Ethical Risk: Pandemic Hero Pay Choices

January 6, 2021 by David Nitkin | Categories: Stakeholder Engagement | Tags: wages, workers well being No Comments ↓

The Issue

While many of us try to stay safe at home, we have neighbours who put their lives on the line by consciously exposing themselves to workplace risk of contracting the pandemic. In doing their jobs, these essential-service workers have been undergoing great emotional strain, periodic workplace harassment from consumers/shoppers, and unfortunately high death rates throughout both waves of the pandemic. Some have received public and corporate recognition through “hero pay” supplement programs.

This blog addresses three questions:

First, which parts of the “essential” or “front-line” workforce have qualified for what is variously called hero pay, hazard supplements, enhanced stipends, or coronavirus-related bonuses?
Second, what has been the uptake of national companies, particularly in grocery retail and food distribution, that offer danger pay supplements during one or both waves of the pandemic?
Third, what are the ethical issues involved in analyzing calls for expanding such programs, both during and after the pandemic?

The Case For Hero Or Danger Supplement Pay

When COVID-19 caused business lockdowns for much of Canada’s economy back in March, an interesting thing happened. The contributions of those working minimum-wage or low-income jobs — including grocery store cashiers, delivery drivers, warehouse workers fulfilling online shopping orders, or aides in long-term care facilities, among others — were acknowledged by many grateful shoppers/clients as laudatory, heroic, worth celebrating and acknowledging. Their risky work needed to continue in order to make sure food and other goods were readily available to the rest of us.

This initiated a period when essential workers were being recognized and praised as unsung heroes around the world. Almost immediately , however, there were problems:

(a) not all employers voluntarily agreed to make discretionary wage supplement programs available, either from their own coffers or through emergency government wage supplement funding;
(b) these supplements did not provide most recipients with a living wage that allowed them to sufficiently provide for themselves, their families, and reach basic financial security; and
(c) it wasn’t clear whether or for how long the pandemic threat would last.

Essential workers that make less than $49,999 a year include practical nurses, grocery store workers, cleaners, personal care aides/support workers, delivery and warehouse workers, maintenance staff, restaurant staff and others. For example, personal care workers across Canada earn $11-15 an hour to work in close contact with vulnerable and sick people all day. Semi-trailer drivers, cleaners, maintenance workers and others in similar industries who were making $11.30- $27.00 an hour risked their own safety and endangered their vulnerable families and housemates.

Early on in the pandemic, the federal government announced a cost-shared program to support essential care workers with wage guarantees and top-ups. Various provinces acted individually in the speed and extent to which they spent the millions that the federal government made available. In Ontario, temporary pandemic pay was designed to support eligible employees who worked between April 24 and August 13, 2020.

Grocery and Food Service Sector Hero Pay

The average salary in a Canadian grocery store is less than $30,000 or $15 per hour. An employee would start at around $13 an hour. The highest paid employees could earn almost $50,000 a year, tops. The “hero pay” described here represents on average a 10% to 15% increase in pay. Given that the average grocery store in Canada would employ about 80 full-time employees and that payroll represents roughly 30% of costs to operate, some industry insiders have argued that the supplement might make the average store almost unprofitable. Contrarian others argued that the monies were there– they could readily come from expanding profits, which soared an average of 39% in the first half of the year at big, publicly traded supermarket chains and other food retailers in the U.S.

The characteristics of “danger pay” in the food and grocery industry in Canada include:

companies can support workers in combating COVID through a variety of programs in addition to hero pay: these ways include providing PPE and safety training, allowing flexible shift schedules, requiring mask use from customers, and giving paid time off for quarantining.
fewer grocery chains continue to offer such pay during the second wave.
many low paid workers have no alternative but to work in order to sustain their families.
hero pay remains one of the top priorities for unions like UFCW in current and future collective bargaining efforts.
Profits earned at certain top retailers were described as “eye-popping,” for the first three quarters in Canada, as of the end of November, even as most companies quickly ended so-called “hero pay” that was offered at the beginning of the pandemic in the form of bonuses or temporary bumps in pay for workers.

