retail news in context, analysis with attitude

From the Los Angeles Times this morning:

"More than two-thirds of Kroger workers struggle to afford food, housing or other basic needs due to low wages and part-time work schedules, a report published Tuesday by a Los Angeles-based research group found.

"Fourteen percent of Kroger workers are homeless now or have been during the last year, according to the report.  Three-quarters are food insecure, meaning they lack access at all times to enough food for an active, healthy life, according to the definition set forth by the U.S. Department of Agriculture. That’s seven times the rate of food insecurity in the general population. Fourteen percent of workers report getting food stamps or food from a food bank or community donation program … Adjusting for inflation, wages for the most experienced Kroger food clerks have declined between 11% and 22% across the regions surveyed since 1990, the report found. Kroger is the only employer for 86% of the workers surveyed."

The Times quotes Kroger spokesperson John Votava as saying that "Ralphs and Food 4 Less paid average compensation of more than $24 an hour to cover wages, healthcare and retirement benefits, compared with the $18-an-hour average compensation for U.S. retail workers."

The Times says that the study was conducted by the Economic Roundtable, was based on "a survey of more than 10,000 workers at Kroger-owned stores in Southern California, Colorado and Washington," and was commissioned by the United Food and Commercial Workers International Union (UFCW).

You can read the LA Times story here.

You can read the original report here.

KC's View:

There will be criticisms of the report because it was commissioned by organized labor, and comes at a time of increased tensions between Kroger management and the UFCW.    (Kroger-owned King Soopers in the Denver area is facing an imminent strike as negotiations have broken down, Fox News reports.)

I do think that while Kroger may be accurate in its assessment of how well it pays its employees, the disconnect may be that these markets being examined are some of the most expensive in the country.  You may be able to get farther on $18 an hour in Cincinnati than you can on $24 an hour in Los Angeles.

Looks to me like the table is being set for greater tensions between management and labor going forward, which could create issues for Kroger at a time when the labor movement is at least temporarily resurgent.

It also is important for workers to appreciate the point made by Burt P. Flickinger III, managing director of the retail consulting firm Strategic Resource Group, to the Times - that labor isn't the only expense with which retailers have to deal.  Flickinger "said grocery stores are 'caught in in the proverbial crossfire of higher taxes from the county and the state, higher prices for their operating licenses and higher operating costs.'  Flickinger also pointed to revenue loss from retail theft, blaming Proposition 47, a 2014 voter-approved law that raised the minimum for charging property theft as a felony to $950 worth of merchandise."

The crossfire, as Flickinger describes it, only will get more intense … and Kroger will be just one battlefield on which it is likely to play out.