Saturday, May 8, 2021

Where Have All the Retail Checkout Cashiers Gone? Gone to Hero Pay and Minimum Wage

I noticed in the past two weeks one cashier with long lines at an Albertsons, zero cashiers at a Target and only one at another, and two cashiers at a crowded Walmart. What happened to 3 or more in line with an announcement additional check lines are opening up? The retailers are funneling customers into self-checkputs. Where, o where have all the cashiers gone? Displaced by the union and governments which profess to protect their interests. Covid-19 devastated America last spring. America was locked down. Pharmacies and food providers, such as grocery stores, Walmart and Target, could stay open. Their employees were in constant contact with scores of people, obviously including contagious patrons, who might be asymptomatic. Management decided to augment employee wages by $2/hour as hero pay. The extra payments continued until June when America started to reopen. The United Food and Commercial Workers Union (UFCW) thought Hero Pay was a great idea. The union represents 1.3 million grocery and meatpacking workers. The political might of the unions convinced several cities and counties to legislate Hero Pay of $4-5/hour for their employees at supermarkets, pharmacies, Target and Walmart. The Union is not interested in Hero Pay for all – only for frontline workers. California is a one-party state with the Democratic Party nominally in control. However, when push comes to shove the unions call the shots in California. The “Hero Pay” and teachers unions not returning to school indicates the power unions have in the California political system. Long Beach’s City Council on January 19, 2021 enacted an ordinance requiring companies with 300 employees and over 15 workers per location in Long Beach to pay workers an extra $4/hour for four months. Kroger responded by announcing the closure of 2 underperforming stores of its 8 Long Beach stores, a Ralph’s and a Food for Less. The company issued a statement: “This misguided action by the Long Beach City Council oversteps the traditional bargaining process and applies to some, but not all grocery workers in the city.” It added: “The irreparable harm that will come to employees and local citizens as a direct result of the City of Long Beach’s attempt to pick winners and losers, is deeply unfortunate. We are truly saddened that our associates and customers will ultimately be the real victims of the city council’s action.” Andrea Zindar, President of UFCW Local 324 with 22,000 workers in Los Angeles and Orange County, called Kroger’s action an attempt “to intimidate and discourage workers.” Both the city and the county of Los Angeles upped Long Beach by going to $5 per hour. Los Angeles City Council members call the $5 a matter of economic justice. The Los Angeles Council wasn’t listening to the supermarkets or the Chief Legislative Analyst who issued a study of the effects of enacting Hero Pay: higher prices, store closures, and reduced employment and hours. Kroger announced the closure of three underperforming stores in LA, two Ralphs and a Food 4 Less. Kroger said the $5 Hero Pay would add $30 million to the payroll over the four months “making it financially unsustainable” Long Beach Mayor Robert Garcia echoed the “They can afford it crowd;” “Grocers are making record profits.” Los Angeles Council Member Paul Koretz said “They absolutely can afford the increase …. They absolutely should be paying the increase.” The average Los Angeles grocery store worker, earning $18/hour, will receive a roughly 28% pay increase Hero Pay is becoming contagious. It spread to neighboring, once conservative Orange County. Irvine’s City Council voted 3-2 to impose Hero Pay of $4/hour on large grocery stores and pharmacies despite Walmart closing a mammoth store and Albertsons announcing two store closures. Cities imposing Hero Pay include Berkeley, Montebello, Oakland, San Jose, Santa Monica, West Hollywood Santa Ana’s council voted 5-2 to impose Hero Pay on 27 grocery stores, 24 pharmacies, and four targets and Walmarts. Santa Ana Councilwoman Thai Viet Phan said: “These workers have been on the front line since the beginning. And it’s scary for them.” Fellow Councilman Jonathon Ryan Hernandez added ”Hazard pay sends a message that we really do value people.” Not their own municipal employees. Not one of these cities is considering Hero Pay for their employees, such as first responders, healthcare workers, and transit workers, who extensively deal with the public. City councils find it easy to enact Hero Pay for others because it’s not their budget. The idea of Hero Pay should, if politicians were consistent, apply to nurses, doctors, EMT’s, and restaurant workers, but they’re not represented by the UFCW. Coachella extended Hero Pay not only to retail and food workers, but farm workers. The Coachella Valley has 8,000 farm workers, of which 30% are in the city of Coachella. Food retailing is a low margin business. Supermarkets often earn 1% on sales with LA supermarkets netting up to 2.2%. Labor costs in LA average 9.4% of sales, which leaves little margin for error. A 9-10% increase in wages can shatter budgets, leaving three alternatives: raising prices, cutting underperforming stores, cutting employment, and reducing overtime. Albertsons, Krogers, Target and Walmart are not eleemosynary institutions. Companies which do not earn a reasonable rate of return on capital will wither and die. These stores are survivors in cut-throat retailing in which scores of once mighty grocery chains and discounters have failed. The radicals in the Seattle City Council also think $4 Hero Pay is a great idea for grocery workers. Kroger responded by announcing the closure of two QFC supermarkets, issuing a statement: “Unfortunately, Seattle City Council didn’t consider that grocery stores – even in a pandemic – operate on razor thin 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 consistently profitable business.” The Seattle City Council has proven in the past couple of years that it is either ignorant and/or oblivious to economic reality. Trader Joe’s in Seattle raised pay by $4/hour in response to the Seattle City Council vote, but said it would cancel a scheduled a midyear company-wide raise. Large retailers hired tens of thousands of temporary workers because of the increased needs caused by Covid-19. The large workforce will drop as the large retailers readjust. They’ve begun by reducing checkout cashiers by pushing customers to use self-service checkouts. The retailers have calculated the payroll savings offset the increased shrinkage costs (shoplifting). They are also outsourcing, when possible, jobs to independent contractors. The response to the temporary enactment of Hero Pay ordinances is a poor omen of the pending increases in the minimum wage.

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