As COVID-19 continues to spread across the U.S. landscape, millions of frontline grocery and retail workers remain exposed to the virus, but without extra compensation for the risks they face. While the hazards of the pandemic have grown worse, hazard pay for most grocery workers expired months ago.
As we documented in a recent report with Julia Du, the country’s biggest grocery and retail employers have earned record profits during the pandemic—but, with few exceptions, most are sharing little of their windfall with the frontline essential workers who are risking the most.
Now, thanks to new local government efforts, this is about to change for thousands of grocery workers. Buoyed by the United Food and Commercial Workers International Union’s (UFCW) organizing efforts, several city and county governments across California and in Seattle have just passed mandates requiring some large grocery, food retail, and pharmacy employers to provide their workers hazard pay—a trend that may (and should) expand to other communities across the country.
The momentum to mandate hazard pay began last month in the city of Long Beach, Calif. Citing our research, Long Beach city council members introduced an ordinance for hazard pay—the first of its kind in the country aimed specifically at frontline essential grocery and food retail workers. Last week, the city council voted unanimously to approve the ordinance mandating that large grocery chains (those that employ more than 300 workers nationally and at least 15 locally) pay workers an additional $4 per hour “hero pay” for at least 120 days. Long Beach Mayor Robert Garcia signed the ordinance last week and the city council will take a final vote on February 2.
The Long Beach ordinance has already been replicated in more than half a dozen cities, including:
- Santa Monica, Calif: On January 12, the Santa Monica city council approved $5 per hour “hero pay” for grocery workers at large employers.
- Seattle: On January 25, the Seattle City Council unanimously passed a similar mandate—citing our research requiring certain large grocery and food retail businesses with at least 500 employees globally to pay $4 per hour hazard pay for grocery workers.
- Los Angeles County: On January 5, the Los Angeles County Board of Supervisors voted to draft a mandate—also citing our research—requiring large grocery and drugstore chains to provide workers a $5 per hour pay increase for at least 120 days.
- San Francisco: Earlier this month, San Francisco passed a nonbinding ordinance urging companies to pay hazard pay.
- San Jose, Berkeley, Santa Ana, Los Angeles, West Hollywood, Santa Clara, and San Mateo: Several other California cities are also considering mandates.
The new hazard pay ordinances in California and Seattle are unique because they are among the first to be government-mandated, rather than government-funded or voluntarily employer-provided. They follow a novel hazard pay ordinance passed by Seattle’s city council in June requiring gig platform companies that deliver food and groceries to provide premium pay to workers.
The new ordinances help fill the void left by nonexistent government-funded hazard pay and inadequate or lapsed employer-provided hazard pay. Despite early political momentum and a clear rationale to do so, the U.S. Congress has not passed any government-funded hazard pay for frontline workers during the pandemic. While a few states—including Pennsylvania and Vermont—creatively leveraged federal CARES Act funding to introduce state-level hazard pay programs, it is unlikely that these programs will continue or expand without additional federal funding. There are also no national or state laws requiring employers (outside the federal government) to provide hazard pay to workers during a public health emergency.
Thus, the provision of hazard pay to date has largely been voluntary and up to the discretion, willingness, and resources of individual employers. The result is a patchwork of intermittent, modest additional pay to only some frontline workers. Most essential workers received no hazard pay at all.
Hazard pay mandates target companies earning windfall pandemic profits
The new ordinances are targeted at some large companies with the greatest ability to pay, while sparing small businesses and other employers that are struggling financially during the pandemic.
In our recent report, we examined the record pandemic profits and the pandemic pay at 13 of the largest retail and grocery companies in the country. Combined, the 13 companies earned an additional $17.7 billion in the first three quarters of 2020 compared to 2019—a striking 42% increase. We found that many of the top companies earned billions of dollars during (and largely because of) the pandemic, but have shared little of their windfall with frontline workers. More generous companies such as Target (which permanently raised its starting wage to $15 per hour and has offered periodic bonuses) and Costco (which will sustain its $2 per hour hazard pay through March, on top of its $15 per hour minimum wage) stood out as exceptions. In contrast, grocery and pharmacy companies were among the least generous employers in our analysis, despite booming profits and very low wages.
The gap between pandemic profits and pandemic pay is especially striking at the country’s three largest grocery providers: Walmart, Kroger, and Albertsons. Together, the three companies earned an additional $6.8 billion in profit in the first three quarters of 2020 compared to 2019—an average increase of 98%. Meanwhile, the extra hazard pay these companies provided their workers averaged just $0.76 per hour through the end of 2020—well below the average hazard pay of $1.19 per hour across the 13 companies in our analysis, and far less than the $2 per hour hazard pay that Costco continues to provide its frontline workers. Specifically:
- Walmart could have quadrupled the amount of hazard pay it gave its frontline workers and still earned more profit than last year. As Walmart’s profits and stock price surged during the pandemic, the wealth of the Walton siblings (billionaire heirs to the Walmart fortune) has grown by 26 times the total amount of hazard pay the company paid its more than 1.5 million associates.
