Companies Frequently Know Their Employees Are Having A Hard Time


When stories come out about a company’s employees being heavy users of government benefits and not making enough to live on, you could be excused for wondering if executives actually knew what was happening. Do they pay attention to such things? Do the research on their own payroll data? Should the public offer a benefit of the doubt?

Like in 2013, when McDonald’s came under criticism because of a Huffington Post story that was eventually redacted that originally claimed McDonald’s could double employee pay by raising the price of a Big Mac by 68 cents.

The redaction happened because the story was based on what purportedly was a study from a University of Kansas researcher. However, it turned out that the author was an undergraduate student who hadn’t considered employees at franchise operations, so missed a “majority of the payroll and employee benefits” that workers earned.

However, what wasn’t redacted was a Bill Moyers story that a McDonald’s corporate help line would suggest that workers who couldn’t make ends meet apply for food stamps and Medicaid, rather than raising pay.

The audio on which the story and others were based was provided by an issue advocacy group. Was this really a common practice? Did the advocacy group set up an unrealistic sting? If a corporation has a hotline handing out suggestions like filing for food stands, it seems reasonable to believe that such advice is programmed into their software and training and so management should have awareness of the issue that many workers have been grossly underpaid.

A more recent example comes via a non-profit called “More Perfect Union,” part of “More Perfect Union Foundation,” which doesn’t seem to have information filed with such non-profit monitoring groups as GuideStar or Charity Navigator.

Nevertheless, the group’s website has a story about how grocery chain giant Kroger has for years had information about the difficulty straits of many of their workers. The basis of the story is a reportedly leaked 2017 fourth quarter company document called State of the Associate.

Kroger did not answer a request asking if the document was genuine, what the company had done since about employee conditions, and current figures for government assistance use among workers.

One section of the presentation was titled, “Many Kroger Associates Live Under The Poverty Line.” Among the data the company had pulled together was that one in ten customers were on either SNAP or WIC federal benefits while one in five employees were. Of people the company hired in 2017, 24% were eligible for the Work Opportunity Tax Credit, which meant that people lived in federally designated areas and were economically disadvantaged (otherwise known as poor) based on receipt of benefits from any of a number of federal poverty programs. Kroger earned $20 million annually in tax credits.

In Ohio, the publication noted, Kroger reportedly had the third highest number of employees receiving SNAP benefits behind Walmart and McDonald’s. And the overall employee use of government assistance was increasing.

In a different section, the company noted that divisions in which the company “offered competitive wages” showed better employee retention. First, this shouldn’t surprise anyone inside the company or out. Second, it’s a tacit admission that many divisions don’t offer competitive wages.

By the way, half of employees were considered “very loyal shoppers,” so some significant parts of those frequently non-competitive wages were going back into the corporate coffers to the tune at the time of 2.5% of annual sales.

The presentation did note that “wages are important” because of a tight labor market and the information that divisions that paid better had improved retention.

What did the company decide to do at the time? Apparently not that much. This month, employees at almost 80 King Soopers grocery stores, owned by Kroger, saw a three-week strike for better wages during union negotiations. Some got a $5 an hour raise, which leaves the question how little they were getting previously to make a $5 raise fiscally feasible for the company.

Kroger said that it had spent $300 million in 2020 to boost wages to at least $15 an hour, according to the Cincinnati Enquirer.

And that same year, sales jumped 8.4% to $132.5 billion, with a $2.6 billion profit in 2020—after spending that $300 million for higher wages. But that was three years after the presentation that discussion about workers depending on federal aid.

Maybe that benefit of the doubt should get filed away.



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