Business Booms at Kroger-Owned Grocery Stores, but Workers Are Left Behind
When Enrique Romero Jr. finishes his shift fulfilling online orders at a Fred Meyer grocery store in Bellingham, Wash., he often walks to a nearby plasma donation center. There, he has his blood drained, and a hydrating solution is pumped into his veins, a process that leaves him tired and cold.
Mr. Romero, 30, said selling his plasma made him feel “like cattle.” But the income he earns from it — roughly $500 a month — is more reliable than his wages at Fred Meyer, which is owned by the grocery giant Kroger. His part-time hours often fluctuate, and he struggles to find enough money to cover his rent, his groceries and the regular repairs required to keep his 2007 Chevy Aveo on the road.
“The economy we have is grueling,” he said.
Business has boomed during the pandemic for Kroger, the biggest supermarket chain in the United States and the fourth-largest employer in the Fortune 500. It owns more than 2,700 locations, and its brands include Harris Teeter, Fred Meyer, Ralphs, Smith’s, Pick ’n Save and even Murray’s Cheese in New York City. The company, which is based in Cincinnati, said in December that it was expecting sales growth of at least 13.7 percent over two years. The company’s stock has risen about 36 percent over the past year.
But that success has not trickled down to its vast work force of nearly 500,000 employees, a number of whom have reported being homeless, receiving government food stamps or relying on food banks to feed their families. A brief strike in Colorado last month by workers, represented by the United Food and Commercial Workers Union, at dozens of Kroger-owned King Soopers locations brought renewed scrutiny to the issues of pay and working conditions for grocery workers, who have been on the front lines throughout the pandemic.
The Economic Roundtable, a nonprofit research group that surveyed more than 10,000 Kroger workers in Washington, Colorado and Southern California about their working conditions for a report commissioned by four units of the food workers union, found that about 75 percent of Kroger workers said they were food insecure, meaning they lacked consistent access to enough food for an active, healthy life. About 14 percent said they were homeless or had been homeless in the previous year, and 63 percent said they did not earn enough money to pay for basic expenses every month.
“There is a race to the bottom that’s been going on for a while with Walmart and other large retail stores, and also restaurants, and to reverse that trend is not easy,” said Daniel Flaming, president of the Economic Roundtable.
Kroger was the sole employer for 86 percent of those surveyed, partly because more than half had schedules that changed at least every week, making it difficult to commit to another employer. About two-thirds said they were part-time workers, even though they wanted more hours. Keeping workers part time is a strategy employers use to encourage turnover and reduce costs.
Kristal Howard, a spokeswoman for Kroger, said the report was “one-dimensional and does not tell the complete story.”
“Kroger has provided an incredible number of people with their first job, second chances and lifelong careers, and we’re proud to play this role in our communities,” she said. Ms. Howard added that the company had raised its national average hourly rate of pay to $16.68 from $13.66 in 2017, a 22 percent increase, and that its benefits package included health care, retirement savings, tuition assistance and on-demand access to mental health assistance.
Some of the workers said that even though other retailers and fast food restaurants had started offering higher starting wages than Kroger, the company’s health insurance and retirement benefits, which the union negotiated, were more generous than what other employers offered. Other part-time Kroger workers say they stay on the job because they don’t want to lose their seniority and the chance for a full-time role.
Despite some of the wage increases and benefits, working at a grocery store no longer provides the stable income and middle-class lifestyle that it did 30 years ago, workers say. The Economic Roundtable report studied contracts dating back to 1990 and said the most experienced clerks — known as journeymen — in Southern California made roughly $28 per hour in today’s dollars while working full-time schedules. Wages for top-paid clerks today are 22 percent lower, and those workers are far more likely to be working part-time hours.
Ashley Manning, a 32-year-old floral manager at a Ralphs in San Pedro, Calif., works full time but is regularly strapped for cash. Ms. Manning, the single mother of a 12-year-old, said she had worked at Ralphs for nine years and earned $18.25 an hour. It took her four years to reach full-time status, which guarantees 40 hours per week and comes with an annual bonus ranging from $500 to $3,000.
She said she struggled to pay rent and moved into her grandmother’s house after being evicted last spring. She has needed help from her family to help pay for a car. She has tried to make extra money through a party planning and decorating business, but demand for those services dried up in the pandemic.
“I would think, ‘I have a good job and make decent money,’ and I don’t,” Ms. Manning said. “I’m still on the poverty level.”
During the pandemic, grocery store workers have been recognized as essential to keeping society going, but they have also faced health risks. At least 50,600 grocery workers around the country have been infected with or exposed to the coronavirus, and at least 213 have died from the virus, according to the United Food and Commercial Workers International Union.