Grocery, food service and some other retail workers, both union and non-union, started demanding not only hero pay but also mask wearing mandates, free coronavirus testing, paid sick time for those sick or exposed, and more. It quickly reached the point where national chains like Loblaw Cos, Walmart and Metro readily gave temporary pay raises, typically $2 per hour, to both full and part time workers.

Most food and grocery industry workers live in low job security, highly vulnerable financial situations. They disproportionately include single-parents, students, seniors with fixed incomes, immigrant women, and underprivileged demographic groups. The voices of these workers and their collective bargaining agents include the following comments:

the supplements are a helpful recognition of their efforts.
any rolling back of the raises contributes to the idea or emotion that previously they were zeroes, then they went to heroes, now they’re back to being zeroes.
two dollars an hour is not a huge amount of money to make. It doesn’t make a huge difference in your life but it is a visible, tangible sign of respect and appreciation.
You told us this virus was so bad and so deadly we needed to shut down the entire country but we continue to go to work for you and some of us have died for you.

Wave One and Wave Two Corporate Practice Differences

Many white collar workers rely on essential workers to provide them with food, groceries, clean, long-term care homes, and home delivery of on-line purchase goods. In order to address this disparity and to make sure these workers still showed up in the face of tremendous personal risk, workers at major grocery chains such as Loblaw Cos, Save-on-Foods, and Sobeys were given a temporary pay raise — usually $2 per hour — in acknowledgment of their hard work. During wave one, one in four companies that require employees on-site offered hazard pay, according to an April survey by WorldatWork, a nonprofit professional association. Retail workers were more likely to get extra pay, with 46% of grocers and other essential retailers offering hazard wages, compared with 29% of health-related employers.

By summer time, most grocery chains had phased out their bonus pay as the economy started to re-open and active cases of COVID-19 were declining. Currently, during wave two, with hard lockdowns expanding in many regions, many of those same retailers are being sharply criticized for having decided to not introduce or bring back those wages while the wave two pandemic takes a harsher toll on people’s health and on the economy. Companies like Metro and Loblaw Cos. have ended the $2 per hour premium pay for front-line workers. Despite record-breaking profits at stores, many grocery workers saw hazard pay taken away and replaced, in some instances, with bonuses, sometimes in gift-card form.

Untitled Document

Sector	Canadian Chains Offering Pandemic Pay In Canada (1)		Retailers Reporting Not Doing So	Companies Not Reporting or Data Unavailable
Sector	Wave One (April-June)	Wave Two (November-December)	Wave One or Two	Companies Not Reporting or Data Unavailable
Grocery Retail	Calgary Co-op, Empire (5) Loblaw (4), Metro, Save-on-Foods, Metro, Whole Foods (2)	Sobey’s (5)
Grocery Products				Colgate Palmolive, Dare Foods, High Liner Foods, JD Smith & Sons, Kellogg, Kraft Heinz, Maple Leaf Foods, Nestlé, Ocean Brands, Redpath Sugar, Weston Foods
Beverage	Starbucks (3)		LCBO	A Lassonde, Coca Cola, Coffee Time, Pepsi, Second Cup
Drugstore	Rexall/PharmaPlus			Jean Coutu, London Drugs. Shoppers Drug Mart
Fast Food	McDonalds	McDonalds		A&W Canada, Harvey’s/Swiss Chalet, KFC, Mr Sub, Pizza Hut, Pizza Pizza, Tim Horton’s, Wendy’s,
Merchandise	Amazon (2), Costco, Walmart	Walmart		Instacart
Hardware	Canadian Tire, Home Depot, Lowe’s Canada/Rona	Lowe’s Canada/Rona
Dairy	Chapman Ice Cream	Chapman Ice Cream		Agropur Co-op, Danone, Parmalat, Saputo, Scotsburn Ice Cream