- Kroger ended its $2 per hour “hero pay” in mid-May, 257 days ago, despite doubling its profits and spending nearly a billion dollars in 2020 to buy back its own stock shares.
- Albertsons had the highest profit growth of all the retail companies in our analysis. Their pandemic profits are up a stunning 149% in the first three quarters of 2020 compared to 2019. The company spent nearly $1.9 billion in stock buybacks in the first three quarters of last year, compared to the approximate $350 million, pre-tax, the company spent on hazard pay and expanded sick pay for its workers.
These large grocery companies have the means—and the moral imperative—to provide their workers hazard pay. Despite pressure from unions, negative media attention, and even comments from President Joe Biden and Vice President Kamala Harris calling on CEOs to institute hazard pay, many large grocery and retail companies are still choosing not to invest their pandemic profits back into workers. With the new mandates, however, local governments are signaling that not only should these companies provide hazard pay, but they must.
Local governments face trade-offs in including more essential workers in hazard pay mandates
In addition to legal challenges, the main limitation of the new ordinances is their narrow scope, primarily benefiting frontline grocery and pharmacy workers. The mandates do not cover other frontline essential workers such as nursing home and hospital staff, home health aides, security guards, janitors, and food service workers—who, like grocery workers, earn low wages and face risks to their health on the job, but whose employers have not financially benefitted during the pandemic.
As we emphasized in reports from April and October, the best way to ensure all frontline essential workers receive hazard pay is for Congress to dedicate federal funds for it. However, with federal relief uncertain and local and state government budgets pummeled by the pandemic, government funding for hazard pay may not transpire.
In the absence of public funding, local policymakers have several options to expand eligibility for mandated hazard pay. All of them come with trade-offs, as they pass on the cost of wage increases to employers, including some that are barely surviving and others that are holding steady. The following are several options for expanding locally mandated hazard pay, with varying implications for employers based on their abilities to absorb higher labor costs:
- Hazard pay for all workers: A more sweeping legislative change could result in higher wages for the widest range of frontline workers. For instance, a successful ballot initiative in Portland, Maine raised the city’s hazard pay minimum wage to 150% of the normal minimum wage during a public health emergency. But without public funds from the state or federal government to help struggling employers pay for it, a broader mandate for higher pay across all employers could leave financially struggling employers in a difficult position.
- Generous hazard pay for more frontline workers at highly profitable companies: One low-hanging fruit for local policymakers is to broaden mandates like those in Seattle and Los Angeles County to include generous hazard pay to other workers at highly profitable companies outside of food retail. For instance, discount retailer Dollar General, e-commerce giant Amazon, and delivery company FedEx have earned large pandemic profits while offering little or no hazard pay to their workers.
- Modest hazard pay for more essential workers: Policymakers could also explore opportunities to widen eligibility by including more essential workers in additional mandates with less generous hourly pay, in addition to the more targeted grocery and retail worker hazard pay. For instance, to expand eligibility to workers outside of the most profitable companies, policymakers could consider a more modest wage increase (such as $1 or $2 per hour) for a larger pool of essential workers, perhaps with either exemptions for small businesses and certain struggling industries or grants to reimburse them.
More local governments should mandate hazard pay
While not addressing the needs of all essential workers, the new local ordinances in Long Beach, Santa Monica, and Seattle are paving a new approach for how cities and counties can address the needs of their frontline essential workers, despite inaction by Congress and the unwillingness of some large companies to share their pandemic profits. By focusing on some of the companies that do have the means to provide extra hazard pay, policymakers will make an immediate and meaningful difference for some of the workers risking the most on the COVID-19 frontline.
The case for more local hazard pay mandates may become even more urgent in the coming weeks. The Centers for Disease Control and Prevention forecasted that the more highly transmissible U.K. variant of COVID-19 will become the dominant strain in the country by March, foreshadowing a potentially worsening pandemic ahead. While frontline essential workers are prioritized for vaccines, their sustained exposure to COVID-19 at work could continue to jeopardize the health and safety of family members in their household who may have to wait months or longer to be vaccinated.
There are essential workers in every community across America who are performing jobs vital to their neighbors and the country, at great risk to themselves and their families. Hazard pay is one way that employers and policymakers can recognize their sacrifices and honor their essential value. New hazard pay mandates are a promising model for other local governments across the country to replicate and build on, ensuring that we not only praise essential workers in our communities, but also pay them.