We first wrote about the $4 an hour “hazard pay” mandate for some grocery workers at the end of January. Our lead then:
As lawmakers in Olympia consider pandemic-relief legislation designed to help employers and others struggling during the recession, the Seattle City Council has voted to require large grocers to pay their workers an additional $4 an hour “hazard pay.”
Details in the post, but the bottom line is clear. We asked,
For most workers in Seattle, the minimum wage in 2021 is $16.69 an hour, so for grocery workers that’s a bump to at least $20.69 an hour, or nearly 20 percent. Does anyone believe that won’t have consequences?
Some consequences are already clear, which is why we’re revisiting the story now. Jobs have been lost. Lawsuits filed. And supporters of the policy are taking it on the road. Similar proposals have been adopted in other states and more are expected in Washington.
The United Food and Commercial Workers International Union’s Washington chapter worked with Seattle officials to draft that city’s hazard-pay mandate, and is in talks with about 10 other Washington cities to put together similar measures, said Joe Mizrahi, a union official. Store closures and potential changes in food prices are “political posturing” aimed at discouraging other governments to take action, he said.
That quote is from today’s story in the Wall Street Journal (probably paywall protected). As for wave-of-the-hand dismissal of closures, price increases or job losses, we’re not sure what other options there are for business in a low-margin, highly competitive industry when governments mandate a major increase in operating costs.
About the same time as the Seattle City Council was passing the hazard pay law, The Seattle Times editorial board was writing of the city council’s reductions in police funding and consideration of policies to “[allow] misdemeanor charges to be tossed out if the defendant claims poverty, substance abuse or behavioral disturbance.” Which prompted our conclusion,
Raising business costs while reducing protection for employers runs counter to constructive efforts to provide relief from a year-long pandemic-induced recession.
In early February, ST columnist Danny Westneat described the hazard pay legislation as a classic Seattle story.
The Seattle City Council’s decision to force big grocery store chains into paying $4 an hour coronavirus hazard pay is turning into a typical Seattle government story.
He’s not unsympathetic to workers receiving hazard. Citing efforts in other states and communities to provide assistance to front-line workers, he writes,
The city could offer businesses tax credits in exchange for giving workers hazard pay. The state could steer federal relief money toward workers, as those other states cited above did. So far, the federal government has allocated Washington state about $5 billion in COVID relief funds, but very little has gone to front-line worker pay.
There’s more in his still-timely column. He concludes,
In the fall, I wrote that our state and local governments deserved an “A” grade for the health side of this pandemic. They still do…
But as to working creatively with the state’s businesses to keep the economy running, they don’t even get a grade. They’re marked absent for barely trying.
Supermarket operators said that the store closures and price moves are among their few options to control costs, since wages typically represent about half or more of grocers’ expenses.
Kroger, the nation’s biggest supermarket chain, said it would close two stores in Long Beach and two others in Seattle in April because the mandates increase labor costs by 20% to 30% and weigh on thin profit margins. A Kroger spokeswoman added that the four stores have been struggling, but the company delayed closings during the initial phases of the pandemic. The mandated extra pay makes it “impossible” to continue operating underperforming stores, she said, adding that the company has spent about $1.5 billion to protect and reward employees.
Albertsons Cos. could change operating hours or staffing levels in areas with wage mandates, a spokesman said, adding that the measures unfairly target large supermarkets. The company spent $885 million on pandemic-related costs through its fiscal third quarter.
The extra pay is in addition to the total compensation package QFC currently offers to its associates, including competitive wages, comprehensive health care and a reliable pension. QFC’s average hourly wage in Seattle is about $20 an hour and total compensation is over $25 an hour, including health care and pension benefits.
“Seattle City Council’s misguided mandate targets one industry and not only oversteps our collective bargaining rights, but it altogether exempts several non-union competitors.”
As the ST reports, the issue is now in court.
The Northwest Grocery Association and the Washington Food Industry Association (WFIA) filed their lawsuit the [day the law took effect].
“Unfortunately, the council’s unprecedented ordinance, its unilateral action, and unwillingness to work with the grocery industry has left us with no other option than to file a lawsuit against the city,” Tammie Hetrick, president and CEO of WFIA, said in a prepared statement.
The law applies to large grocers, those with more than 500 employees worldwide and stores larger than 10,000 square feet, in Seattle. It mandates a $4-an-hour pay boost for all workers in retail locations. And that pay boost must remain in effect for as long as Seattle remains in a declared civil emergency.
The lawsuit claims the new law is “invalid and unconstitutional” for two reasons. First, it says, it is preempted by federal law governing collective bargaining and labor practices. And, second, the lawsuit says, the law violates the equal protection clauses of the U.S. and Washington constitutions by treating large grocers differently “without providing any reasonable justification for the exclusion of other employers or frontline retail workers.”
Would a more collaborative strategy have avoided the litigation, contention, and job loss? Possibly. Westneat’s column identified several more productive strategies pursued in other communities. Among the troubling aspects of the issue is that, unfortunately, it’s not an isolated instance of governments increasing cost burdens on business during the pandemic. Consider the tax proposals under consideration in the Legislature, as just one example.
We’ll return to a statement AWB president Kris Johnson made in reference to the new Opportunity Washington poll.
“Employers need help right now. Lawmakers can start by first doing no harm. That means avoiding actions that place more hurdles in front of them. Beyond that, lawmakers should do everything in their power to help struggling employers survive and begin to rebuild.”
By helping employers survive, lawmakers – state and local – help keep workers employed and stores open. A year into the COVID recession, that is a sensible – an essential – policy priority. Do no harm.