States and cities demanding companies boost employee wages with “hazard pay” or “hero pay” are being cast as villains, as some workers are out of work because of these actions.
U.S. Chamber of Commerce Senior Vice President of the Employment Policy Division Glenn Spencer said mandated pay increases are a poor idea that ignores economic realities.
“It’s basically just an unfunded mandate,” Spencer told DC Business Daily. “Some of these businesses have particularly thin profit margins.”
He said companies have invested in personal protective equipment, shielding and other methods to protect the health and safety of their workers and customers. A mandated pay increase further cuts into the companies’ bottom lines.
“It’s just another expense on top of that,” Spencer said.
When the Long Beach City Council mandated on Jan. 19 a temporary $4 an hour pay increase for all stores with more than 300 employees, it failed to provide financial assistance to companies not using COVID-19 relief dollars.
In response, Kroger closed two stores in North Long Beach – the Ralphs at Los Coyotes and Diagonal, and the Food 4 Less on South Street near Cherry Avenue – and issued this statement:
“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. 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.”
The minimum wage for workers in the stores was $14 per hour.
“Not only are they not getting hazard pay, some are not working at all,” Spencer said.
Some workers said they felt caught in the middle of a political battle, with their jobs at risk. The California Grocers Association filed a lawsuit against the city over the ordinance.
This issue comes at almost exactly the same time grocery stores are laying off hundreds of drivers and switching to private delivery services in the wake of Proposition 22, approved as Assembly Bill 5 by the California Assembly in 2019.
It says delivery workers must be classified as employees rather than independent contractors, which means they may access to company health care, other benefits and increased pay.
In response, companies are switching to Uber and other firms to deliver goods.
Spencer said unions have not offered to rebate or reduce dues to provide assistance. Both are “interesting ideas,” he said, but so far, there has been little sign that will occur.
“I’m sure workers would appreciate that,” Spencer said.
Spencer, who has been with the chamber since 2007, focuses on several issues, including labor relations, wage and hour worker safety, state labor and employment law and equal employment opportunities. He also works on immigration, retirement security and human trafficking, wage hour and worker safety issues, EEOC matters, and state labor and employment law.
His expertise in law matters goes back to his work with the U.S. Department of Labor in the Office of the Secretary. Spencer served as deputy chief of staff and then chief of staff to Secretary of Labor Elaine L. Chao. He also served as a lobbyist for Citizens for a Sound Economy in Washington, D.C., and as a senior analyst in the research departments of the National Republican Senatorial Committee and the Republican National Committee.
Spencer said that as the pandemic recedes, the economic situation has become uneven.
“What we’ve really got is, we’ve got a K-shaped recovery in a lot of ways,” he said.
Some firms have done well and are on the upward track of the K. Others, such as restaurants and businesses in the hospitality and group event field, are headed in the opposite direction.
“They’re certainly not doing well,” Spencer said.
Grocery stores, with little room for error in a business with thin profit margins, do not want to end up on the downward track, he said. The concept of hazard pay could end up doing that, while harming the workers it’s intended to help.