As the new debate on the Kroger closing stores have created a lot of controversy! While, the company’s decision to close two grocery stores due to the risk allowance is a political move. (many of the senior analytics are thinking this might be the reason behind closing stores) The economy is more complex.
In addition, Kroger supermarket retailer recently announced the closure of two grocery stores in Long Beach, the first California city to implement a “pay heroes” law. Kroger blamed the new law. Would you do the same trick here in Seattle? As it turns out, yes. Last week, the Kroger-owned Qatar Financial Center announced that two of its 13 stores in Seattle would be closed in April. One of them is the Qatar Financial Center. The 109 workers whose future jobs will appear in the air will likely feel angry, too.
Let’s put aside the question of whether grocery workers need and deserve the risk allowance, because of course they do. Unless counted as the QFC’s protests about how it was providing generous care and rewards for its workforce during the pandemic, opponents of these new laws do not usually argue that workers are already making enough money. Instead, they argue that due to its extremely narrow margins, the grocery industry simply cannot absorb the extra costs. This is how Kroger interpreted its decision to close stores, which it says have been “struggling for a long time” and “underperforming” before the pandemic. Of course, the company won’t open its books to public scrutiny, so we only have the good word that this step is a business necessity. Every news story about the Seattle shutdown has repeated the QFC’s dramatic claim that the new law “will increase our store’s operating costs by approximately 22%”. I thought that sounds suspiciously loud, so I put on my reasoning cap and did some simple math.
The QFC says its labor costs equal 13% of total sales, and the average labor cost in Seattle is $ 25.96 an hour, including benefits. (This is believable: Lots of newbies tend to start at $ 16.79, which is just over the minimum wage, and a lot of veterans near $ 23, which is the top of the union-won wage scale, with a sprinkle in between). In this case, paying $ 4 an hour in risk allowance, and generously recognizing an additional dollar for additional expenses such as payroll tax increases and pension contributions, would increase labor costs at the QFC by less than 20%. But what about company operating costs?
It is generally understood that “operating costs” include all the day-to-day costs of running a business. This can’t be what Kroger means, given that a 20% increase in labor costs will not raise total expenses more than a few percentage points. Maybe Kroger rules out the cost of goods sold? This would be a non-intuitive but still defensible definition. But even then, it’s hard to envision how the new law could raise the store’s operating costs by more than 10% or 12%. That’s important, but it doesn’t come close to 22%. is this wrong? A bald lie? Or perhaps Kroger, like Humpty Dumpty, uses words to only mean what he chooses. Does the company have a vague internal definition of operating costs that no one knows? I asked the media relations department at the QFC to show me the company’s accounts, and I got a cheerful response showing $ 4 between 20% and 22% of $ 19.97, which is the company’s average hourly wage at its stores in Seattle. It is true. But not the statement that was printed on the “fact sheet” and reprinted in news stories across the country. Now, let’s see what happens in future, let us know what are your thoughts on it?
After all, it is tempting to view closing the store as a pure political move. There is no doubt that this is a political move. Tom Geiger, director of special projects for UFCW 21, the union that represents grocery store workers in the Puget Sound area, notes that Kroger doesn’t usually issue press releases when the store is closed. “It really looks to me like this is a shot across the bow in front of other communities across the state and across the country,” he says.
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If this is the game, it is not completely functional. A number of California cities have already followed the Long Beach line. Burien increased Seattle once this month by claiming a $ 5 risk allowance, and is considered King County