Why hazard pay for grocery store workers harms independent natural retailers

Addressing predatory practices in healthcare, education and housing or reducing the burden of childcare and retirement are more effective ways lawmakers can support these frontline employees.

Alan Lewis

March 22, 2021

4 Min Read
Why hazard pay for grocery store workers harms independent natural retailers
Rebecca Wilson Photography

Let’s face it: Grocery workers don’t always get the respect they deserve. They spend all day finding, ordering, stocking, facing and selling staple and innovative products that draw in and delight their customers, then get up and do it again, and again and again. Stockers, receivers, salespeople, cashiers and cleaning staff are sometimes considered “unskilled” positions. A high school diploma and the ability to show up on time will do. They are often paid as little as possible because someone else is ready to walk in and replace them.  

COVID-19 changed the public’s perception of supermarket employees from afterthoughts into "essential" workers and even heroes. Food, water and other essentials showed up on the shelves every day during the pandemic, even though the virus would disrupt every other facet of our lives. And grocery workers came to work despite being exposed to thousands of people who could transmit to them a deadly disease. Along with other frontline, public-facing workers, they made the brave choice every day to stand and deliver in the face of mortal danger.  

So, yes, let’s reward them for their service and sacrifice. Every one of America’s frontline grocery workers should be able to afford healthcare, housing, childcare, education and savings for retirement. These are in fact clear policy initiatives that continue to vex the United States as a nation. Healthcare is the leading cause of bankruptcy, housing costs put mortgages out of reach and rents continue to rise faster than inflation and pay increases. Education loans often lead to lifelong debt bondage. Retirement savings may last a few months, not decades.  

Without addressing all these burdens at the same time, a few dollars increased pay makes little difference. Not just that, but let’s look at how businesses are forced to respond to large sudden increases in minimum wages, or the recent trend to awarding employees COVID-19 “hazard pay”.  

For smaller retailers especially, increasing hourly pay from $10 to $15 or $15 to $20 to comply with a government mandate triggers a set of severe survival responses. There is no pot of money buried in the yard to cover these expenses. They must cut head count, reallocate hours to lower paid employees, eliminate benefits by only allowing part-time work, or eliminating benefits altogether. They certainly must place more duties on fewer people—within the same number of hours worked.  

On the income side, small businesses may be forced to raise prices, which in turn reduces sales and the number of hours of work available to staff. A natural products store with $2 million in revenue and ten employees sells about $100 of goods per labor hour. Hazard pay changes that ratio to $105 in sales per labor hour. So what? The cost of $5 per hour hazard pay for 10 full-time employees is $100,000 a year. Just to appear to stay even, prices would have to increase 5% to offset it.  

U.S. lawmakers have yet to find a way to address predatory practices in healthcare, education and housing, or reduce the burden of childcare and retirement, like many other countries have. And lawmakers don’t want to be seen raising taxes, especially when government budgets have been shattered by the coronavirus. But let’s be clear that by mandating hazard pay for grocery workers, they are taxing the food-buying public–and taxing it heavily. 

For the natural products industry, which still relies on the independent natural products retailers to curate new trends, establish new brands, educate new consumers and carry the torch for higher standards, this kind of tax can be devastating. Independent retailers don’t have the financial spackle to fill in these holes. Sales per labor hour, and the cost of that labor, makes or breaks their profit and loss. Costco is largely unaffected because it has already eliminated 85% of the head count that a full-service grocery requires. Target and Walmart cost average against the 90% of employees that don’t work in the grocery department. The national grocery chains offset the localized costs of hazard pay with their record-breaking profits from the surge in buying caused by COVID-19 lockdowns.  

Mandates for hazard pay are just one lever being pushed in the time of COVID-19. Minimum wage laws, paid family leave and other pay-related measures continue to hurt retailers and other businesses. These are the levers that lawmakers have available, so they push them relentlessly and sometimes blindly in hopes that something good will happen.  

But until we address all of the undue financial burdens faced by American workers, for every five dollars extra in our paychecks there are 10 more dollars of household bills. Independent grocers are being told to pay out for both that five and the 10. That’s not a solution for anyone. 

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About the Author(s)

Alan Lewis

Natural Grocers

Alan Lewis navigates food and agriculture policy and government affairs for Natural Grocers, a chain of 144 health food stores in 19 states.

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