Kroger Co. announced the closure of two stores in Long Beach due to the “hero pay raise order” passed by the City of Long Beach. A Food 4 Less employee pushes a shopping cart past supermarket employees gathered in front of the supermarket to protest on Feb. 3, 2021, in Long Beach. (FREDERIC J. BROWN/AFP via Getty Images)
A wage increase is causing conflict and confusion between the cities of Los Angeles and Long Beach. April 17 marked the permanent closure of two Long Beach supermarkets of the Kroger Co. Three of Kroger’s supermarkets in Los Angeles will also close in May.
Grocery workers have organized protests against the closures, and unions have criticized the closures; L.A. City Council members have filed motions to investigate the reasons for the closures. The grocers’ union, which acted earlier, took the city of Long Beach to court over the wage increase order.
The Long Beach City Council first passed a 120-day “hero pay raise order” on Feb. 2, mandating that local hypermarkets (with 300 or more employees nationwide and 10 or more locally) give their employees a $4 per hour pay increase, citing the high risk these employees took during the epidemic, during which Large retailers also saw a significant increase in profits.
Going into 2021, the minimum wage in California has risen to $14 an hour for any business with 26 employees or more; employees of businesses with fewer than 25 employees have seen their hourly wages rise to $13. The average hourly wage for grocery stores in Los Angeles is $17.51 per hour, according to a report by the city’s chief legislative analyst. The average hourly wage for employees at its Ralph’s and Food4Less stores has reached $18, Kroger said on March 10.
Grocers Association Launches Lawsuit
The first to act was the California Grocers Association (CGA). After the first reading of the city of Long Beach’s wage increase order passed, the CGA launched a lawsuit, suing the order for interfering with the collective bargaining process between grocery stores and employee unions.
Association officials said the $4 per hour wage increase would mean a 28 percent increase in employee costs. Considering the meager profits of grocery stores and the fact that many stores are already in the red, they cannot afford to absorb such a high cost increase. In addition, firefighters, police officers, paramedics, and transportation, health, and restaurant employees are all essential high-risk service workers, but the City of Long Beach’s order singles out grocers for additional wage increases for their employees, so the CGA considers the order unconstitutional.
In fact, the CGA has initiated lawsuits against several California cities that have passed wage increase orders. In its lawsuit against San Jose, the CGA also cited the results of a recent study: a $5 per hour raise for grocery store employees would increase an average family of four’s grocery expenses by $400 per year (due to grocery price increases resulting from the raise); in addition, grocers could potentially be forced to reduce operating costs, potentially cutting hours by 22%, which would hurt workers.
The judge’s response
A federal district judge in late February denied the CGA’s request to suspend the Long Beach wage increase order. In his ruling, the judge said the CGA failed to provide sufficient evidence that the wage increase order would impose a high burden. The ruling will have a significant impact on CGA’s other lawsuits.
However, the Long Beach Area Chamber of Commerce has already indicated that it supports the CGA’s appeal to the Ninth Circuit Court of Appeals.
Some grocery stores choose to close
Kroger announced on Feb. 1 that it will close a Ralphs and a Food 4 Less supermarket in Long Beach on April 17. The company said in a statement that it was a difficult decision, but that the city of Long Beach’s mandatory wage increase order forced them to decide to permanently close two supermarkets that had long struggled to operate.
On March 10, Kroger announced that it would close three more Los Angeles-based supermarkets (including two Ralph’s stores and a Food 4 Less) on May 15. The Los Angeles City Council voted on March 3 to approve a heroic wage increase order that calls for a $5 per hour raise for employees at large grocery and drug stores.
Kroger said in a statement that Ralph’s and Food 4 Less have 68 locations in the city of Los Angeles and that the L.A. city’s wage increase order will result in an additional $20 million in operating costs for the company over the next 120 days. As a result, they are no longer able to continue operations at the three underperforming locations.
Employees and Unions Protest Closures
The store closures have sparked several protests by union members, residents, community activists and employees.
Union officials say that Kroger’s decision to close the stores is simply punishing the workers at these stores as well as the surrounding communities. They estimate the closures will affect 200 workers.
However, Kroger responded that the closures were of underperforming locations and that those employees could still transfer to other stores.
L.A. City Council Members Demand Investigation into Reasons for Store Closures
On April 7, two Los Angeles City Council members, Marqueece Harris-Dawson and Paul Koretz, filed a motion asking the city to investigate the reasons for the closure of the three Kroger stores.
The motion calls for: the City Council to use its authority to examine witnesses and compel their attendance and production of evidence; direct the City’s Chief Legislative Analyst as well as the Clerk, with the assistance of the City Attorney, to formally request the appearance of executives from these stores within 30 days and issue subpoenas if they refuse; and develop future legislative policies based on the results of the hearings to protect workers and essential services in neglected communities and to develop strategies to address the problem of “food deserts” (i.e., communities without supermarkets that make it difficult for residents to buy fresh food).
Today, the conflict caused by the wage increase order is still festering in multiple locations. In addition to the city of Long Beach, the California Grocers Association has taken several California cities to court, including Montebello, West Hollywood, Oakland, Irvine, Daly City, and San Jose, all of which are demanding a $3-$5 per hour wage increase for grocery store employees. In addition, the National Grocers Association has also launched lawsuits against wage increase orders in New York, Seattle and other places.
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