Multiple cities in liberal California have decided to use the pandemic as an excuse to introduce a targeted minimum wage. On Jan 19th, the Long Beach City Council voted to force companies with 15 local workers and more than 300 nationally to raise the pay of frontline grocery workers by $4 per hour. The City Council called this “hero pay,” with the idea being that these grocery workers had a higher risk of getting COVID-19. Of course, the City Council didn’t offer to pay for this new expense they heaped on these businesses and it has already backfired spectacularly.
Kroger responded to the city council by announcing the closure of two stores it said were “underperforming.” Those two stores were Ralphs market and a Food 4 Less, of which Kroger is their parent company. It’s also worth noting that Kroger says it has already spent $1.3 billion dollars implementing safety measures in its stores and rewarding its employees during the pandemic. Meanwhile, the California Grocer’s Association released a statement that basically said, “We told you so.”
“This is truly unfortunate for the Long Beach community, its grocery workers and consumers, but not surprising given the magnitude of the Council’s actions. We repeatedly warned that a $4/hour increase would have major unintended consequences – including potential store closures, the reduction of work for employees, and higher grocery costs for customers.”
Grocery stores have a thin profit margin and are very labor-intensive, so when you target them with something like this, it can be enough to push them from “profitable” to “unprofitable.” Liberals may say, “Kroger is a giant company. They can afford this cost at this store,” but that’s not how it works. Businesses are not interested in running stores at a loss. Why keep open a store in Long Beach that will lose money, when you can open one somewhere else that will be profitable? The simple reality is the more costs you pile on businesses, the less likely they are to survive and thrive. Do you want a higher minimum wage? New regulations? Higher taxes? Ultimately, that means fewer businesses will be profitable or even survive and guess what? A business that goes under can’t provide goods and services to the public, create jobs, or pay taxes. Hopefully, more liberals will wake up to that fact one day, but don’t hold your breath waiting.
John Hawkins is the author of 101 Things All Young Adults Should Know.
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