The Kroger Co. announced on Monday that it is closing two of its Long Beach grocery stores in response to the city’s recently passed mandate requiring local grocers to pay employees an additional $ 4 an hour in ‘hero pay’.
The national supermarket giant is closing one of its Ralphs stores, located at 3380 N. Los Coyotes Diagonal, and a Food 4 Less store, located at 2185 E. South St. The permanent closings will occur on April 17, the company said. adding that the stores were “long struggling” locations.
“This misguided action by Long Beach City Council goes beyond the traditional negotiation process and applies to some, but not all, grocery workers in the city,” the company said in its announcement.
City law affects businesses with 300 or more national employees and more than 15 employees per store in Long Beach. It stays in effect for a minimum of 120 days.
Kroger Ralphs Division spokesman John Votava said the closures will affect nearly 200 employees between the two sites and potentially lead to layoffs.
“As always, we will do everything we can to take care of our employees,” Votava said in a text message to the Post. “We may not be able to take care of every individual and this could lead to layoffs.”
The company has four other Ralphs stores and two Food 4 Less stores that will continue to operate in the city.
In a statement following Kroger’s announcement, the city recognized the potential job losses and stated that the city’s Pacific Gateway Workforce Innovation Network would help anyone laid off with unemployment benefits and other services.
The statement did not address Kroger’s criticism of the city’s wage mandate.
Mayor Robert Garcia was a proponent of the law, saying in a Jan. 20 tweet that grocery workers “deserve this hero.” Garcia did not immediately respond for comment through his chief of staff, Diana Tang, but wrote on Twitter that grocers are making record profits.
The Kroger company is closing two markets in Long Beach as our city demands a temporary grocery hero during this pandemic. Grocers are making record profits. We are going to court this month and we will vigorously defend the workers. https://t.co/Q7H8jRp6iF
– Robert Garcia (@RobertGarcia) February 1, 2021
While it has been discussed elsewhere, Long Beach was the first city to pass a law demanding more wages for grocery workers.
The city council noted in its resolution approving the new regulation that while other companies struggled during the COVID-19 pandemic, supermarkets have seen an increase in customer numbers.
Grocery workers working during the COVID-19 emergency deserve additional compensation for performing hazardous tasks due to the significant risk of exposure to the COVID-19 virus, the regulation said. “They are now operating in these dangerous conditions and will continue to face security risks as the virus poses an ongoing threat for an uncertain period, which could result in successive waves of infection.”
During the pandemic, profits grew an average of 39% in the first half of 2020 at supermarket chains and other food retailers across the country, according to a recent survey from the Brookings Institute, a Washington, DC-based think tank.
At Kroger Co., the parent company of both Ralphs and Food 4 Less, profit for the first two quarters of 2020 was up 90%, according to the report. Kroger saw its first two quarters net profit increase to more than $ 2,031 billion, compared to $ 1,069 billion in the same period of 2019.
The report found that the average salary for a cashier across the country is $ 10 an hour. The company gave employees a nearly 10% salary increase at the start of the pandemic, which ended in May. The company also offered a $ 400 “thank you” bonus in June.
The company said in its statement that it offered additional benefits, such as paid emergency leave and a $ 15 million “Helping Hands” fund that provides financial support to employees who are in certain difficulties because of COVID-19.
Kroger said the “irreparable damage” that will come as a result of the city’s decision is “very unfortunate.”
The day after the city council unanimously approved the hero’s remuneration mandate at its January 19 meeting, the California Grocers Association filed a lawsuit against the city and asked the Los Angeles federal court to declare the ordinance invalid and unconstitutional.
In a statement on Monday, the association said Kroger’s decision to close two stores is “really unfortunate” for the community – and grocers in particular – but went on to say it is not surprising.
“An increase of $ 4 an hour represents about a 28% increase in grocery labor costs,” the association wrote. “There is no way that grocers can absorb that big cost increase without having compensation elsewhere, as grocers operate with razor-thin margins and many stores are already operating in the red.”
The Long Beach Area Chamber of Commerce opposed the mandate from the outset, President Jeremy Harris said, due to the lack of dialogue between the city and the grocers in drafting the ordinance. With the pandemic on, Harris said the potential job losses come at the worst time for employees.
“This is a worst-case scenario,” said Harris. “This is an example of government overruns and it is ultimately the employees who pay the price.”
This story has been updated with comments from the city, chamber of commerce, and grocery association.