Cities trying to impose unrealistic wages find themselves without grocery stores

 Monica Showalter:

Long Beach is now short two big grocery stores. 

Ralph's and Food 4 Less have shut their doors, unable to sustain the city council's order that they raise worker "hero pay" by $4 an hour, pretty much forever.

According to the Epoch Times:

Grocery chain Kroger said it closed down two California stores Saturday after the Long Beach City Council approved a COVID-19-related "hero pay" ordinance that increased wages by $4 per hour.

The pay increase, mandated in January, was for workers who were employed at pharmacies and retail stores with 300 or more employees in the Southern California city.

The move was announced earlier this year, but the Ralph's and Food 4 Less—both operated by Kroger—were shut down on April 17, employees told local media outlets.

"As a result of the City of Long Beach's decision to pass an ordinance mandating Extra Pay for grocery workers, we have made the difficult decision to permanently close long-struggling store locations in Long Beach," said a spokesperson for Kroger several weeks ago. "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."

So instead of highly compensated "hero" workers as dictated by the central planners, the city has got 300 more heading for the unemployment lines.  Proud of yourselves, morons?

It's not as if they didn't have warnings — they most certainly did.  Los Angeles passed a $5-an-hour "hero pay" measure and got a wave of shutdowns to show for it.

That didn't register with the clowns on the Long Beach City Council, who passed the "hero pay" legislation of their own, late, way, way late into the pandemic this past January.  Groceries warned that the increased labor cost of 28% would soar well ahead of the grocers' tiny 2.2% profit margins, rendering their businesses unsustainable.  That was brushed off as union ignoramuses and rabid-left crazies falsely yelled that groceries were more profitable than ever.

According to trade publication Supermarket News, which has an excellent, balanced report, here's the hard numbers on the problem:

CGA [California Grocers Association] said it commissioned a study finding that grocery costs for a family of four could increase by $400 a year with a $5-per-hour extra pay mandate, as proposed in Los Angeles County. The report pegged grocery industry average profits at 2.2% during early to mid-2020, at the height of pandemic-triggered panic buying, but determined that the higher wage would hike overall costs 4.5%, twice the size of the industry profit margin and three times historical profit margins.

"The Long Beach City Council rushed to enact the misguided extra pay mandate without any meaningful dialogue with grocers in their community. 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," according to CGA's Fong, who said a $4 hourly increase translates to a roughly 28% rise in retailers' labor costs. "There's no way grocers can absorb that big of a cost increase without an offset somewhere else, considering grocers operate with razor-thin margins and many stores already operate in the red. The Long Beach City Council put politics ahead of families and jobs in the middle of a pandemic. This was entirely avoidable. We are hopeful that Long Beach and other cities reconsider these misguided proposals that do far more harm than good."

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Grocery stores have always had slender profit margins.  Ignoring this reality can be fatal to a business.  This is also another example of why politicians are ill-suited from making business decisions for others. Liberals in Southern California are their own worst enemy.