Kroger to close a Ralphs and Food 4 Less in Long Beach after city’s ‘hero pay’ mandate

The Kroger Co. announced Monday it is closing two of its Long Beach grocery stores in response to the city’s recently adopted mandate requiring local grocers to pay employees an extra $4 per hour in “hero pay.”

The national grocery giant is closing one of its Ralphs stores, located at 3380 N. Los Coyotes Diagonal, and one Food 4 Less store, located at 2185 E. South St. The permanent closures will happen April 17, the company said, adding that the stores were “long struggling” locations.

“This misguided action by the Long Beach City Council oversteps the traditional bargaining process and applies to some, but not all, grocery workers in the city,” the company stated in its announcement.

The city’s law affects companies with 300 or more workers nationally 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 will impact nearly 200 employees between both locations and may involve layoffs.

“As always, we will do everything we can to take care of our associates,” Votava said in a text to the Post. “We may not be able to take care of every individual and it may result in 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, stating the city’s Pacific Gateway Workforce Innovation Network would assist anyone who is laid off with unemployment benefits and other services.

The statement did not address Kroger’s criticism of the city’s pay mandate.

Mayor Robert Garcia was a proponent of the law, saying in a Jan. 20 tweet that grocery workers “deserve this hero pay.” Garcia did not immediately respond for comment through his chief of staff, Diana Tang, but wrote on Twitter that grocers are making record profits.

Though it has been discussed elsewhere, Long Beach was the first city to enact a law requiring more pay for grocery workers.

The City Council noted in its resolution passing the new ordinance that while other businesses have struggled during the COVID-19 pandemic, supermarkets have seen a surge in customers.

“Grocery workers working during the COVID-19 emergency merit additional compensation because they are performing hazardous duty due to the significant risk of exposure to the COVID-19 virus,” according to ordinance. “They are working in these hazardous conditions now and will continue to face safety risks as the virus presents an ongoing threat for an uncertain period, potentially resulting in 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 by the Brookings Institute, a Washington, D.C.-based think tank.

At Kroger Co., the parent company of both Ralphs and Food 4 Less, profits for the first two quarters of 2020 were up 90%, according to the report. Kroger saw its net earnings for the first two quarters jump to more than $2.031 billion compared with $1.069 billion in 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 raise 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 it provided additional benefits like paid emergency leave and a $15 million “Helping Hands fund” that provides financial support to associates experiencing certain hardships due to COVID-19.

Kroger said the “irreparable harm” that will come as a result of the city’s decision is “deeply unfortunate.”

The day after the city council unanimously approved the hero pay mandate during its Jan. 19 meeting, the California Grocers Association filed a lawsuit against the city, asking 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 “truly unfortunate” for the community—and grocery workers in particular—but went on to say it is not surprising.

“A $4 per hour increase represents about a 28% increase in labor costs for grocers,” the association wrote. “There’s no way grocers can absorb that big of a cost increase without an offset somewhere else, considering grocers operate with razor thin margins and many stores already operate in the red.”

The Long Beach Area Chamber of Commerce opposed the mandate from the beginning, President Jeremy Harris said, due to the lack of dialogue between the city and grocers in the crafting of the ordinance. With the pandemic ongoing, Harris said the potential job losses come at the worst time for employees.

“This is a worst-case scenario,” Harris said. “This is an example of government overreach and it’s ultimately employees paying the price.”

This story has been updated with comments from the city, the chamber of commerce and the grocers association.

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Brandon Richardson is a business reporter, covering everything from real estate and healthcare to the airport and port to city hall and the economy. He is a Long Beach native who has been with the Business Journal since graduating from Long Beach City College in spring 2016 with an associate’s degree in journalism. He is an avid record collector and concert goer.
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