A COVID-19 “hero pay” ordinance that increased wages by $4 per hour approved by the city of Long Beach led to the closure of two California stores of retail chain Kroger on Saturday, April 17.
A spokesperson for Kroger said in February that the Long Beach City Council’s “misguided action” in passing the ordinance had overstepped “the traditional bargaining process” and “only applies to some, but not all, grocery workers in the city,” according to FOX Business.
“Despite our efforts to overcome the challenges we were already facing at these locations, the extra pay mandate makes it impossible to run a financially sustainable business…,” Kroger said in a statement.
Next May 12 might see the closing of another three Los Angeles stores of the company with “hero pay” as the leading factor.
Due to the dangers of the COVID-19 pandemic, Democratic Mayor Robert Garcia endorsed hero pay ordinances in January, which increases pay for staff in retail stores and pharmacies with 300 or more employees.
Eligible jobs in Long Beach have seen a $4 per hour pay rise.
Other California cities have followed suit, with Los Angeles accepting $5 an hour “hero pay” in March.
The move received agreement from local leaders and union workers, but the California Grocers Association brought an injunction against the pay rise immediately.
However, U.S. District Judge Otis D. Wright II denied the association’s effort, concluding that such an injunction would be “an extraordinary remedy” for the association’s complaints, according to the Long Beach Post.
Staff and union members protested when the retail chain first announced plans to close two Long Beach stores in February.
Mayor Garcia has also threatened to sue Kroger over the Long Beach closures, but his grounds for this are not clear.
In an explanation, Kroger said that their stores were “underperforming” and that their workers were given the opportunity to move to other places.
Mayor Garcia responded by citing a Brooking Institute study that said Kroger had doubled its profits and spent “nearly a billion dollars in 2020 to buy back its own stock shares.”
Regardings its plan to close the next three stores in Los Angeles on May 12, Kroger explained in a statement, “The hero pay mandate in Los Angeles mandate will add an additional $20 million in operating costs over the next 120 days, making it financially unsustainable to continue operating the three underperforming locations.”
“We are proud of our role as a leading employer in Los Angeles and remain committed to our dedicated associates on the frontlines serving in our 65 other area locations,” the retail chain added.
Last week, a motion to investigate Kroger’s decision to close several of its stores in the city was introduced by two Los Angeles City Council members—Councilmen Marqueece Harris-Dawson and Paul Koretz, both Democrats.
“The city has an interest in considering whether it should take legislative action to address these closures and potentially future closures of other grocery stores especially in areas of the city that are commonly known as Food Deserts,” the motion reads.