Should grocers keep paying their associates like heroes?

Discussion
Photo: RetailWire
May 14, 2020
Matthew Stern

Since the novel coronavirus pandemic began, low-paying frontline positions in grocery have been recognized by the public as some of the most indispensable and dangerous in the country. Many grocers praised the heroism of their workers and offered bonus pay in recognition. Now, as states, often against the federal government’s guidelines, begin to open more businesses to the public, grocers are evaluating whether to continue paying higher hourly wages and bonuses to associates.

In a significant announcement, Kroger announced it will be ending its “Hero Bonus,” a $2 hourly increase in pay instituted in April for tens of thousands of workers.

In a statement provided to RetailWire, Kroger wrote, “Our temporary Hero Bonus is scheduled to end in mid-May. In the coming months, we know that our associates’ needs will continue to evolve and change as our country recovers. Our commitment is that we will continue to listen and be responsive, empowering us to make decisions that advance the needs of our associates, customers, communities and business. We continuously evaluate employee compensation and benefits packages. Our average hourly wage is $15 and with benefits factored in, like health care, the hourly wage is over $20.”

The United Food and Commercial Workers Union (UFCW), which represents 55,000 Kroger employees, told CBS Moneywatch that given that the danger of COVID-19 still remains, so should the bonus pay.

While grocery work has arguably never been more dangerous for frontline associates, sales have been up for grocers. Year-over-year dollar sales of consumer packaged goods were up 58 percent for the week ending April 18, according to numbers by Nielsen and Rakuten appearing on Commerce 360.

Kroger, the largest operator of supermarkets in the U.S., announced a 30 percent year-over-year sales increase early in April.

Grocery prices have also increased, jumping 2.6 percent in April, the largest one-month increase since 1974, according to Labor Department statistics reported by CNBC.

While Kroger is getting rid of its bonus, Walmart has announced it will be giving its employees an additional one, according to Supermarket News. In March, Walmart gave full-time employees a $300 bonus and part-time and temporary employees a $150 bonus. The second round of bonuses will be identical and will be paid out on June 25 to people who have been with the company since at least June 5.

Amazon.com, which pays its warehouse and retail workers a minimum starting wage of $15 an hour, announced that it would extend its temporary $2 hourly pay increase and double pay for overtime policy through May 30.

RetailWire has reached out to UFCW for a statement and we will update as information becomes available.

DISCUSSION QUESTIONS: With the critical importance of the job now more broadly acknowledged, should the higher wages paid to frontline grocery workers during the pandemic become the standard moving forward? What do you make of Kroger’s move to end the bonus and do you expect most of its grocery rivals to follow its move?

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38 Comments on "Should grocers keep paying their associates like heroes?"


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Jeff Sward
BrainTrust

When the risk normalizes, the pay can be normalized. Until then, front line workers deserve some kind of premium over normal risk level working conditions.

Mohamed Amer
BrainTrust

That sums it up well! In the military, there’s hazardous duty pay when you work in extraordinary conditions, we have the same situation here.

Mark Ryski
BrainTrust

But herein lies the challenge — when will we know when it’s safe? What’s the measure? There isn’t one. With a lack of national guidelines, inadequate testing, and the real possibility that COVID-19 becomes an ongoing issue like the flu, it’s going to be very difficult for any retailer to make this call.

Mohamed Amer
BrainTrust

Absolutely Mark, it is a real challenge. Once a vaccine is available to the public, then you can mitigate the inherent risk. Short of that, the operating cost for retailers is going up and there’s no way to avoid it and having this happen with simultaneous reduction in store traffic is a double squeeze. In the interim, accessible and reliable testing will help as will taking active precautionary measures to limit spread. Customers are more likely to frequent a well-run store (read: safe) over a crowded one with no cues that shout I have healthy employees and surfaces are clean.

Joe Skorupa
Guest

Mark, retailers have to make this call — difficult or not, with national guidelines or not. We may never feel as safe at work as we once did, or at least not for some time to come. So to paraphrase Mohamed Amer, “you deserve hazard pay when you work in hazardous conditions.”

Richard Hernandez
BrainTrust

I believe all retailers should keep paying their employees the extra pay a lot longer. They have been essential since day one, and they are still putting their health on the line every day they work.

Mark Ryski
BrainTrust

Has the frontline work become less hazardous? I don’t think so. Increasing wages was the right thing to do during the height of the pandemic and the companies that did increase wages were held up as exemplars of how to treat employees. However grocery/essential goods retailers operate in a low margin environment that cannot absorb a significant, across-the-board wage increase and maintain sufficient profitability. It was inevitable that these extra pay programs would come to an end, but now the optics will make this problematic. Does the reduction in pay mean that frontline workers are no longer heroes? Does it mean that the work environment is safe now? I think the answer is no to both. Kroger took the lead and I believe others will follow.

