Profits soared an average of 39% in the first half of the year at supermarket chains and other food retailers, thanks to the pandemic, although front-line workers reaped little or no benefit, a new report shows.
At Cincinnati-based Kroger Co., which has 119 stores in Michigan, profits for the first two quarters were up a staggering 90%, according to the report from the Brookings Institution, a Washington, D.C.-based think tank.
“We find that while top retail companies’ profits have soared during the pandemic, pay for their front-line workers — in most cases — has not,” the report said.
The report, released Nov. 20, revealed inequalities between retail workers’ pay and company profits during the pandemic. Profits earned at top retailers were described as “eye-popping,” even as most quickly ended so-called “hero pay” that was offered at the beginning of the pandemic in the form of bonuses or temporary bumps in pay for workers.
Among the retailers cited in the report:
- Kroger saw its net earnings for the first two quarters jump to more than $2.031 billion compared with $1.069 billion in the same period of 2019. Third-quarter profits, which were reported Thursday, were not included in the Brooking Institute report. When those are included, the company’s net earnings of $2.662 billion are up just short of 100% for the first three quarters compared with 2019.
- Walmart profit was $15.6 billion for the first three quarters compared with $10.7 billion for the same period for 2019, a 45% increase.
- Amazon, which owns Whole Foods, saw a $17.4 billion profit for the first three quarters, up $6 billion from the same period last year. That amounted to a 53% increase.
- Costco’s profit was $2.2 billion for the first two quarters of 2020, an increase of $244 million from 2019 or 11%.
The study looked at profits at 13 publicly traded retail companies out of the top 20, including several grocery stores and retailers, such as Costco, Target and Amazon, that also sell groceries. The report also looked at how workers were compensated before and after the coronavirus pandemic began in March.
“Amazon and Walmart could have quadrupled the hazard pay they gave their front-line workers and still earned more profit than the previous year,” said Molly Kinder, one of the report’s authors.
In an email statement to the Free Press, Rachael Lighty , an Amazon spokesperson, called the Brookings study “flawed” and said it doesn’t “provide an accurate picture of wages, benefits and career opportunities that exist for employees at Amazon.“
Overall, the report revealed, retail companies cited in the analysis earned, on average, an extra $16.9 billion in profit in the first quarters of this year compared with last year, as grocery stores and their workers became a lifeline for people during the initial lockdown.
Despite record-breaking profits at stores, many grocery workers saw hazard pay — typically an extra $2 per hour at the onset — taken away and replaced in some instances with bonuses, sometimes in gift card form.
Kroger was listed under the report’s “laggards” category. Under the company name was “from hero pay to zero pay.” At the time of the report, it had been 181 days since Kroger workers received hazard pay.
Kristal Howard, a Kroger spokesperson, said the company has invested more than $1 billion since March to reward its associates and for safety measures to protect them and customers. In September and November, front-line associates received a $100 store credit and 1,000 fuel points.
Howard added that Kroger continues to provide benefits like paid emergency leave and financial support to associates facing hardships because of COVID-19 through its $15 million Helping Hands fund.
“Our most urgent priority throughout this pandemic has been to provide a safe environment for our associates and customers while meeting our societal obligation to provide open stores, e-commerce solutions and an efficiently operating supply chain so that our communities have access to fresh, affordable food and essentials,” Howard said.
“America’s essential workers are facing a holiday season of unparalleled danger as COVID-19 cases explode across the country,” Marc Perrone, president of the United Food and Commercial Workers International, said in a Nov. 25 nationwide media call. “With more than 1 million new COVID-19 cases in the past week, and deaths spiking to unprecedented levels, we are entering what could be the deadliest phase of this pandemic for millions of America’s essential front-line workers.”
The UFCW said among its members impacted by COVID-19, there have been 350 front-line worker deaths, including 109 grocery workers. More than 17,400 grocery workers have been infected or exposed to the virus, the UFCW said.
Perrone said unless action is taken, ” … many more essential workers will become sick and more, tragically, will die.”
Walmart, whose profits were up 45%, gave full-time workers a $300 bonus in April, June and August, the report showed.
Delia Garcia, a Walmart spokeswoman, said in an email that the retail giant has given out more than $1.1 billion in special cash bonuses this year and awarded more than $1.3 billion in quarterly bonuses. The company also offers a COVID-19 emergency leave for full- and part-time associates.
