San Diego City Wire

As “hero's pay” ordinances are being implemented in several California cities, some essential retail workers in San Diego are demanding to receive a COVID-19 pay boost, but the push has some local businesses concerned.

Though most grocery stores in the city provided additional hazard pay early on in the pandemic, the wage increase quietly expired last spring for most workers.

Now, the United Food and Commercial Workers Local 5, a union representing 13,000 grocery and drug store workers in San Diego County, is campaigning for the city to adopt its own hero's pay mandate. The proposed ordinance would require grocers to pay their workers an additional $5 per hour when the county is above a yellow-tier status on the coronavirus severity scale.

Opponents say such ordinances are unconstitutional and that any mandated pay increases should be paid for by the government, such as with funds allocated through the $2.2 trillion CARES Act.  

U.S Chamber of Commerce Senior Vice President of the Employment Policy Division Glenn Spencer told DC Business Daily that while hero pay sounds like a nice way to support workers, in reality, it hurts businesses. It is an "unfunded mandate" as he calls it, amounting to an effective minimum wage hike that cuts into businesses' bottom lines.

Spencer maintained that unions have failed to provide assistance to essential workers by reducing or rebating dues. He said the concept is interesting, but so far, there has been no sign they will offer any form of aid.

"I'm sure workers would appreciate that," Spencer told DC Business Daily.

Nonetheless, the prospective hero pay ordinance appears to be gaining support among some San Diego city council members.

"The pandemic taught us many valuable lessons, including how crucial our frontline essential workers were to meeting our needs through the restrictions of local and state public health orders and directives," Councilmember Monica Montgomery Steppe told San Diego City Wire. "Many of these grocery store workers, gas station attendants and other frontline employees put themselves in harm's way and in so doing, are deserving of hazard pay."

Montgomery did not suggest that any CARES Act funding would be used to offset the required pay increase should the ordinance pass.

On Jan. 19, Long Beach adopted a similar measure, requiring all grocers to pay their employees an additional $4 an hour. However, just days after the passage of the order, Kroger Co. announced plans to close two of its grocery stores in the city. Kroger said the stores were already struggling financially, and the closures were unavoidable because the company could no longer afford to employ its staff under the new hazard pay requirement. The move is expected to impact a total of 200 employees and will likely result in layoffs.

The increased wage mandate in Long Beach applies to all stores in the city that have more than 300 employees nationwide or more than 15 employees per store. Though the city mandated the pay increase, it is not providing funds to offset the increased labor costs the grocers will need to absorb.

The California Grocers Association also weighed in on the controversial issue and announced a lawsuit against the city, requesting the Los Angeles federal court to review the case in Long Beach and invalidate the ordinance.

The association also plans to file lawsuits against Oakland and the city of Montebello in response to similar $5-an-hour hazard pay ordinances.

“When a city tries to enact what is a 30% raise for grocery store workers, it is impossible to be able to absorb that," Association President Ronald Fong told the Washington Post.

Such a significant increase in expenses, Fong told the publication, typically means that grocery stores have to raise prices, close stores or cut hours and shifts because they operate on very slim profit margins.

"It is really unprecedented to have a city council demand what businesses should do with their wages," he told the Washington Post.