The end of wage increases raises a question: Firms may have no incentive to offer additional pay due to supply and demand in the labor market today. But, if the concept of risk payment is to compensate employees for the additional risk, and that risk has not disappeared, should they do it anyway?
“The danger faced by essential workers has not diminished. Any job in which a worker is closely interacting with the public or coworkers for an extended period raises the possibility of contracting coronavirus,” said economist AnnElizabeth Konkel.
Susan Hernandez, a Kroger-owned Food 4 Less employee in Los Angeles, stopped receiving an additional $ 2 an hour in mid-May, but her fear of contracting the coronavirus on the job did not end then.
“We are there every day, dealing with clients who do not comply with security measures, such as wearing masks,” he said.
Some customers have even spit on the floors after being told they couldn’t get in without facial covers, he said.
“From my point of view, the payment of risks is a small price to pay for what we are dealing with every day,” said Hernández. “We are risking our lives.”
A Kroger representative said the company has invested more than $ 830 million to reward associates in “appreciation” payments and bonuses since March.
“We continue to listen to our associates and take steps to ensure their safety and well-being. We also continue to implement dozens of security measures and support our associates” with expanded benefits such as paid emergency leave and childcare assistance, the spokesperson said. . said.
Amazon, Rite Aid and Albertsons did not respond to requests for comment on their decisions to end the pay increases.
A Stop & Shop spokesperson said, “The purpose of this temporary additional payment was to recognize our associates for their hard work during an unprecedented surge in customer demand and traffic. As states continue to reopen, we are returning to pre-COVID levels of traffic and demand. ” The company said it continues to take “important steps” to keep employees safe and that it offers a “flexible leave policy” and additional paid sick leave.
How the risk payment originated
The danger pay, known as the “danger pay” outside the United States, “originated in the military during World War II, when soldiers, reporters, and artists received additional compensation for assignments in war-torn areas “said Kate Bronfenbrenner, director of research in job education. at Cornell University School of Industrial and Labor Relations. “Employers resumed the practice sometime after the war, offering their employees additional pay for recruiting and dangerous, unpleasant, or physically demanding jobs.”
The coronavirus pandemic was the first time that supermarkets implemented risk-paying, according to Bronfenbrenner.
The companies said they offered risk pay during the early stages of the pandemic to reward workers on the front line. Economists and labor experts say they had an added incentive: They wanted people to keep showing up to keep operations running smoothly.
Employers “must provide a risk payment if they cannot hire workers who work at the regular rate,” said Nicole Hallett, an associate professor of law at the University of Chicago School of Law, who studies immigration and labor and labor law.
There was no formula for calculating risk payment, said Suresh Naidu, a professor of economics and international and public affairs at Columbia University. Employers invented it “based on what workers are willing to accept without quitting.”
But unions and Democrats in Congress are pressuring retailers who offered a risk payment in the form of temporary wage increases to reinstate it in lieu of cash bonuses.
Senators Elizabeth Warren, Sherrod Brown and top Democrats sent a letter Thursday to the top 15 executives of the supermarket chain asking them to reinstate risk-paying for workers during the pandemic.
Labor advocates say there is a clear moral reason that essential workers should get additional compensation. The United Food and Commercial Workers union said at least 93 of its supermarket worker members died of coronavirus and published a survey of 4,000 members on Friday that found that nearly half said they were more concerned about the coronavirus than two weeks ago.
“Ending the risk payment doesn’t make sense,” said UFCW President Marc Perrone. “Our members and supermarket workers across the country continue to show up to work during this pandemic, risking their health to serve our communities.”
Why risk payment should continue
“If employers do not have to provide risk payment, they will not. The fact that many companies have terminated their risk payment policies tells me they feel there is no longer a need to attract workers,” said Nicole Hallett, associate professor of the University. from the Chicago Law School studying labor law.
Cost problems during the pandemic can also delay grocery shopping because of a pay raise. The companies added staff and increased cleaning measures in stores, reducing their profits.
Some employers may not be able to afford to pay their workers, said Konkel, the Indeed economist. “For companies with thin margins, it will be a particularly difficult decision.”
But some labor experts said that in the long term, companies are interested in compensating employees for the risk they are taking now.
Employers “may get away with it in a context of 11% unemployment,” but it is “unfair now and destructive in the medium term,” said Lawrence Mishel, former president of the Institute for Economic Policy. Employees must be “compensated for risk”. Eventually, “unemployment will fall and the best employers will expand.”
In fact, a tight labor market before the pandemic had prompted major retailers, including Walmart and Amazon, to announce wage increases.
In any case, it should be a reminder that the economy is cyclical.
“If companies end risk-paying policies now, they can retain workers in the short term because workers have no other choice,” said Hallett. “But once the economy improves, workers can move on because of how they were treated during the pandemic. Staff turnover is costly for companies, and workers will remember how they are treated now.”
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