Art Suriano
Guest
It’s effortless to give something to someone but very difficult to take it away. Employees who received that additional hourly wage are not going to easily accept it being taken away, especially when the process of reopening our country is not cut and dry, and many people are still afraid of contracting the virus. Walmart did it wisely because a bonus is a one-time payment. Employees will accept it gladly, but the reward didn’t become part of the weekly paycheck. Now when employees working for grocers will see their paychecks reduced, they are not going to be happy. And the fact is, we’re still practicing some precautions to avoid the virus which varies by state, but surely grocery employees will always be in the high-risk employment category as the pandemic continues. Lastly, I have to point out the substantial price increases on products. Sure they start with the companies who sell their goods to the supermarkets, but there’s no doubt that the grocers themselves are also enjoying the opportunity to increase profits. Adjusting employees’ paychecks… Read more »
Neil Saunders
BrainTrust

It would be a nice gesture to keep wages higher. However, while sales have risen sharply for most grocers, profits have not and the higher cost of doing business has taken its toll. As much as I would like to see frontline grocery workers paid more, sound economics do need to prevail at some point. However, that point is not now when we are still in the middle of the crisis.

George Anderson
Staff

Neil – Americans have shown a willingness to pay higher prices in grocery stores as illustrated in the latest DOL numbers. Do you think there’s room for grocers to raise prices to help increase pay levels even if not to the $2 an hour level?

Looking more long-term, are there are opportunities for large chains, in particular, to remake themselves into more horizontal, responsive organizations where differences in compensation are less dramatic from the c-suite to stores?

Neil Saunders
BrainTrust

It is an interesting thought, but I don’t agree that Americans have shown a willingness. They may be paying more out of necessity and because there is less price sensitivity (among some) during a crisis. However, the major trends in grocery point to lower prices – the growth of Aldi, the continued rise of dollar stores, switching to cheaper own-brands. Our own data shows price remains of paramount importance to most grocery shoppers.

On top of this, there are shifts to online – now much accelerated – which are very margin depleting. Plus all of the investments needed in technology and stores. So, overall, I think grocery has little room for maneuvering.

The U.K. faces very similar grocery trends. Wages there were pushed up by the Living Wage legislation. The result has been a lot of staff rationalizing, unfavorable rostering changes, and reduced benefits for shop-floor staff in grocery. So higher wages came, but not without a cost.

George Anderson
Staff

Thanks

Dr. Stephen Needel
BrainTrust

From a social perspective, they, like first responders, don’t get paid nearly enough. From a capitalist perspective, with unemployment as high as it is, wages are going to decline in many places. As long as stores refuse to force mask-wearing or social distancing, (hello, Kroger) their workers need hazard pay. At places that do enforce the rules, wage supply and demand is going to take over.

And everyone watches what a Kroger or a Walmart does and follows along – some lead, most follow.

Stephen Rector
BrainTrust

Yes, the higher wages should still remain in effect. I am not sure what Kroger was thinking in ending their bonus program as it just shines a poor light on them in the media. It feels like a PR blunder.

Suresh Chaganti
BrainTrust

So it took less than two months. I don’t know if anyone should be surprised that this has ended. But I am somewhat surprised it is ending so soon. I don’t see any less risk compared to eight weeks ago. No therapeutics yet, no vaccine. If anything the risk has been going up with reopening and some people refusing to wear masks.

But then we are a capitalist country. It’s a demand/supply equation. But decisions like these will have an impact on consumer psyche, as negative press is very likely. So Kroger and others that will follow soon should be careful.

David Naumann
BrainTrust

There is no doubt that grocery employees are putting themselves in a risky environment at work by interacting with the general public, as not all customers are taking the proper precautions. Giving these employees extra pay for “hazardous” duty is the right thing to do, however, it probably isn’t viable to continue the extra pay forever. The timing of when to discontinue may depend on the status of each specific state. Using a factual data-driven decision-making process may make the most sense, such as when the new COVID-19 cases drop for a number of days or reach a low threshold.

Michael Terpkosh
BrainTrust

All of us that have worked in the grocery retailing and wholesaling business know margins are very thin. However, during this time of absolute need (and big sales increases for the retailers) the higher wages should continue. These workers are risking themselves and their families by coming into work everyday to help feed America. I was surprised and somewhat shocked Kroger made this move this early in pandemic. This was a mistake, especially when you consider Walmart and others are extending the higher wages. In the end, the workers will decide where to work and they will remember and recognize with loyalty the retailers that have stood by them.

Cathy Hotka
BrainTrust

Grocers can start withdrawing their “hero bonus” when the pandemic is over. It isn’t.

