Businesses To Bear The Burden Of Another Government Mandate, Part II

Last month we covered the story of the Los Angeles County Board of Supervisors deciding it was within the scope of their duties to reward pandemic “front-line” workers with other people’s money. As we noted then, Long Beach was considering a similar mandate, which it eventually approved. Yes, some workers will benefit, earning additional wages. But every time government chooses winners, someone else loses. There can be no other way.

A few weeks after Los Angeles County approved its $5-an-hour increase for “heroes of this pandemic,” the Long Beach City Council unanimously passed a $4-an-hour “hero pay” raise for the next 120 days for workers in grocery chains that employ at least 300 nationwide and have more than 15 employees in the city. In a response Long Beach officials should have expected, two stores will close, a Ralphs and a Food 4 Less, both owned by Cincinnati-based Kroger.

“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,” says a company-issued statement. “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.”

Long Beach also heard from the California Grocers Association. It filed a federal lawsuit against the city, alleging the “ordinance is unconstitutional because it interferes with the collective bargaining process between grocery stores and the unions that represent their frontline workers,” the Long Beach Press-Telegram reports.

The Press-Telegram also said that “grocers warned the trend may continue in other cities that consider similar policies.” Montebello and Pomona would be on the list, as would Los Angeles, where the City Council unanimously adopted an ordinance requiring a $5-perhour temporary boost in grocery worker pay last week.

Businesses are not toys for policymakers to play with, nor are they platforms from which politicians should feel free to launch personal and partisan social objectives. If elected officials gave private-sector employees raises any time they believed they were warranted, companies would soon go out of business. No one should be surprised nor upset that Kroger is closing a pair of Long Beach stores – unless the displeasure is directed at the Long Beach City Council, which is directly responsible for the closings – when the cost of doing business is artificially inflated.

The effect of “hero pay” is no different than that of minimum-wage increases. Forcing pay hikes always produces results that are at odds with the goal. When labor costs are inflated by public policy, businesses respond by reducing the added expenses by laying off workers, cutting hours, putting off new hiring, and, as Kroger did, closing doors.

Yet California elected officials continue to raise the minimum wage, and demand grocers cough up higher pay without regard to the impacts. Too many feel as New York City Mayor Bill de Blasio does, that “there’s plenty of money in the world … it’s just in the wrong hands.” No, we can’t recall a California lawmaker making a similar statement. But it’s obvious by their actions that many are in agreement with it.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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