Posted on 02/28/2021 7:05:44 AM PST by Kaslin
While proposals to increase the minimum wage to $10 and $15 are being debated at the federal level, local legislatures in cities across the U.S. are taking initiatives to pass their own wage increases for grocery store workers during the Covid-19 health emergency.
In the early months of the pandemic, grocery stores were giving their employees small temporary wage increases and bonuses known as ‘hero pay’ to subsidize the risks these employees were taking when showing up to work. Now, city governments across California and Washington have passed mandates to make this idea stick at least for the duration of the pandemic. Ordinances in Seattle and Long Beach now require a $4 per hour temporary wage increase for grocery store workers, while similar mandates in Oakland and Los Angeles require an even higher increase of $5 per hour.
By artificially mandating wages for grocery store employees, city officials are not doing workers any favors. The pandemic has already added extra operational costs to businesses that must be paid to keep customers safe. New minimum wage requirements increase labor prices substantially for grocery chains, and companies have been forced to make big adjustments due to their very slim profit margins.
As mandated wage premiums for grocery store workers are spreading, so too is the news of store closings that are following these increases. In Seattle, a Kroger-owned supermarket chain named Quality Food Centers (QFC) announced it would be closing two of its locations in response to the new ordinance.
For the stores that can afford to remain open in Seattle, the ordinance will still have a huge impact on their employees. Workers are guaranteed to see their hours reduced due to increased costs on their employers. A National Bureau of Economic Research study reviewed the effects of the 2016 minimum wage increase in Seattle from $9.47 to $13 an hour found that the hours employees worked fell by more than the increase in wages. Because of the decrease in hours, workers were making on average $74 less than they were before the wage increase.
>Similarly, two Kroger stores in Long Beach were also closed because of the temporary wage increase. In a statement, the California Grocers Association explained that the grocery stores cannot absorb these new costs and many will have to choose between passing them on to consumers, cutting employee hours, or closing their doors.
Another grocery chain, Trader Joe’s, announced it would be fulfilling the temporary $4 per hour increase nationwide, but at the cost of its permanent $0.75 mid-year raise for its employees. The company’s executives stated that further action could be taken across the country if cities choose to raise premiums above $4 like Los Angeles and Oakland have, or if the wage hikes remain after the pandemic is over.
Supporters of ‘hero pay’ argue companies can afford to pay workers more especially since stores’ average profit margins doubled during the pandemic last year. Yet, a report by Capitol Matrix Consulting found that a $5 per hour wage premium would increase these stores overall costs by 4.5 percent, which is two times higher than the 2.2 percent profit margin of a typical grocery store in 2020 and three times higher than the 1.4 percent rate in 2019. While these companies are making profits during the pandemic, ‘hero pay’ premiums would more than erase profits.
The report also concluded that implementing a $5 per hour premium statewide in California would cost an additional $4.5 billion in yearly grocery costs, or an extra $400 per year for a family of four if grocery stores chose to raise prices. If store owners chose to reduce labor costs instead, the proposal would cost 66,000 grocery jobs statewide.
If lawmakers want to help grocery store workers, they should not be putting undue pressure on employers to pay workers more than they can afford, especially during these trying times. Contrary to what lawmakers hope to achieve with these mandates, ‘hero pay’ ordinances only harm the ever workers they were designed to help.
It will result in more and more automation and less and less jobs.
Under the 10th ammendment, the corrupt and largely illegitimate Congress, and the brain dead occupant of the White House, CLEARLY do not have the Constitutional authority to set a national minimum wage.
How about a $4 hero pay for customers walking into the danger zone.
Last week, my bag boy wore a mask. Yep, he wore a black gator mask around his neck. He also wore his pants down under his butt cheeks. Thankfully, he had on underwear. Black underwear so color coordinated. To answer the question, they weren’t boxers.
And while they are at it, put fuel back in to be counted for inflation.
But that is $74 they were not taxed upon. At that wage level that is about $5 in federal taxes, 2$ in state taxes and $5 in social security and Medicare taxes. So they actually reduced their taxes by about $12. Disgusting. Tax breaks just like the rich get. We should tax them on the amount they were not paid so that needy government programs do not get shorted by greedy workers looking to take advantage of tax breaks available for those that don't get paid as much.
I know an 18 YO guy - he’s been working at Wal Mart and just the talk of raising the minimum wage has them cutting his hours and therefore also depriving him of a quarterly bonus.
Instant conservative.
They should make $40.00 an hour if they really believed in it.
This claim always seemed odd to me. The store is not going to reduce the hours it is open. The same workload is present. How do hours get reduced? Will there be stuff the stores will not do that they otherwise would?
I would love to have some input on this one. Thanks.
What will they automate?
A 20 year-old grocery cashier is no hero.
When they reduce their hours below 40 hours a week, they can also stop paying for medical and other benefits that full time employees get. Obamacare made this happen. Lots of full time employees lost their benefits and became part time employees.
dem specialty: job destruction
“They should make $40.00 an hour if they really believed in it.”
I have NEVER believed in the minimum wage and “believe in” is the correct term because it really is equivalent to believing in Santa Claus or the Easter Bunny but sorry, you are wrong. If they really believe it works they should go for at least ten thousand an hour and that figure is purely random of course. The point we are both making is that the entire concept is absurd and pointless. Wage and price fixing helps no one in the end.
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