Jeff Weidauer
BrainTrust

Kroger and its peers knew the pay increase was temporary, yet didn’t communicate an end date up front to manage expectations. In addition, the crisis is far from over, so removing hazard pay now raises many questions about how much these companies actually care about their frontline workers. The lack of transparency and poor communication is turning what was a PR coup into a PR disaster, and much of the good will earned has been lost. Other companies need to take note.

Ron Margulis
BrainTrust

It’s easy to sit on the sidelines and award these great workers money out of other people’s pockets, but we have to remember that even with the dramatic volume increases grocery is still a penny or two per dollar net income business. Supermarket operators are very well aware of the additional profit they’ve earned. They also know the cost for those extra earnings. If they’re transparent with their team members and reward them based on added output, the workers, shoppers and the community will be more than satisfied.

Phil Chang
BrainTrust

It has to continue. Hopefully Kroger just needs some adjustment time to catch-up to the evolving pandemic timing.

Nobody even understands all the risks yet. Having said that, it’s up to us, the “experts” and the consumers to understand that all this is going to cost us more.

Being a retailer got more expensive – cleaning, PPE, and bonuses to frontline staff are all expenses that need to get covered, without even starting to think about supply shortages and how that impacts prices.

Cynthia Holcomb
BrainTrust

Grocery workers earned and will continue to deserve an acknowledgment of the risks they continue to take hour-by-hour and day-by-day in the form of pay, not praise. I shop at my local Kroger store and I am disappointed to learn this. I see the weariness on the faces of the employees all the while as they present a caring experience for each customer. As communities begin to open the unknown risks to grocery workers could actually be more severe. I personally would pay more in food costs to support the continued bravery of grocery workers. Corporate execs at Kroger, Safeway, Amazon, and others are exhibiting a level of detachment only solved by working the grocery floor himself or herself as a grocery worker.

Richard J. George, Ph.D.
BrainTrust

These workers have been deemed “essential” like first responders and healthcare workers. They have become heroes because they have “hung in there” while providing these essential services. Going forward, post-pandemic, they may no longer be viewed as heroes, but will continue to be essential and should be compensated accordingly.

Ben Ball
BrainTrust

Increasing any sort of “regularly scheduled benefit” in response to a temporary situation is a bad management idea, period. One time bonuses or some other form of reward for continuing routine duties in the face of an unusual circumstance or hazard is a much better practice all around. The employee effort gets acknowledged; the inevitable disappointment and resentment when the “temporary” increase ends is avoided; and the union leaders and the press don’t get a bone to tussle over.

Ricardo Belmar
BrainTrust
Non-essential stores may be re-opening in many states, but that doesn’t mean the pandemic is over. Until the health crisis is over, the increased pay for these essential frontline workers needs to remain. It’s serving as an incentive to keep these workers coming to work every day. What kind of message does it send when you end these bonuses? That the employees are no longer essential? Last time I checked, we all still need to buy groceries, and shelves still need to be stocked quicker than ever. From a PR perspective, the optics on Kroger does not look good, but the message Walmart is sending to the public about their bonuses is a highlight of what should and can be done for frontline workers. I haven’t done the math on this so I don’t know if the bonuses Walmart is paying out makes the hourly wage for their workers on par, or better, or worse than other grocery retailers, but PR announcements like these are about optics and not necessarily substance. Hopefully this represents a… Read more »
Ken Morris
BrainTrust

A two dollar per hour permanent increase is not going to break any grocer. These people need a living wage. The benefits mentioned as part of the hourly wage calculation doesn’t mention that between 30 percent to 50 percent of these workers are part-time with little or no benefit coverage. It’s time we recognize the value of everyone in our personal ecosystem and reward them accordingly.

Ken Lonyai
BrainTrust

I told you so–there, I said it. When these TEMPORARY bonuses were first discussed on RetailWire I questioned what would happen when this day comes. Well, it’s here now.

It’s a horrible message to frontline workers that “we only really value you when there’s an emergency and we have to.” That’s what the cessation of bonus pay means.

So what will the criteria going forward be that determines what a “crisis” is, who gets what pay, and for how long?

The problem across all of retail is that to the C-suite, frontline = low-level = expendable.

Just look at Instacart’s CEO’s attitude. When there was a threat that 50,000 Instacart shoppers would strike over the lack of personal protective equipment, he stated that there were 300,000 applicants looking to onboard.

If retail (grocery and other) want to operate consistently and with team members that will step up without hesitation, whatever the situation is, (as we’ve said here for years), management has to start paying them appropriately and create career positions rather than just jobs.

Ananda Chakravarty
BrainTrust

The retail industry and grocery in particular have always had high employee turnover. Despite the value provided, the current economy, especially with loss of jobs in the transportation and hospitality industry (think Uber or Hilton) will have many workers ready to step into the grocery retail space with little job specialist skills needed. Everyone is learning as they go. Although disappointing from a purely economical point of view, there is excess manpower — even for risky jobs. The PR backlash is the key concern, but while consumers are thinking about themselves and their own health, it’s unlikely that the PR backlash will be substantial. However for companies that do take the long term view, they will be rewarded with a workforce that will be highly loyal and committed to great service and delivery. Companies like Costco – who already compensated their employees well – and perhaps in the future Walmart and other retailers can boast a higher level of talent ROI and lower turnover.

