Local governments broadly adopt hazard pay mandates
April 15, 2021
Despite the increase in COVID-19 vaccine distribution and local residents anticipating a return to a greater sense of normalcy, Bay Area governments are considering and implementing hazard pay mandates for grocery and drugstore workers.
In a movement that spread quickly in the first few months of 2021, union workers and government officials in numerous California cities have advocated for increases in hourly pay to compensate grocery and drugstore workers for the enhanced risks they undertake at their jobs as a result of the pandemic.
A version of the policy has been implemented in all three major Bay Area cities – San Francisco, Oakland, and San Jose – as well as Santa Clara County. More locally, San Mateo recently passed an emergency ordinance to ease the economic burden of the COVID-19 pandemic, while San Carlos and Belmont both decided against imposing a hazard pay requirement in March. (To read more about San Carlos’ rejection of a hazard pay mandate, click here.) This week, Redwood City became the latest municipality in San Mateo County to approve a temporary hazard pay ordinance.
San Mateo’s Unanimous Decision
The San Mateo ordinance requires large grocery stores and drugstores in that city to provide their workers with hazard pay of $5 per hour in addition to their hourly wages. For the average drugstore or grocery worker, that hazard pay reflects a 35-40% increase in their hourly wage. The San Mateo ordinance also applies to stores with over 750 employees nationwide and 10% of their floor space to selling food.
Passed on March 1, 2021, with a unanimous vote, the San Mateo councilmembers lodged their strong support for the ordinance. Having spearheaded the mandate, Councilmember Diane Papan of San Mateo led the effort to support grocery and drugstore workers during the spring and summertime.
The Impact of Hazard Pay by Hudson Fox
Grocery and drugstore workers have suffered from constant exposure to customers, and companies such as Walgreens and Kroger neglected to reinstate hazard pay after the spring and summer months of 2020. While a small percentage of national corporations have continued their policies of hazard pay, many have offered bonuses during the holiday or added compensation for those who administer the vaccine, an integral step in America’s return to normalcy.
In a written statement, Joseph Goode, Senior Director of Corporate Communications at CVS Health, noted that bonuses were provided at the beginning of the pandemic to “demonstrate [CVS Health’s] appreciation to colleagues who continue to serve patients and customers during a time of great uncertainty.” Goode also drew attention to the fact that CVS Health provided $250 bonuses to nearly 250,000 employees at the beginning of the pandemic, and it has recently implemented an increase of $2 per hour in the salaries of pharmacy technicians administering COVID-19 immunizations.
Despite these efforts, Papan did not feel as if private corporations were being proactive enough, which is why she sought to compensate workers for the undue risks they continue to face during their daily jobs.
Papan said, “They weren’t all [providing hazard pay], so we had to come up with some sort of uniform endeavor. I felt that the stores conceded that there was a hazard and paid it initially, so it begs the questions as to why it stopped.”
The ordinance notably covers workers from local drugstores or grocery stores, but it exempts similar industries from having to abide by the mandate.
Stressing the importance of the grocery stores and drugstores to residents, Papan said, “Everyone needs food. Food was considered a frontline job in the direct pipeline to keep people going during the pandemic, so that’s why we singled out [those industries].”
When explaining her logic for providing grocery and drugstore workers with government-mandated hazard pay, Papan highlighted the difference in the nature of frontline workers’ jobs. According to Papan, a grocery worker is exposed to about 250 people during a full shift of eight hours, and COVID-19 exposure was never contemplated by those workers when they took the job.
Papan said, “I felt quite strongly that when you signed up to be a grocery or drugstore worker, many didn’t necessarily sign up for that kind of risk. I mean, it’s one thing to work in the medical industry, where you know there could be a risk, but not when you’re doing this sort of work.”
As many small, local businesses ceased to exist during the pandemic, the council was acutely aware of the fact that the increased wages could spell financial ruin for smaller stores in their municipality. Papan explained the decision to set the standard to only affect businesses with at least 750 employees nationwide.
“[The council] does not want this to apply to small mom and pop stores. We also do not want it to apply to regional grocers who have already done quite a bit in terms of compensation; we would rather target the larger stores who have made record profits and have the resources,” Papan said.
In supporting essential workers in drugstores and grocery stores, Papan highlighted the council’s motivation to help workers as they navigate between their homes and a high-exposure workplace.
Papan said, “It’s one of the things I felt really proud of, supporting people who are in such high-exposure scenarios. It was the right thing to do.”
The Workers’ Plight
Since the beginning of the pandemic, employers have struggled with the issue of compensation for workers nationwide. Unknown risks, coupled with high exposure levels, led many major employers to offer hazard or “hero” pay voluntarily.
As COVID-19 cases continued to increase, many employers ended their policies of offering hazard pay after the first shelter in place order was lifted before last summer, according to Jim Araby, the political and strategic director of the United Food and Commercial Workers (UFCW) Local 5 union.
After the end of hazard pay, local unions such as UFCW Local 5 began to negotiate with corporations to obtain some sort of compensation for the risks they were undertaking with their daily jobs.
