Correspondence - #30 - Laserfiche WebLink

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Consumer and Community Impacts of Hazard Pay Mandates that labor costs are by far the largest controllable expense for stores, it is highly likely that the wage mandates will translate into fewer store hours, fewer employee hours, and fewer jobs. For a store with 50 full-time equivalent employees, it would take a reduction of 11 employees to offset the increased wages, which is about a 22 percent decrease in staff/hours. Aggregate impacts. As an illustration, if the full California grocery industry were to respond to a statewide $5.00 wage mandate by reducing its workforce, we estimate that up to 66,000 industry jobs would be eliminated. This is about 22 percent of the 306,000 workers in the grocery industry in the second quarter of 2020 (the most recent quarter for which we have detailed job totals).16 If the mandate were imposed locally in the City of Los Angeles, the impact would be about 7,000 workers, and in the City of Long Beach (at $4.00 per hour), the impact would be about 775 jobs. Stores could alternatively avoid job reductions by cutting hours worked by 22 percent across-the-board. Under these circumstances, some workers receiving the wage increases would be better off, but many others would be worse off because of reduced hours or layoffs. Customers would also be worse off because of reduced store hours, and fewer food choices and services. Without any external constraints imposed by the local ordinances, it is likely some combination of higher prices and job and hour reductions would occur. Stores within some jurisdictions imposing the mandatory wage increase might be able to raise retail prices sufficiently to cover a significant portion of the mandated wage increase, thereby shifting the burden onto customers. However, the degree to which this would occur would vary from jurisdiction to jurisdiction, depending on the price -sensitivity of their customers and (if the mandate is imposed locally) the availability of shopping alternatives in neighboring communities that have not imposed the wage mandate. Of course, if the local ordinances contain provisions prohibiting stores from cutting hours, then stores would be forced to pass costs on to consumers in the form of higher prices, or to close stores in those jurisdictions. Some communities would become food deserts Many of the up -to one third of stores already incurring losses may find it impossible to raise prices or achieve savings that are sufficient to offset the higher wage costs. For these stores, the only option would be store closure. Indeed, a consistent theme of feedback we received from California grocer representatives is that it would be extremely difficult, if not impossible, to justify continued operation of a significant portion of their stores following a government -mandated 28-percent increase in wages. This would leave some communities with fewer fresh food options. According to the Propel LA: "The United States Department of Agriculture (USDA) defines a food desert as 'a low-income census tract where either a substantial number or share of residents has low access to a supermarket or large grocery store: There are a large number of census tracts in Los Angeles County, including Antelope Valley and San Fernando Valley, that are considered to be food deserts. The population of food deserts is predominantly Hispanic or Latino, followed by Black and White, respectively."17 The map also shows several food deserts in and around the City of Long Beach. The hazard pay proposal would exacerbate this problem. 16 Employment Development Department Labor Market Information Division. Quarterly Census of Employment and Wages. https://www.tabormarketinfo.edd.ca.gov/qcew/cew-setect.asp 19 "Food deserts in LA, an Interactive Map." Propel LA, https://www.propeLla/portfolio-item/food-deserts-in-tos-angeles- county/ 1C