Ms. Manning was hospitalized for Covid-19 last summer. She blames herself for her grandmother’s subsequent death from the virus in August.
“She was one of the people that would help me the most, if I was short on a bill or needed help, to pick my daughter up from school,” she said. But when her grandmother was in critical condition, Ms. Manning said, she was told that she couldn’t take more time off after being sick with Covid-19.
The illness and the company’s response were jarring, given that corporate workers had the flexibility to work from home, she said, adding that she ultimately took disability leave for a stretch.
Kroger has one of the country’s starkest gaps between a chief executive’s compensation and that of the median employee. Rodney McMullen, Kroger’s chief executive since 2014, earned $22.4 million in 2020, while the median employee earned $24,617 — a ratio of 909 to 1. The average C.E.O.-to-worker pay ratio in the S&P 500 is 299 to 1, with grocery chains like Costco (193 to 1) and Publix (153 to 1) lower than that.
These disparities have fomented outrage among employees, who are also dealing with issues like fights over masks and theft and violence in stores.
In Colorado, more than 8,000 workers at the Kroger-owned King Soopers chain walked off the job last month when union contract negotiations broke down over wages, employee safety issues and scheduling.
Around the time of the strike, a nonprofit publication, A More Perfect Union, published an internal Kroger document in which the company acknowledged that one in five of its employees received government assistance in 2017. The document also included research showing that employee turnover was lower in places where it raised wages.
In response, Kroger said it had developed an improvement plan after the analysis, which included the wage increase and steps to improve tuition assistance and retirement benefits. The company commissioned its own study that stated last month that Kroger’s average pay and benefits in Colorado and three other Western states were higher than those of other retailers.
After more than a week of picketing, the union — Local 7 of the U.F.C.W. — won large concessions, including wage increases of more than $5A an hour for some workers and a plan to move at least 500 part-time workers into full-time roles within a few months.
As successful as the strike was for workers in Colorado, Larry Cohen, former president of the Communications Workers of America, said the contracts covered only employees at specific Kroger chains, making it difficult for unions to gain broader leverage.
“When all contracts are local, how do you deal with a giant national company?” Mr. Cohen said. “Not very well.”
Kroger has tightly controlled labor expenses during the pandemic. The company offered hero pay and thank-you bonuses to workers in the early months of the pandemic but ended those well before vaccinations were available. (Grocery workers were also not given priority for vaccinations in many states.) While some municipalities like Los Angeles and Seattle sought to institute hazard pay mandates, Kroger and grocery lobbying associations fought such efforts.
Kroger’s resistance to wage increases peaked last year when the Los Angeles City Council approved a hazard pay mandate requiring large grocers and pharmacies to pay employees an additional $5 an hour for four months. In response, Kroger said it would close three stores in the area in May — two Ralphs locations and a Food 4 Less — blaming increased costs. The company pointed to a release at the time that said the stores were underperforming. But City Council members were left with the sense that the closures were retaliatory.
Paul Koretz, a member of the Council, said he had dealt with backlash from some constituents about the impending closing of a Ralphs in his district, a go-to for the local Orthodox Jewish community. He said Ralphs representatives had warned him that they would close the store if the mandate was instituted.
“I’m not sure I really believed that Ralphs would do it,” he said. “It just seemed so counterintuitive that you would mess with your very loyal customers.”
Shoppers in his district have adapted since the store closed. But he said he believed that the impact of the closings on employees and Council members’ fear of angering constituents probably had a chilling effect on other municipalities that were considering similar measures.
The mandated hazard pay gave many Kroger workers a glimpse of how their day-to-day lives could improve with more money. Areli Rivas, a part-time cashier at a Ralphs in Van Nuys, Calif., who is married to a full-time worker at the store, said the extra pay gave her “peace of mind.”
The mother of two said it was hard to justify purchases like a new backpack for her son, even though his current one is fraying. More pay would also allow her to get her daughter a new glasses prescription.
Some workers like Ms. Manning said that they couldn’t afford to shop at their store and that the employee discount of 10 percent applied only to Kroger-branded goods and did not always include produce and other essentials.
Kroger said that the discount covered 19,000 private-label food products and that it did include dairy, proteins and produce.
Pio Figueroa, 25, who has been working at a Ralphs in Laguna Beach, Calif., for about six years, said he was able to manage his monthly expenses now that he was among the highest earners in his store, making about $22.50 an hour. But at one point, he was making $15 or $16 per hour at the chain and struggled mightily.
“There were times I could only budget to spend $100 on food and everything a week,” he said. “So there were times I would go without a meal or definitely think, ‘What am I going to eat tonight?’”