Grocery and Drugstore Employees Across the Bay Area by Hudson Fox
Araby said, “Grocery workers, in particular, took on a much higher level of risks than many other workers because they didn’t have control of their environment. There was no way of tracking any exposure, so many were left helpless.”
For Araby, San Mateo’s ordinance signaled a positive trend in local governments intervening to provide grocery and drugstore workers with additional compensation. Speaking to how the ordinance will support the workforce, Araby highlighted the risks that workers in this sector still face, even as the U.S. has pursued mass vaccination policies that prioritize essential frontline workers.
Araby said, “Grocery workers and other essential workers have access to the vaccine today, but this is more about rewarding workers for taking the risk to provide us with essential services. [Grocery and drugstore chains] have been the only ones making profits, but there is still that elevated risk for both vaccinated and unvaccinated workers, as both groups could bring the virus home to their families.”
According to Araby, the grocery industry’s profits are up over 30% on average. In an analysis provided by Brookings Institution, a think tank based in Washington D.C., the top retail companies “earned on average an extra $16.7 billion in profit this year compared to last—a stunning 40% increase—while stock prices are up an average of 33%,” supporting Araby’s contention.
Furthermore, the 13 companies observed by Brookings raised wages for their frontline workers by an average of just $1.11 per hour since the beginning of the pandemic. For those same workers, the average time since receiving hazard pay has totaled 133 days as of November 2020.
Addressing the concerns that local hazard pay mandates could lead to the closure of grocery stores and drugstores, as seen in Seattle and Los Angeles with Kroger’s planned closures, Araby maintained that these closures were politically motivated and tactical ploys to discourage other municipalities from pursuing similar legislation.
Araby said, “Kroger has aggressively been trying to use this hazard pay ordinance as a scapegoat for the closure of these underperforming stores. Many of the stores they are closing were going to close before the pandemic, and their only reason they were kept open is that they began to make massive profits.”
With a record year of profits in 2020, Kroger seemed poised to continue with its strong showing, propelled by the momentum provided by their 14.1% increase in identical sales (excluding fuel) in the fiscal year 2020. Despite large profits and a jump in sales, Kroger still struggles to compete with other large chains. Araby highlighted Kroger’s attempt to shift the blame to local governments by noting that Kroger would not immediately close the stores but reversed course after a pivotal legal decision.
“They’re still trying to squeeze out as much profit as they can before blaming hazard pay for the closure. They are [closing the stores] not because of an economic decision, but rather, a political one; they are trying to scare other cities into not continuing with these policies,” Araby said.
The Kroger store closures came soon after important legal decisions affirmed the legality of these sorts of ordinances.
On Feb. 25, 2021, U.S. District Judge Otis D. Wright II concluded that the California Grocers Association (CGA) failed to establish a likelihood of success in its argument for a preliminary injunction that targeted the hazard pay mandate issued in Long Beach, Calif.
“A preliminary injunction is ‘an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief,’” Wright wrote, deciding that CGA’s argument was not sufficient enough to merit a trial.
After the legal challenges failed to stop the mandate, Araby believes that companies took more drastic measures, such as closing stores, to shift the blame off of their management and onto hazard pay. For Araby, this only calls more attention to the fact that these companies do not want to provide their workers with ample financial support.
“In my mind, this is less about their lack of ability to pay and more about the greed,” Araby said.
By and large, Araby was positive about the level of attention the issue of hazard pay mandates has recently received. He expressed optimism at the prospect of widespread vaccinations by this summer that would make COVID-19 less rampant.
“Hopefully, by the middle of summer, the risk will be less. If that occurs, there will no longer be a need for some sort of hazard pay, but until then, [the workers] believe it is necessary,” Araby said.
Araby summed up his feelings, underscoring major companies’ failures to meet the workers’ needs that are placed in hazardous conditions as a part of their daily work.
Araby said, “The bottom line is that these companies have not rewarded the workers taking these sorts of risks, risks that put their lives in danger every day.”
San Mateo Inspires Other Cities
Buoyed by the success that San Mateo had with the implementation of the hazard pay ordinance, other cities in San Mateo County have pursued the ordinance. On March 8, Daly City implemented a hazard pay ordinance, and on March 16, Millbrae followed suit and adopted the policy.
After a long period of consideration, Redwood City’s city council became the latest Bay Area community to implement a hazard pay ordinance on April 12. This ordinance is set to expire on July 11 and includes many of the same provisions established in the San Mateo ordinance.
“This is important, and our community has been talking about it,” said Redwood City Councilmember Alicia Aguirre, the person who made the motion to adopt the ordinance during the meeting. “As leaders in San Mateo County, I don’t want to be behind.”
Concluding her argument for the passing of the ordinance, Vice Mayor Giselle Hale called attention to the important role grocery workers play in the community when keeping stores open during the pandemic.
“These are the people who are truly at the front line. It’s the bottom of Maslow’s hierarchy,” Hale said. “It’s giving you food so you can eat during this pandemic.”