"Hero pay" laws, which require big wage increases for grocery store workers during the COVID-19 pandemic, are sweeping the West Coast. Store closures, unemployment, and lawsuits have followed in their wake.
The first of these laws, passed in late January by the Long Beach, California, City Council, mandated that grocery workers at large stores get a $4-an-hour pay raise for the duration of the pandemic. By early February, Kroger announced it was shutting down two stores in Long Beach.
The locations had already been underperforming, the company said, but the new pay hike meant they were now unsustainable. It was the same story in Seattle and Los Angeles: In response to "hero pay" laws, Kroger said it would close three stores in each city.
Many independent stores that remain open say these policies have pushed them deep into the red. One analysis by Capitol Matrix Consulting (and commissioned by the California Grocers Association) found the laws have increased labor costs by an average of 30 percent.
Grocery store associations in California and Washington are suing every city that requires "hero pay." They argue that such mandates are preempted by federal labor law and violate the 14th Amendment's Equal Protection Clause.
The grocery store unions that push these laws and the politicians who pass them scoff at store owners' arguments. Grocery store profits, they note, are way up during the pandemic. They argue that the store closures are merely an intimidation tactic.
Grocery stores "absolutely should be paying this increase," said Los Angeles City Councilmember Paul Kortez. "And if they shut down stores, it's just out of spite." It's a strange argument that companies would be greedy enough to resist giving affordable pay increases to their employees but not so greedy that they don't mind closing profitable stores just to make a point.
Even with record pandemic profits, grocery stores operate on very slim margins. Big, sudden increases in expenses have to be absorbed somewhere. Those stores with the least room to make up added costs are the most at risk of being shuttered.
Most supermarkets, of course, will survive, likely through a combination of price hikes, layoffs, and employee hour reductions. These consequences are a compressed version of what we'd expect from the much-discussed idea of raising the federal minimum wage to $15 an hour: pay raises for many workers, job losses for others, and higher prices and fewer options for consumers. Unlike with a minimum wage increase, however, the costs of "hero pay" laws are obvious, immediate, and visible to everyone.