SEATTLE - Kroger-owned QFC said it is closing two "underperforming" grocery stores in Seattle largely because of the City Council's new law requiring an extra $4 in hazard pay for grocery workers.
"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," QFC said in a news release.
The hazard pay applies to grocery companies with more than 500 employees and for stores larger than 10,000 square feet, such as Safeway, QFC, and others. The ordinance doesn't apply to convenience stores, food marts or farmers' markets.
Kroger, which owns more than 2,700 grocery stores in the United States, claims stores are operating on "razor-thin" profit margins even during a pandemic. A recent report from the Brookings Institute says Kroger's net earnings for the first three quarters of 2020 are 100 percent higher than they were for the first three quarters of 2019.
Councilwoman Teresa Mosqueda, who sponsored the legislation, said 73 percent of Seattle residents support hazard pay for workers. Other stores like Trader Joe's and PCC have extended the hazard pay to workers across the country in response to Seattle's new law, she said.
"Grocery workers have had to cover emergency shifts, pick up extra responsibilities, and are five times more likely to contract COVID. These workers should not be pawns in a game of chess. Workers aren’t an unnamed, unknown entity. They are the folks who load your cars, check out your groceries, re-stock your shelves. They are our neighbors. And their health is ours," she said in a prepared statement.
UFCW, the nation's largest grocery workers union, also condemned QFC's decision, calling it "retaliation" against policies designed to help frontline workers.
"Kroger has literally made billions in pandemic profits off the sacrifices of grocery workers in Seattle and across the country. Kroger’s action today not only threatens these workers, but it also threatens the local food supply. Instead of doing what is right, protecting the community and providing the hazard pay for these essential grocery workers, Kroger is once again trying to intimidate local and national elected leaders. It will not work.
QFC says the stores closing are the Capitol Hill location on 15th Avenue and the 35th Avenue store in the Wedgwood neighborhood. They will remain open for 60 days.
The company says its Seattle workers earn about $20 an hour on average, not including health care and retirement benefits.
Two grocery store associations have filed a lawsuit challenging the measure, claiming the law is unconstitutional and picks "winners and losers" by design.
The California cities of Los Angeles, Long Beach and Berkeley have also forwarded or approved similar "hazard pay" boosts for grocery workers.
The Associated Press contributed to this report.