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An unexpected pitfall for some cities’ mandatory hazard pay for essential workers

Despite the rollout of COVID-19 vaccinations, hazards for frontline workers continue. Early in the pandemic, many large companies increased pay for essential workers, but many of those raises have now expired. Seattle and several cities across California have passed mandatory hazard pay for employees at some large grocers, a move that's gaining traction. But there have also been unexpected consequences to the measure. Laura Fong reports.

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  • Hari Sreenivasan:

    While the rollout of COVID-19 vaccinations broadens across the country, the hazards for frontline workers continue. Early in the pandemic, many large companies increased pay for essential workers, but many of those raises have expired. Now, several cities across California and Seattle, Washington have passed mandatory hazard pay for employees at some large grocers and food retailers. It's a move that is gaining traction but there have also been consequences. NewsHour Weekend's Laura Fong has the story.

  • Laura Fong:

    Forty hours a week, Eric Cortez is a food clerk at this Ralphs grocery store in Long Beach. Cortez has worked for Ralphs, a large supermarket chain in Southern California, for 14 years and throughout the COVID-19 crisis.

  • Eric Cortez:

    From day one, I've been working since day one, throughout the pandemic. It's been rewarding in a sense, because, you know, at the end of the day, our customers rely on us.

  • Laura Fong:

    Cortez, who lives with his father Antonio Curtis, said there have been several COVID-19 scares among co-workers.

  • Eric Cortez:

    We did have three members who did come down with it. Thank God, they did recover but at the same time, I was worried about, hey, you know, it's me and my 78-year-old dad. So I was just like, I don't want to bring home anything to him.

  • Laura Fong:

    Like many large companies across the country, Ralphs' parent company Kroger gave workers a "hazard pay" raise of two dollars an hour at the end of March, but stopped by mid-May, before the pandemic came into full swing.

    What was your reaction when you heard that they stopped the hazard pay?

  • Eric Cortez:

    Kinda like a slap in the face because they were calling us heroes. They actually called it "hero pay." So if we are heroes, we should be rewarded accordingly.

  • Robert Garcia:

    With that, we'll do a roll call vote.

  • Laura Fong:

    Last month, the Long Beach City Council, pointing to large chains not doing enough, passed a hazard pay ordinance of four dollars per hour for grocery store employees.

    The law went into effect immediately for 120 days and targeted companies with more than 300 workers nationwide and more than 15 employees per store.

    In the weeks since the Long Beach ordinance went into effect, other city councils in California — Oakland, Montebello, San Jose, Los Angeles, Irvine, and Seattle, Washington — have passed similar laws mandating temporary pay raises of three to five dollars per hour for grocery workers.

    After the Seattle law was adopted, Traders Joes announced a four per hour "thank you premium," an increase from two dollars, for its stores nationwide.

    But in Long Beach this month, Kroger announced that two of its stores — a Ralphs and a Food4Less — will begin to close in April.

  • Eric Cortez:

    You can see…

  • Laura Fong:

    Cortez and his coworkers received letters from the company, which cited the ordinance as part of the reason.

  • Eric Cortez:

    "This is to advise you of our company's decision to close and permanently terminate the entirety of the operations where businesses for economic reasons, including the economic cost mandated by the Long Beach ordinance requiring an increase in employee wages, four dollars an hour…"

  • Laura Fong:

    Cortez and his union's leadership, the United Food and Commercial Workers, or UFCW, view the closures as a warning to other cities considering hazard pay mandates.

  • Andrea Zinder:

    It was announced as a retaliatory action.

  • Laura Fong:

    Andrea Zinder is the president of UFCW Local 324 in south Los Angeles and Orange counties.

  • Andrea Zinder:

    These stores were making money. Both of the stores that they've slated to close have had their sales increase at approximately 30 percent during the pandemic versus the same period last year. Our members are working harder than ever. They are out there taking risks and then they get slapped in the face with notice that their stores are going to close.

  • Ron Fong:

    It sets off a series of unintended consequences.

  • Laura Fong:

    Ron Fong is president and CEO of the California Grocers Association, which represents 3,000 retail grocery stores in the state, and has sued Long Beach, Oakland and other cities where hazard pay mandates were passed.

  • Ron Fong:

    It's really unprecedented what the local city ordinances are asking us to do, and that's to enact a four dollar, or in Oakland's case, a five-dollar per hour raise. We're going to have to pass on these new expenses on to customers.

  • Laura Fong:

    Fong said a California Grocers Association -commissioned study estimated that a $5 per hour hazard pay would increase a typical family of four's grocery bill by $400 dollars a year.

  • Laura Fong:

    Do you think that potentially a smaller hazard pay increase would have been tolerable in these circumstances?

  • Ron Fong:

    What we try to tell the city councils is that our grocery stores have been providing "heroes pay," or hazard pay, at their own pace. Four dollars on an average wage amounts to about a 30 percent raise, which is unreasonable on any business. When you say, OK, your costs are going to go up 30 percent, that's just not a lot of companies can absorb that. But in our own way, we've been doing a dollar and two dollars. A lot of our regional chains are continuing to do that and have not stopped.

  • Laura Fong:

    The UFCW, which is the union that represents these workers, they characterize the closures as a retaliatory action and pointed to the profits of Kroger over the past year as more than enough to cover these hazard pay raises. What's your response to that?

  • Ron Fong:

    You know, I'm not going to speak to Kroger and Ralph's because we're, we're not owners and we don't know their real finances. I know they like to talk about the bigger parent company that has done so well. But those two stores, obviously, we're not doing well enough where they could sustain a four dollar increase per employee and made the difficult choice to close.

  • Laura Fong:

    With his store slated to close in two months, Cortez is hoping he can be reassigned to another Ralphs, but he still thinks hazard pay is necessary for all grocery workers.

  • Laura Fong:

    What sort of difference does that extra four dollars an hour make for you?

  • Eric Cortez:

    Oh, it makes a big difference, you know, get ahead on the bills, a little more food in the house, just put a little bit more in your savings. And at the end of the day, it just shows me as a worker that we are appreciated for working so hard and risking our health and safety, not just ours, but our families as well.

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