Amazon called its $15 an hour national minimum wage “industry-leading” and says its spent more than $2.5 billion globally on special bonuses and incentives this year.
On Thanksgiving Day, Amazon announced a special bonus, totaling more than $500 million, for front-line U.S. operations employees, according to a news release. Those employed by the company from Dec. 1 to Dec. 31 will receive a $300 bonus for full-time employees and $150 for part-time employees.
“More than two years ago, we increased our starting wage to at least $15 per hour, more in some places, which is nearly twice the federal minimum wage,” Lighty, the Amazon spokesperson, said. “Since then, we have urged other retailers to do the same and have actively lobbied for a federal minimum wage increase which has been unchanged since 2009.”
“Unlike many of those cited in the study, Amazon offers full-time jobs with benefits starting on the first day of employment,” she said.
Still, the study found, front-line grocery and retail workers, considered essential during the pandemic, saw companies do away with hazard pay and other bonuses.
“In more than a dozen interviews, front-line retail workers shared with us a strong desire for receiving hazard pay while putting their lives on the line every shift,” the report said. “They preferred hourly pay increases of several dollars an hour (like overtime or holiday hours) rather than occasional bonuses, which fail to compensate workers for each additional hour worked, are less predictable, and are less generous in most cases,”
The study cited and ranked companies based on:
- Starting pay or the average hourly pay for a cashier.
- COVID-19 compensation generosity based on hours, bonuses and permanent wage increases from March 13-Nov. 19.
- Company profit and days since last hazard pay and worker compensation in relation to company financial performance.
From the start, workers, and some of the unions that represent them, were very vocal about risking their lives amid a deadly pandemic while working in an industry where wages are often low.
“With a dark winter looming, millions of front-line essential retail workers face grave risks to their health, often for very low wages and without the hazard pay they were earning at the start of the pandemic,” the report said.
The report also analyzed company stock buyback programs where companies repurchase its own shares, often driving up the company stock price.
“Some suspended the stock buybacks and at the same time that’s when they offered hazard pay,” Kinder said.
But some reinstated stock buybacks, the report said, including Walmart reporting $500 million in new share repurchases for the third quarter, the report said. Once Kroger ended its “hero pay” in May, it reported $211 million in stock buybacks in the second quarter and announced a new $1 billion stock buyback program in September, sending stock prices up, according to the report.
“Workers are putting their lives on the line and there’s no excuse to not pay front-line workers more,” said Kinder. “These are the companies that have the financial resources but also the moral imperative to raise wages.”
Retailers in the study that didn’t sell groceries included Home Depot, Best Buy, CVS and others. Some companies did do better than others.
Best Buy, Target and Home Depot were considered leaders who permanently increased wages.
“These three companies provided the most COVID-19 compensation to workers through temporary pay increases, bonuses, and permanent wage increases,” the report found.
Of the 13 companies studied, worker pay, on average was increased just $1.11 per hour since the beginning of the pandemic. While that represents a 10% increase, it’s on wages, the report said, ” …often too low to meet a family’s basic needs.”
John Cakmakci, of Local 951 based in Grand Rapids, said of all the employees and companies the local has labor contracts with, he is most disappointed in Kroger. Local 951 represents nearly 30,000 workers, mainly at Meijer, but also at Kroger, as well as the JBS meat processing plant in Plainwell.
When it came to extra worker appreciation or heroes pay, Cakmakci said, Kroger was the last one to come to the table with an offer of temporary pay increases for its workers.
Kroger was also the first to stop offering the extra pay, he said.
“It’s baloney,” Cakmakci said by phone. “It’s absolutely a money grab. Bar none, Kroger is the worst. It’s like getting water from rock. I can’t believe you guys are making the money you’re making and acting like you are losing money.”
Cakmakci said Kroger gave employees a bonus of a $100 Kroger gift card several weeks ago. They also got 1,000 gas points, which is equal to $1 off a gallon for up to 35 gallons for a one-time use.
Privately owned Meijer, though not included in the study, is more generous to its employees, according to Cakmakci. Though the Grand Rapids-based retailer also eliminated its additional hourly pay, it gave other bonuses.
Meijer employees, he said, received mPerks gift cards of $100 on Labor Day, $250 in November and are expected to receive $250 in December. In between, Meijer employees also received free rotisserie chicken with sides several times.
“At least it’s something,” Cakmakci said.
Source: Detroit Free Press