Los Angeles County leaders approved a $5 per hour hazard-pay boost for frontline workers at grocery markets and drug stores in unincorporated areas, despite pushback from employers over similar actions in surrounding cities, threats of a lawsuit from grocer interests and anticipated higher prices for consumers.
The California Grocers Association filed lawsuits against the cities of West Hollywood, Montebello and Long Beach over similar measures and the Kroger grocery chain announced it would close two underperforming Long Beach stores because of the additional cost of paying the wage bump.
“These are our frontline workers who have continued to report to work for more than a year and they serve our communities despite the ongoing hazards of COVID-19 over the past year,” said Supervisor Hilda Solis, who along with Supervisor Holly Mitchell introduced the motion to the board.
But the salary bump — known as “hero pay” — met with resistance from Supervisor Kathryn Barger, who said she was concerned that the measure could put people out of work and prompt grocery stores to pass on the cost to consumers — but doesn’t address other kinds of “essential” workers.
“My concern is of one of the unintended consequences of this,” said Barger, who agreed with the spirit of the motion, that grocery workers and drug retail workers are “heroes” who have risked infection in the COVID-19-era marketplace.
“Creating a more unfriendly business climate may hurt our region at a time when we need to support economic recovery from the COVID-19 pandemic,” Barger said in a statement, adding that she had further concerns about whether store shutdowns would create food deserts in certain areas.
The motion passed 4-1, with only Barger opposing.
The ordinance is relatively limited, compared to the scope of other cities’ ordinances. It will cover 2,000-2,500 non-exempt hourly workers at publicly traded companies or at chains that have 300 or more employees nationwide and more than10 at individual sites in unincorporated areas. It also offers an option to take the pay or get paid leave instead, Mitchell said. Either way, the measure sunsets in 120 days.
In contrast, a similar measure approved Feb. 2 in the city of Los Angeles covers 26,000 workers, Solis said.
Ordinances elsewhere have drawn the ire of employers and industry interests, who say such measures negatively impact business and jobs.
“Extra pay mandates will have severe unintended consequences on not only grocers, but on their workers and their customers,” said Ron Fong, president & CEO, California Grocers Association, in a statement Tuesday. “A $5/hour extra pay mandate amounts to a 28 percent increase in labor costs. That’s huge. Grocers will not be able to absorb those costs and negative repercussions are unavoidable.”
Long Beach approved a similar mandate Jan. 20. In response, grocery giant Kroger announced it would permanently close an underperforming Ralphs store at 3380 N. Los Coyotes Diagonal and the Food4Less store at 2185 E. South St.
A city of L.A. analysis released last week noted that such hazard pay would launch higher wages for grocery, drug, and retail store workers, taking them from an average hourly wage of $17.51 per hour to $22.51. But the analysis warned that the measure would increase labor costs as a percentage of sales, potentially sparking higher prices for consumers and delaying store openings, renovations and other wage increases. There would also be more pressure on struggling stores — especially independent grocers — which could lead to store closures, according to the analysis.
There are also legal challenges in the works, and county officials were expecting one on their own ordinance, though County Counsel Rodrigo A. Castro-Silva said many of those challenges have failed and the county would be prepared to defend itself.
The analysis also warned of potential legal challenges, because such measures may violate the National Labor Relations Act by regulating zones of activity — which Congress intentionally left to be controlled by the free play of economic forces — as well as possibly violating the Equal Protection Clause and the California Constitution by improperly singling out certain grocery businesses for disparate treatment while ignoring employers or essential frontline workers outside the industry.
Leaders on Tuesday acknowledged the risk, but said the ordinance was “the right thing to do.”
Solis noted the earlier days of the pandemic, grocery stores themselves touted workers as essential, and in fact gave them hazard pay early on.
Solis noted a study, conducted by the Brookings Institute, which found found that retailers have seen a 40% increase in profit averaging $16.7 billion in extra profit in 2020, while their stock prices increased by an average of 33%.
Brookings studied 13 top companies, finding they raised pay for their frontline workers by an average of $1.11 per hour since the pandemic began.