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The Price of Seattle’s Hazard Pay Bill? Two QFC Closures

But the $4 hourly bump has also boosted workers’ paychecks across the country.

By Benjamin Cassidy February 17, 2021

QFC sign

Your grocery shopping plans just got a bit more political. On Tuesday, QFC announced that it would shut down two of its Seattle stores in late April. A press release from the Kroger-owned grocery store said the closure of the businesses—one on 15th Avenue in Capitol Hill, the other in Wedgwood—was "accelerated" by the $4 hourly hazard pay legislation passed by Seattle City Council a few weeks ago.

"Unfortunately, Seattle City Council didn't consider that grocery stores—even in a pandemic—operate on razor-thin profit margins in a very competitive landscape," the release notes. "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 financially sustainable business."

Council member Teresa Mosqueda, the bill's lead sponsor, did not find that argument persuasive. "It’s beyond disappointing—it’s harmful to our public health and retaliatory—that Kroger decided to announce the closure of their stores (including one store that was already slated for redevelopment),” Mosqueda said in a statement, alluding to the Capitol Hill location, which sits on a block developers bought four years ago.

The impending closures should come as no surprise to Mosqueda or other close observers of hazard pay legislation during the coronavirus pandemic. Grocery store industry trade groups have sued Seattle over the bill. More tellingly, in Long Beach, California, a $4 pay raise led Kroger to announce the closure of two city stores last month. A QFC spokesperson warned struggling Seattle businesses could face a similar fate.

Some other prominent grocers, however, have responded differently to Seattle's hazard pay bill. After initially pushing back on the legislation, PCC Community Markets eventually adopted the hourly increase for all of its stores across the Puget Sound region, not just in Seattle. And Trader Joe's went national with the bump (though it did eliminate a midyear raise in the process), earning Seattle's city council plaudits from progressives across the country.

The council has certainly proven it’s not afraid to gamble jobs to advance progressive policy. Last year, it passed an additional payroll tax on larger businesses that could help the city weather an economic crisis brought on by the coronavirus pandemic. The legislation could also potentially drive away some of those employers and, consequently, the employment and tax income that come with them.

The equation is similar, though on a smaller scale, with hazard pay. Raising pay for workers benefits workers, as long as they still have jobs with those companies.

The two QFC closures are a blow to employment; they will eliminate positions in a move the local chapter of the United Food and Commercial Workers union called "corporate bullying." Many in Seattle would agree with that description. While there's merit to the company's financial argument, as Kevin Schofield of Seattle City Council Insight outlined in painstaking detail weeks ago, Kroger's profits have still grown year-over-year during a pandemic. And on a local level, the move seems like bad business: Cutting two stores in a bastion of progressive boycotts is a great way to guarantee a revenue drop at all 15 Seattle locations.

This doesn't appear to be a decision, however, with just local profits in mind. Kroger clearly doesn't want to follow the lead of Trader Joe's and hike wages in other locales. Though Seattle City Council, and mayor Jenny Durkan, are unlikely to fold on this legislation, perhaps a city council somewhere less liberal, in the many states where Kroger does business, will be less inclined to stand up for some of their most essential workers. They closed those two stores in Seattle, they'll say. What if they do that here?

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