Mary Zendejas is by all standards a strong community activist.
Her life story is inspiring. The daughter of immigrants who labored as a farm worker and a factory worker, she did not let getting polio as an infant stop her from achieving. Not only was she the first in her family to graduate from college but she has been a dynamic public servant through government service on boards such as Long Beach Transit and now the Long Beach City Council as well as numerous community organizations.
She has not, however, created jobs in the private sector by running a business.
Zendejas sponsored the successful City of Long Beach “Hero’s Pay” ordinance that mandated chain stores where 70 percent of their business consists of retail food sales that have more than 300 employees nationally and at least 15 employees at stores in Long Beach to boost pay for workers by $4 an hour for 120 days.
The rationale is they are essential workers braving the COVID-19 pandemic to serve the public.
When the ordinance backfired by triggering a Kroger’s decision to close two underperforming stores in Long Beach, she released a statement that she was “incredibly disappointed.”
Her disappointment doesn’t do much to help the 200 workers that are losing their jobs at a Food 4 Less and Ralph’s that Kroger owns in Long Beach.
So how could such a noble gesture backfire?
For starters, it has a lot to do with the fact Zendejas — or the City of Long Beach for that matter — aren’t paying for it.
It’s popular to slam big bad brick and mortar capitalists these days whether they are big chains or mom and pop operations defying government ordered lockdowns in a bid to keep from going under. But guess who creates most of the jobs that support families? Need a hint? It isn’t the government.
Of course, the first thing Zendejas used to defend her ordinance when it backfired for 200 workers who are going from $14.25 an hour to $0 an hour is to argue Kroger essentially had a moral obligation to keep the stores open even if the $4 an hour pay hike by Long Beach City Council edict turned them into money losers. After all, Kroger generates billions of dollars a year. They also made a profit in 2020 of $3.35 per share.
Does anyone want to guess who are some of the biggest holders of most stock like Kroger’s in this country? They are mutual funds for 401k holders as well as public and private pension funds.
Sure, Kroger profits benefit company brass. But those profits also make sure a lot of people who worked all their lives and are retired can feed and shelter themselves as well as to assure “heroes” working today can afford to retire in the future.
And in order to do that Kroger’s has to run like a business and not like the government.
Kroger’s, like most supermarket chains and small grocery stores, operate on razor thin margins. They have 2,750 stores so the accumulative money does look impressive.
That money though covers paybacks for 450,000 employees, pays local as well as state and national taxes, covers debt payments, is put aside for capital replacement, covers pilferage, pays monstrous energy bills, and buys the products that are placed on their shelves.
Kroger did not make its decision in a vacuum as the Long Beach City Council did.
They had underperforming stores. That means they either weren’t making money or the company was churning millions at the store to squeeze out a small profit that could easily be less than $100,000 a year. How many of the Reddit/RobinHood players would be willing to have to actually work at snaring millions of dollars through providing actual goods and services just to net the amount of money they can do manipulating stocks in a 24-hour period?
The additional $5 plus per hour was the proverbial nail in the coffin. But wait, Zendejas’ ordinance only mandated a $4 an hour increase, right? Wrong. That $4 mandated requires mandated increases in the company’s share of Social Security and other payroll costs such as unemployment insurance and workmen’s compensation.
Long Beach also picked winners and losers. Three Target stores did not meet the threshold of having 70 percent of their business come from retail food sales yet they — along with Walmart — are taking a sizable bite out of grocery sales.
Better yet, they were able to use their food sales to stay open much of the pandemic while other chains that compete against them such as Kohl’s were forced to close for months due to COVID-19 lockdowns.
Zendejas bemoaned the increased revenue Kroger sustained during the pandemic after government basically snuffed the life out of restaurants. Yet she sees no irony in the fact her ordinance lets off the hook department and/or drug stores that used food sales to stay open to enjoy increased revenue due to shopping dynamics changing during the pandemic due to government decree.
It would be irresponsible of Kroger not to read the writing on the wall and pull the plug in their stores if they are going from marginal to losing stores due to jacking up weekly payroll costs by at least $60,000 so Zendejas can claim political and/or social justice points.
In 120 days’ time that additional payroll could easily cost the two stores in excess of $800,000 when all payroll costs are factored in. Assume the stores are making $200,000 a year net profit instead of an even more anemic $100,000. That would mean Kroger would have to operate both stores for two years without making a penny while neither taxes nor California’s minimum wage goes up and Amazon et al don’t keep its buzz saw act up.
That might be a hard concept for someone to grasp whose entire world is government.
Government is the entity that doesn’t have to provide goods or services to generate money — except for enterprise accounts such as sewer and water.
We will find out soon enough whether Zendejas has helped launch a progressive trend that will sacrifice the jobs of some to temporarily fill the pockets of others with more money. Los Angeles on Tuesday voted in mandated “hero’s pay” of $5 an hour — add $1 or so for mandated payroll cost increases —for both supermarkets and drug stores. San Jose and other cities are also thinking about following suit.
Keep in mind the most vulnerable stores that will close likely are in low-come areas such as in Long Beach where Zendejas now laments a Food 4 Less store will now be closing due to them not doing what the City Council dictated.
That means more food desserts in low-income areas will be created.
It shouldn’t surprise anyone that one progressive idea that passes today’s steroid enhanced politically correct litmus test cancels out another progressive idea that meets the same imposed standards.
But who cares about such gory details when you are part of the government? After all, it’s only money and it isn’t even your money.