Kroger to close 3 stores in Los Angeles over a $5-per-hour hazard pay mandate

Kroger said Wednesday it will close three stores in Los Angeles after local officials approved mandated $5-per-hour hazard pay for grocery and drug store workers during the COVID-19 crisis.

The Cincinnati-based grocer will shutter two Ralphs and one Food 4 Less stores in the city on May 15. It will continue to operate 65 other stores in the city. The retailer heaped criticism on local officials for dumping millions of additional expenses on it in the middle of the pandemic.

"It becomes impossible to operate these three stores," Kroger said in a statement, noting the mandate will cost nearly $20 million over the next 120 days. It noted local employees already averaged hourly pay of $18, $24 when considering benefits.

Kroger also noted it has given 20% of its Ralphs and Food 4 Less associates at least the first shot of the COVID-19 vaccine.

Kroger's move comes after other February closure announcements in the wake of hazard pay mandates elsewhere along West Coast. Those affected four other stores.

Kroger said it's complying with the mandate at all its stores, including the three that will be closed that the company described as "underperforming."

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"Prioritizing vaccinations – not arbitrary mandates for extra pay – is what will keep frontline workers protected,” Kroger added. "Unfortunately, the Los Angeles City Council disregarded their own Economic Impact Report by not considering that grocery stores – even in a pandemic – operate on razor-thin profit margins in a very competitive landscape."

Last week, Kroger reported it made a $2.6 billion profit on sales of $132.5 billion in 2020. The retailer, however, had a $77 million loss in the final quarter after it paid nearly $1 billion into employee pensions.

An analysis of the added cost of hazard pay at Kroger by The Cincinnati Enquirer, part of the USA TODAY Network, showed every extra $1 per hour for its nearly 500,000 associates would cost roughly $15 million a week and $780 million annually.

Besides Kroger stores, the grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Mariano's, Fry's, Smith's, King Soopers, QFC and others. The company has nearly 2,800 stores and employs nearly 500,000 workers.

The union that represents thousands of Kroger's frontline workers, United Food and Commercial Workers International, has blasted previous Kroger closures as "retaliation."

"Kroger’s action today is a cruel attack on essential workers and threatens the food supply for California communities devastated by the explosion of COVID-19 infections in recent months," said UFCW's president Marc Perrone, in a statement. "Essential workers in grocery stores are putting their health at risk every day to make sure families can put food on the table and city leaders are stepping up to ensure they have the hazard pay they have earned."

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The union noted at least 139 grocery workers it represents at Kroger and other retailers have died during the COVID-19 pandemic and more than 32,000 grocery workers have been infected or exposed to the new coronavirus.

"Hazard pay is not just about recognizing the health risks grocery workers face, it's about making sure that these essential workers have the support they need to keep our grocery stores safe for customers and ensure all our families have the food we need as the pandemic continues," Perrone added.

For the latest on Kroger, P&G, Fifth Third Bank and Cincinnati business, follow @alexcoolidge on Twitter.