In the quest to make sure people are safe and can still afford to pay their bills during the COVID pandemic, local lawmakers seem to be forgetting that business owners need to eat too. While some companies have voluntarily offered their employees a hazard pay bonus, in the city of Seattle, WA, the council decided to mandate that grocery companies pay their employees a $4 an hour raise until the crisis is over. The result is as you would imagine: some businesses are shutting down.
So far, two QFC stores in Seattle’s Capitol Hill and Wedgwood neighborhoods have announced plans to close by April 24. The two locations are considered “underperforming” and according to a statement from the parent company, Kroger, the closures were “accelerated by a new Seattle City Council mandate.”
City officials disagree, claiming the two QFC stores were already planning to close. A spokesperson for Seattle Mayor Jenny Durkan (D) said:
“Kroger is a huge conglomerate that has made billions in profits during COVID because its frontline workers continued to show up every day, despite the risk to themselves. It is unfortunate that Kroger chose to accelerate closure of stores they had already planned to close, and then blamed it on the need to pay the very workers who brought them these huge revenues.”
However, Tiffany Sanders, a QFC spokesperson refuted the accusation: “This was a 22 percent increase in operating costs and those two stores were already operating in the red, so it was just a decision we had to make, unfortunately.” The Capitol Hill area is, if you remember, the site of a weeks-long siege where local lawmakers allowed BLM, Antifa, and other protesters to commandeer several city blocks in what the mayor once referred to as a “summer of love” atmosphere. Looting, murder, violence, and destruction of property probably didn’t help that QFC’s numbers.
The legislation, which passed with an 8-0 vote, requires grocery businesses that have 500 or more employees worldwide to provide the extra hazard pay as well as for employees that are covered by the city’s minimum wage. It does not affect smaller companies or convenience stores that have a more limited inventory. According to QFC, its Seattle employees average about $20 per hour as it is, or $25 per hour when you add in total compensation. And just as with every other business, the COVID restrictions limit the number of customers allowed in the stores.
The Northwest Grocery Association and the Washington Food Industry Association have already filed a lawsuit against the city for its Hazard Pay Ordinance. In a statement, Kroger said:
“Our business provides affordable groceries, good jobs with growth opportunities to thousands of Seattle residents, and proudly supports thousands of local community organizations. We need a level playing field to deliver on these commitments. 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. 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.”
In its statement, the company asked a very telling question: Why hasn’t the city raised wages for its own frontline workers? “Unfortunately, the irreparable harm that will come to workers and our Seattle community is a direct result of the city’s attempt to pick winners and losers among essential businesses and workers,” the statement continued.
City councilmember Teresa Mosqueda said: “We should not treat [employees] as sacrificial, and we should compensate them for the hazard they are in.” Small businesses are already hurting from the forced closures and restrictions, but apparently, those employees are not working in hazardous conditions that require such a pay increase.
Raising the Minimum Wage
The Democrats have been trying to get the federal minimum wage increased for quite some time without much luck. President Joe Biden’s plan to practically double it is a bold, and, one could say, financially dangerous aspiration. Biden says the move is inspired by the pandemic and the need for Americans to make a decent living.
“The recovery around COVID shouldn’t just be about how to stabilize and get people back to zero,” Adrianne Shropshire, executive director of BlackPAC said. “It should be about how do we create opportunities to move people beyond where they were.” A good idea in theory, but success and recovery do not just focus on one rung on a ladder. The pandemic has affected people of all economic backgrounds. Forcing businesses to pay higher wages, whether via a minimum wage hike or hazard pay, means the closure of more companies as owners struggle to meet restrictions, lockdowns, payroll and unemployment rate increases, cost of living, and more. Mandating pay-raises could very well have the effect of providing less work and opportunities.
Read more from Kelli Ballard.