Last week, 8000 union workers at Kroger’s King Soopers Colorado stores walked off the job demanding better pay and benefits. At the same time, the workers’ union, United Food and Commercial Workers (UFCW) released a report on the state of Kroger workers.
HUNGRY AT THE TABLE: White Paper on Grocery Workers at the Kroger Company
Economic Roundtable, hired by UFCW, wrote the report based on a survey of Kroger workers in three geographic areas: Colorado, the Puget Sound region of Washington, and southern California. Over 10,000 workers responded resulting in these barbaric stats:
36% of respondents said they were worried about eviction.
66% said they struggle to survive due to low wages and part-time schedules.
78% said they are food-insecure.
1 in 7 faced homelessness in the past year.
"There are workers sleeping in RVs or couch surfing or living in parks somewhere," Peter Dreier, a researcher on the project, told Insider. "Americans go to their local supermarket every week and smile at the person cashing them out, not aware that the person they're talking to is going to sleep in a car after they clock out."
Kroger claims the report is “distorted.” Yet as far back as 2017, according to a leaked internal presentation, Kroger knew that workers couldn’t afford necessities and struggled to survive, and that 20% of workers relied on some form of government assistance.
While workers struggle, company execs make out like bandits
Kroger, the 2nd largest retailer in the US, owns 22 grocery chains in 17 states, some under the Kroger name and others under a local chain name, for a total of over 2700 stores. As befitting a behemoth retailer, the company is highly profitable it good part due to low-cost labor.
There’s more. Kroger nixed employees’ hazard pay in May 2021, and actually closed stores in communities (southern California and Seattle) where local governments required an extra $4/hour in “hero pay,”
“Meanwhile, the pandemic has been extremely profitable for Kroger. . . .The company earned $4.1 billion in profits in 2020, and by the end of the third quarter of 2021, had $2.28 billion in cash on hand.
Company executives received raises and bonuses as a result. [CEO Rodney] McMullen made over $22 million, nearly doubling the $12 million he made in 2018. Kroger also gave their stockholders $1.3 billion in stock buybacks in the first three quarters of 2021, the researchers estimate. The median worker pay at Kroger was $24,617 in 2021, they also found, meaning the CEO made 909 times the pay of the average worker.”
Kroger’s 2020 SEC Annual Report lists executive compensation including a combination of salary and hefty stock awards, stock options, and cash bonuses. (2021’s annual report and table of executive compensation should be out in February.)
Kroger just spent $2 BILLION to buy back its own stock
In 2020, Kroger had so much cash on hand that it did two rounds of stock buybacks—one in June of 2021 ($1 billion) and one for another $1 billion just last month (December 2021) The December buyback replaced the June one, which had $157 million left over.
Why do corporations buy back their own stock? Answer: To jack up earnings per share (profits divided by shares of common stock), a move that typically raises the company’s stock price. Simple example: $10 million profit spread over 1 million shares = earnings per share of $10. If the company buys back and retires 500,000 shares, profits of $10 million spread over the remaining 500,000 shares = $20 earnings per share
A rise in the stock price juices executive compensation, the majority of which comes from stock awards and stock options. Say a CEO gets an incentive stock award of 25,000 shares and the share price goes up by $40. It’s an instant $1 million windfall. What’s not to like? And more: some executive incentive plans pay out based on earnings per share. The higher the earnings per share, the more money the executive gets. Good to know when CEOs blather that they EARN outrageous compensation by “hard work.”
All this is why stock buybacks were illegal from the 1930s until the Reagan administration. Then all bets were off, and wealth flowed like a river to the 1%.
For more background on stock buybacks, check out this 2014 Harvard Business Review report entitled “Profits without Prosperity.”
“Those commenters who are worried about poor Kroger's bottom line would do well to keep in mind a recent tweet from Pitchfork Economics host Nick Hanauer: ‘Whenever a corporation whines about raising wages, just Google '[name of company] stock buybacks' and you'll see where all their profits are really going.”
Workers pay vs CEO bullshit
Deli counter, Aurora, Colorado King Soopers, customer post on Facebook.
No one except teenagers living at home can afford Denver housing at these wages.
Meanwhile Kroger CEO McMullen’s $22 million in 2020 compensation works out to $10,500 AN HOUR, adding to his $75-$100 million net worth.
Touting his humble beginnings and blue-collar parents, McMullen makes statements like the following.
“My parents had the kind of jobs where if the economy was soft, you got laid off. You don’t want anyone to have the fear I had growing up.”
“My personal story is so much like so many of the people at Kroger. You start out as a job, and it becomes a career. I always tell people if you like food and you like people; it’s a wonderful place to be. Because you get to feed people, help them have a little bit better day. What more could you ask for?”
In a 2017 Wall Street Journal puff-piece video interview, “How I Work,” the interviewer mentions that McMullen is a book collector and asks him for his favorite book.
He replies Charles Dickens’ A Christmas Carol. He says he re-reads the book every holiday season to remind himself of the true meaning of Christmas.
While this CEO burnishes his image for the business media and politicians, grocery workers live in a brutal state of food insecurity and near homelessness.
How long will America’s appalling inequality be sustainable?
How long before workers revolt?