Joe Skorupa
Guest

Grocery, like most of retail, is built on an architecture of minimum wage workers. COVID-19 is accelerating a change that was already underway — a shift to technology-driven stores with fewer but more critical employees who deserve greater than minimum wage. Kroger and Walmart and Target and many others already exceed federal and state minimum wage guidelines. Now that frontline workers are viewed as essential the framework for paying associate salaries will have to be restructured and new criteria developed.

Andrew Blatherwick
BrainTrust

During the COVID-19 period, the public has realized the value of the grocery supermarket workers who have for many years been one of the lowest respected groups and whose pay very much reflected this. Grocers need to appreciate that they have very loyal and dedicated workers who can make a real difference to their business. Walmart once again gets it right as they have throughout this tough period. The increase should change from being a hero’s bonus to being a standard for the industry. This epidemic is not going away any time soon and retailers need to retain the loyalty of this group, it will pay off and prove a good investment.

Doug Garnett
BrainTrust

A great article came out over the weekend. And it indicates that while shoppers are likely quite safe, store help are the ones running the risk of getting sick. Until that’s no longer the case, combat pay should continue.

And I highly recommend this article which summarized hard research into physical situations where COVID-19 passes.

Scott Norris
Guest

Weren’t we saying only a few months ago in the “before times” that labor shortages were a real thing and that was inevitably pushing wages up? With Amazon and Costco coming out of this stronger than ever and paying more than ever, the Krogers of the world will end up even more behind the stick. Consider too that our country’s inconsistent and callous approach is literally killing tens of thousands of working-class individuals at the same time that immigration is being cut off.

Peter Charness
BrainTrust

Well from a different angle, restarting the economy means encouraging and restarting spending. At the risk of starting a political maelstrom — paying more to lower income earners means nearly 100 percent of the increased wages go out into the economy vs. tax breaks to the higher income earners which do not all flow out. So paying a living wage also helps get the rest of the economy moving. That’s the original Ford model and it works.

Kathy Kimple
BrainTrust

They are heroes, and yes they should be compensated as such. As the grocery business continues to adapt, companies will need to continue to optimize their compensation structure based on customer and business needs.

Brent Biddulph
BrainTrust

Due to the utter failure of a cohesive US Federal response — e.g. testing protocols and availability of such tools required to make localized informed decisions (unlike any other country on earth), the burden now falls on business leaders.

As a result, grocery retailers and CPG manufacturers (including COVID-19 “hot zone” meat packing plants) are now left to deal with the bifurcated and politically charged local (State) regulations — with really no choice, but to extend “Hero Pay” simply because of the level of uncertainty that still remains.

Craig Sundstrom
Guest

The cruel reality is that while the jobs are crucial collectively, none of them is individually; or to put it another way, the irresistible force of mass unemployment — people looking for work at any reasonable rate — will meet the very moveable number of jobs that don’t require a lot of skill to perform.

The Great Plagues of the Dark Ages ultimately tipped the power to peasants because there were fewer of them left than jobs to perform … now we have just the opposite.

Mel Kleiman
BrainTrust

I am answering the question a little differently. Once again, Walmart is smarter than most of the industry. When you give someone a pay increase, you have set a new standard even if the increase is supposed just to be temporary. It will be very hard and bad PR to take back the pay hike. Walmart did not give an increase in the hourly rate. They gave a bonus. They did not change the basic concept of what they were paying.

Jack Flanagan
Guest
4 months 4 days ago

Throughout the past couple of months (when far more has become known about COVID-19 though you have to dig for the data), I’m more than a bit surprised about the number of “one size fits all” comments on this (and many other) blogs.

Can we do a bit of a thought experiment here? Imagine that instead of a deadly disease we were (all of us professionally involved in retail one way or another) tracking and trying to better understand a new sales initiative that happened to be geographically clustered and demographically stratified the way COVID-19 is. Is there one among us who would accept the fairly high-level, inherently skewed and, in a few cases outright corrupted, data to make systemwide decisions for our nationwide/international company?

Regardless of what you want to pick as the “official” start date of COVID-19, we are many months into this. The data that ought to be available to make informed decisions ought to be far richer and more insightful than the top line.

End of thought experiment.

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Braintrust
"Grocers can start withdrawing their 'hero bonus' when the pandemic is over. It isn’t."
"Well from a different angle, restarting the economy means encouraging and restarting spending."
"It’s time we recognize the value of everyone in our personal ecosystem and reward them accordingly."

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