stop the ordinances from being enforced. 

As the largest grocery chain in the country (including its subsidiaries), Kroger has come under fierce criticism for choosing to close stores and lay off workers rather than comply with the new ordinances. Mosqueda said in a tweet Tuesday that she was “beyond disappointed” in Kroger’s closures, calling them “harmful to public health and retaliatory.”

The country’s top union representing grocery workers, the United Food and Commercial Workers International, blasted Kroger in a statement following the announcement of its Seattle closures.

“Threatening frontline workers with ruthless job cuts and endangering the community’s access to food in the middle of a public health crisis is inexcusable and will only serve to strengthen this movement to provide hazard pay for frontline workers,” UFCW International President Marc Perrone said in a statement. 

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Where is Congress?

Hazard pay focuses on local governments and individual stores because the federal government appears to have given up on wage issues altogether.  

Last April, Senate Democrats released a plan to pay frontline workers $13 per hour, including first responders and grocery workers.  

But such a pay increase has so far not been included in any of the COVID relief legislation that has been signed into law. Democrats are instead fighting over a uniform minimum wage increase to $15 per hour to be phased in over five years. But even the prospects of that happening aren’t good in the short-term.

President Joe Biden reportedly told governors last week that the next COVID relief bill was unlikely to include a $15 per hour minimum wage. If the $15 per hour minimum wage isn’t included in the COVID relief bill, it would likely need a 60-vote filibuster-proof majority to pass.

That means the support of 10 GOP senators. In other words, virtually impossible.