Just days after the CEOs of Kroger and Albertsons attempted to tap on the hands of the public in an attempt to comfort everyone over the $24.6 billion merger, the Economic Policy Institute has shaken up the landscape once again.
In what it calls a policy memo, the Institute claims that workers at Kroger and Albertsons could lose a total of over $330 million annually if the deal goes through. This follows an op-ed in the Cincinnati Enquirer where Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran responded to myths about the merger.
“A recent wave of economic research has called attention to potential damages to workers’ bargaining power over wages stemming from concentration in labor markets,” the memo reads. “We find that the merger of two of the largest supermarket chains in the country will increase employer concentration and reduce the wages of all grocery store workers in affected cities across the country.”
The Institute used grocery store employment and earnings data at specific Kroger and Albertsons stores, and made the following findings:
- The merger will lower wages for 746,000 grocery store workers in over 50 metropolitan areas of the U.S. Increased concentration will suppress wages for all grocery store workers in affected cities—not only those workers currently employed by Kroger or Albertsons
- The total annual earnings of grocery store workers will fall by $334 million in affected metropolitan areas
- Because Kroger and Albertsons employ about one quarter of all grocery store employees, most of the wage losses caused by the merger will be a negative externality that falls on grocery store workers employed by other firms. On average, all grocery workers in affected markets will lose about $450 per year in wage income
- Earnings losses will be smaller in areas with a stronger union presence or a tighter labor market. In areas with weaker worker bargaining power, workers will experience larger wage declines
- The expected earnings losses are a pure windfall for the employers. In the analysis, wages fall solely because of a change in labor market power brought about by increased concentration. Quantitatively, this windfall represents a significant transfer of income from wages to profits: The decrease in wages is equivalent to 2% of Kroger and Albertsons’ profits or three times the companies’ CEO compensation
In the joint op-ed by McMullen and Sankaran that first ran in the Cincinnati Enquirer, the two officials attempt to answer three myths: store closings, job losses and the cost of groceries.
Responding to the potential of jobs being cut and unions weakened, the two CEOs said the combined company will have one of the largest unionized workforces in the country and that they are committed to protecting and expanding opportunities for union jobs.
Do you believe all grocery workers will suffer losses if this merger is approved? Other than wages, what else is at stake? Let us know in the comments below, or email your thoughts to the SN staff at [email protected].