L.A. City Council Decides to Vote in "Hero Pay" for Grocery Workers—Kroger Does as Expected

(AP Photo/Rogelio V. Solis, File)

The Los Angeles City Council learned nothing from the city of Long Beach. Instead, they poured milk on stupid, and decided to pass their own version of Hero Pay, requiring Supermarket chains to pay their workers an extra $5.00 an hour in hazard pay.

The result was, as expected.

From the Los Angeles Daily News:

“Two Ralphs and a Food 4 Less will close by May in Los Angeles, a decision the parent company says was accelerated by a city mandate requiring workers earn an extra $5 hourly in “hazard pay” during the COVID-19 pandemic.

“Cincinnati-based Kroger said it’s shuttering the underperforming stores — Ralphs at 9616 W. Pico Blvd. and 3300 W. Slauson Ave. and a Food 4 Less at 5420 W. Sunset Blvd. The stores will close May 15, affecting 289 employees.

“Ralphs spokesman John Votava said the companies hope to move as many displaced workers as possible to neighboring Ralphs and Food 4 Less locations.

“ ‘We operate seven Ralphs and Food 4 Less stores within a 4-mile radius,’ he said. ‘We’ll still operate 65 stores in Los Angeles after these closures.’ ”

My colleague Scott Hounsell reported in February on what happened in Long Beach, which is right next door to Los Angeles.

“There’s an old saying about the road to hell, and it definitely applies in this case.  In order to reward the work of grocery store employees, Long Beach passed the “Hero Pay” measure, which increased the pay of grocery store employees by four dollars an hour.  While the measure seems like it was well-intentioned, good intentions don’t balance budgets nor make the availability of products any more diverse.  Long Beach officials were looking for a positive moment in the press, however, the Kroger grocery brand quickly put that to rest, by announcing that they were closing two grocery stores in the city, a Ralph’s location as well as a Food4Less store.”

You would think the City Council would have seen the result of what happened there, and thought twice about how the virtue-signaling might affect the actual people who not only work at these stores, but also shop at them.

But, nah.

As if on cue, the usual suspects are condemning Kroger, rather than the Clown Posse known as the Los Angeles City Council:

Maybe find work that doesn’t require you put your life on the line? Asking for a friend.

Kroger was, once again, required to school the public on the laws of economics, since the public schools no longer teach it.

“In a statement Wednesday, Kroger said its stores operate on razor-thin profit margins. Hazard pay, the company said, makes it “financially unsustainable” to keep the three L.A. supermarkets open.

“ ‘It’s never our desire to close a store, but when you factor in the increased costs of operating during COVID-19, consistent financial losses at these locations and an extra pay mandate that will cost nearly $20 million over the next 120 days, it becomes impossible to operate these three stores,’ Kroger said.”

What if they did double their profits? With the pandemic and its subsequent requirements, they have also doubled their costs. How much does PPE and plastic shields for thousands of employees cost? How about all that additional cleaning and cleaning supplies? What about insurance and hazard pay that has already been paid out? Even if store hours are reduced (and many are), because these are Union shops, the store is still required to supply full hours to their workers and pay them at the same rate. So, if the increased profits made by the store does not cover these new costs, the store is operating at a loss. If the store was underperforming even before the pandemic, then it’s a no brainer. Keeping these stores open is not only foolish, but financial suicide. Any business owner knows this, whether it’s a one person shop, or a chain of stores like Kroger.

Or, as the saying goes: Just because you want money to grow on trees, doesn’t make it so.

Having lived in Los Angeles, I know where all three of these stores are located. None of them are in the best of neighborhoods. At least one of them is homeless and crime central. So, we have no idea how much Kroger has to cover those properties in terms of theft, security, damages, and insurance.

There’s something called the law of unintended consequences, and it has slapped the Los Angeles City Council in the face.

Will they actually learn anything?