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02/26/2021

Why a $15 Federal Minimum Wage Isn’t Right for Independent Grocers

Why a $15 Federal Minimum Wage Isn’t Right for Independent Grocers
NGA's Greg Ferrara contends that the Raise the Wage Act would have a detrimental effect on independent community grocers.

Many of us who have found fulfilling careers in the grocery industry can attest to the fact that it was one of the first jobs we ever had. I know I can. As a fifth-generation grocer, I found the work in my family store challenging and rewarding; it came with many life lessons that have accompanied me along my career path.

But that seasonal job a teenager counts on to help pay for a mobile phone, books and incidentals? The local supermarket might not be hiring anymore.

This is a possible scenario if Congress succeeds in adopting a $15 federal minimum wage as Democrats are working to accomplish right now.

Threat to Business

The new hourly minimum, proposed in the Raise the Wage Act, which would be phased in over five years, is simply not practical for most small businesses, and could very well gut independent community grocers, particularly those in many rural and urban food deserts, where they’re the only convenient sources of fresh food. Those grocery stores that have been the bedrock of their respective communities may go out of business, forcing citizens to travel miles out of their way to buy fresh meat, produce and other staples.

I know firsthand the value of independent community supermarkets, the heartbeat of many neighborhoods across the country. I grew up working in my family’s small independent grocery store in New Orleans, where I learned the value of hard work as a teenager. That’s a lesson that could be lost for future generations under the Raise the Wage Act, which would eliminate the youth wage and force employers to pay all starting workers the new minimum, regardless of age or experience. The result would be thousands of lost part-time and seasonal job opportunities for teens and college students.

The job losses would cut even deeper, as small businesses ill-equipped to pay a $15 minimum wage opt to accelerate automation of checkout and back-of-house jobs. Many grocers also hire individuals with disabilities, but a $15 federal wage would make it difficult for grocers to continue to provide them with meaningful employment.

Independent community grocers already work within very tight profit margins, usually less than 1%. Large national retailers might have the scale or cash reserves to absorb the new expenses, but smaller supermarkets would suffer, leaving holes in communities that might never be filled.

Employer Size, Regional Differences Matter

Certainly, we can support higher wages for our associates, who day in and day out show such dedication to their stores and their communities, particularly over the past year, working on the front lines during the pandemic. But for independent supermarkets, the Raise the Wage Act would have the opposite effect, forcing smaller retailers to employ fewer people, raise their prices or shut their doors.

It’s time to remind our policymakers how important independent supermarkets are to their communities and the nation’s economy.

NGA is telling Congress that any increase in the federal minimum wage must consider employer size and regional differences in the cost of living, that and grocers need to be able to pay a training wage for younger, less experienced workers.

Independent grocery retailers truly value their associates, the “supermarket superheroes” who put in long hours on the front lines to serve their friends and neighbors in the communities where they work. But an arbitrarily high mandated hourly minimum that ignores unique market conditions helps no one – not independent grocers, their dedicated staffs or the country they all nobly serve.

About the Author

Greg Ferrara

Greg Ferrara

Greg Ferrara is president and CEO of the National Grocers Association, in Arlington, Virginia. Read More