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The Kroger Co. announced 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 as “heroes.”
The national grocery 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. Permanent closures will take place on April 17, in the company said, adding that the stores were “long struggling” locations.
“This misguided action by Long Beach City Council goes beyond the traditional bargaining process and applies to some, but not all, workers in the city’s grocery store,” the company said in its announcement.
City law applies to businesses with 300 or more workers nationwide and more than 15 employees per store in Long Beach. It will remain in effect for at least 120 days.
Kroger Ralphs division spokesman John Votava said the closures would affect nearly 200 employees between the two sites and could lead to layoffs.
“As always, we will do everything possible to take care of our associates,” Votava said in a text to the Post. “We may not be able to take care of every person and that can 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 acknowledged the potential job losses, saying the city’s Pacific Gateway Workforce Innovation Network would help anyone made redundant with unemployment benefits and other services.
The statement did not respond to Kroger’s criticism of the city’s pay mandate.
Mayor Robert Garcia was a supporter of the law, saying in a Jan. 20 tweet that grocery store workers “deserve this heroic pay.” Garcia did not immediately respond to comments from his chief of staff, Diana Tang, but wrote on Twitter that grocers were making record profits.
The Kroger company is closing two markets in Long Beach because our city is demanding temporary pay for grocery store workers 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
Although it has been discussed elsewhere, Long Beach was the first city to pass a law demanding higher wages for workers in the grocery store.
The city council noted in its resolution adopting the new ordinance that while other businesses struggled during the COVID-19 pandemic, supermarkets saw an increase in the number of customers.
“Grocery store workers working during the COVID-19 emergency deserve additional compensation because they perform hazardous tasks due to the significant risk of exposure to the COVID-19 virus,” according to the order. “They are currently working under these dangerous conditions and will continue to face security risks as the virus presents an ongoing threat for an uncertain period, which could lead to subsequent waves of infection.”
Throughout the pandemic, profits soared an average of 39% in the first half of 2020 at supermarket chains and other food retailers nationwide, according to a recent study from the Brookings Institute, a Washington, DC-based think tank.
At Kroger Co., the parent company of Ralphs and Food 4 Less, profits for the first two quarters of 2020 increased 90%, according to the report. Kroger saw its net income for the first two quarters climb to more than $ 2.031 billion from $ 1.069 billion for the same period of 2019.
The report found that the average pay for a cashier is $ 10 an hour nationwide. The company gave employees a nearly 10% pay rise at the start of the pandemic, which expired in May. The company also offered a $ 400 “thank you” bonus in June.
The company said in its statement that it is providing additional benefits such as paid emergency time off and a $ 15 million “help fund” that provides financial support to associates facing certain hardships due to COVID- 19.
Kroger said the “irreparable harm” that would result from the city’s decision is “deeply unfortunate.”
The day after city council unanimously approved the heroes’ pay mandate at its Jan.19 meeting, the California Grocers Association filed a lawsuit against the city, asking Los Angeles federal court to declare the invalid and unconstitutional order.
In a statement released on Monday, the association said Kroger’s decision to close two stores was “really unfortunate” for the community – and grocers in particular – but went on to say it was not surprising.
“An increase of $ 4 per hour represents an increase of about 28% in labor costs for grocers,” the association wrote. “There is no way for grocers to absorb such a cost increase without compensation elsewhere, given that grocers operate on extremely slim margins and many stores are already operating in the red.”
The Long Beach Area Chamber of Commerce opposed the mandate early on, President Jeremy Harris said, due to the lack of dialogue between the city and grocers in developing the ordinance. With the pandemic underway, Harris said the potential job losses come at the worst times for employees.
“It’s the worst case scenario,” Harris said. “This is an example of government overtaking and ultimately it is the employees who pay the price.”
This story has been updated with comments from the city, the chamber of commerce and the grocers association.
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