Last fall, Cincinnati-based Kroger announced it would merge with Albertsons grocery stores. The $24.6 billion merger would make it the second-largest grocery retail chain in the country behind Walmart.
A report from the Economic Policy Institute reveals the deal could lead to lower grocery store employee wages.
The report finds the merger could lower wages for over 746,000 grocery store workers in about 50 cities across the country. The total annual loss of wages would be $334 million or an average loss of about $450 per year in wages for workers.
Ben Zipperer, an economist at the Economic Policy Institute, attributes the loss to the increasing trend of concentration among grocery store chains. This trend has led to a decrease in competition, which has allowed grocery store chains to raise prices and reduce wages.
“They will have fewer options. They have or will have less leverage in negotiating, better pay, better working conditions and so forth,” Zipperer said. “And so what that means is that wages tend to get depressed in those kinds of markets where there's a lot of employer concentration.”
Zipperer said historically, federal antitrust agencies have focused on the impact to consumers caused by concentration. But the impact to workers is often overlooked.
“It can be a big problem if you're trying to advance in the labor market if the number of outside options available to you starts to shrink. And that is how workers get ahead and that's how they get better jobs,’ Ziperrer said. “Because these are not high wage jobs, we should take extra care to pay attention to the consequences of potential wage reductions for workers.”
In a response, a Kroger spokesperson said the company disagreed with the reports' findings and that it's actually investing in higher wages for its employees.
“The conclusions of the Economic Policy Institute article are erroneous and based on a faulty, biased and poorly sourced analysis that ignores both companies’ long track record of investing in associates," A Kroger spokesperson said in a statement. "The report also egregiously ignores Kroger’s public commitment to invest an additional $1 billion to increase wages and expand industry-leading benefits starting on day one following close."
The commitment is based on an incremental $1.9 billion Kroger has invested in wages and comprehensive benefits since 2018.
The Economic Policy Institute is asking the Federal Trade Commission to consider wage losses stemming from concentrated labor markets in its rulings on the admissibility of mergers.
The Kroger-Albertsons merger is expected to be completed by 2024.
Alejandro Figueroa is a corps member with Report for America, a national service program that places journalists into local newsrooms.
