Kroger to close more stores instead of giving hazard pay

Grocery giant Kroger plans to close two stores in Seattle after the city passed a $4-an-hour hazard-pay mandate for grocery workers, drawing rebukes from local officials and worker advocates who point to the company’s booming sales as the pandemic continues to claim more than 2,000 lives a day.

Kroger, which recorded one of its more profitable years due to strong demand during the pandemic, blamed the closures on the city’s new mandate, saying it would raise costs at the two Quality Food Centers (QFC), which were already underperforming.

“Unfortunately, Seattle City Council didn’t consider that grocery stores - even in a pandemic - operate on razor-thin profit margins in a very competitive landscape,” the company said in a statement. “When you factor in the increased costs of operating during covid-19, coupled with consistent financial losses at these two locations, and this new extra pay mandate, it becomes impossible to operate a financially sustainable business.”

Hazard pay and other pandemic-related bonuses became popular among corporate grocery and retail giants amid wider public attention on essential workers during the early months of the spread of the coronavirus spread last year. Companies including Kroger, Target, Walmart, Amazon, Rite Aid and Albertsons instituted the policy.

But many companies ended hazard pay as the country reopened, declining to reinstate the practice, despite record caseloads in the United States. Kroger replaced it with a $400 bonus.

Seattle is one of several left-leaning cities that have sought to address the issue, passing hazard pay mandates for workers at large groceries at the end of January. The law applies to companies with more than 500 workers and stores larger than 10,000 square feet. In California, Berkeley, Oakland and Los Angeles have advanced similar measures.

These moves have been denounced by business interest groups.