Source: UFCW, Unifor, Best Retail Careers International, OPSEU, Decent Work and Health Coalition,

(1) some or all locations
(2) US data
(3) company-owned stores only
(4) Loblaw Cos. stores: No Frills, Real Canadian Superstores, Loblaws, Dominion
(5) Empire stores: Sobeys, Safeway, FreshCo, Foodland, IGA

In terms of what appears to be the most noteworthy direct action taken by grocery workers in Canada involving post-pandemic pay, Canadian union Unifor undertook a 3-month long strike of Loblaws-owned Dominion Stores in Newfoundland (last August-mid-November), with the company’s removal of pandemic premium pay being one of the key issues. This was a province-wide strike (involving 1,400 workers), and the first COVID-period labour dispute involving grocery workers in Canada.

Health and Moral Arguments and Implications

Overall, national and regional chain employers paying coronavirus-related bonuses remain relatively few and the number is declining. This is despite the fact that wave two is worse than wave one in terms of absolute and relative numbers of workplace infections. Among its members impacted by COVID-19, UFCW International has said there have been 350 front-line worker deaths, including 109 grocery workers. The union reports more than 17,400 grocery workers have been infected or exposed to the virus.

Persons who are sympathetic to the employer’s position highlight a number of defences for not introducing and/or rolling back hazard pay package enhancements during wave two. They include:

(a) operating margins are weak in food retailing;
(b) with high volume of sales but low margins, these stipends were offered simply to keep enough staff around and not have operations affected by higher absenteeism rates;
(c) companies have made a variety major investments to sanitize and otherwise pandemic-proof operations;
(d) money for dividends needs to be allocated to shareholders in order to ensure investment in publicly-traded grocery chains;
(e) some businesses feel they gave a lot — more than was required by law; and
(f) the perceived need to incentivize employees to show up for work has weakened.

By contrast, arguments favouring the stipends include the following:

(a) due in part to lockdowns and changing shopping patterns, the volume of sales and profits at national groceries has been significantly higher during the pandemic– the money is there;
(b) in a difficult economy, these employees are often students, minorities, and racialized Canadians who can readily use the wage top-ups they might receive;
(c) there’s not a grocery store or big box store that has lost money during the present crisis because they paid more for their staff—that is, the amount came off of pure profit;
(d) workers are no less at risk and are no less essential today than they were yesterday;
(e) many workers report feeling greater financial security, being able to afford their bills without having to choose which ones to pay, and
(f) where applied, worker morale has improved with a sense they were more appreciated by their employer.

What are the economics involved? For the first three fiscal quarters of 2020, “Amazon and Walmart could have quadrupled the hazard pay they gave their front-line workers and still earned more profit than the previous year,” said Molly Kinder, one of a Brookings study report’s authors. A separate survey by Robert Half released in November found that six per cent of Canadian employers plan to reduce salaries next year. And an October report by Hay Associates found that only 19 per cent of employers plan to boost pay greater than an annual cost-of-living adjustment for 2021, while 29 per cent are not planning on salary increases.

Ethical and Leadership Issues

As noted in EthicScan Blogs, Radically Remaking the Future of Retailing-Industry post-COVID (November 12) and COVID Adaptation Future-Scenarios Grocery Retailing (June 20), the food and grocery sector has both opportunity and reason to look at their staff talent pool very differently. This includes how grocery stores should be run in the future post-COVID; things such as:

(a) the use of automation to clean carts or machine equipment;
(b) the application of artificial intelligence to warehouse work;
(c) looking at how consumers will interact in a store;
(d) setting up digital point and pay shops in public places like community and commuting centres;
(e) offering more e-commerce and curbside pickup options; and
(f) adding more versatile shift tasks and responsibilities for in-store and “ghost store” staff.

“New normal” retailing could potentially afford to pay employees more to support a different business model, one with fewer stores and fewer SKUs, with more focus on analytics, varied store models, and diverse sales channels.

Our country faces challenges like food insecurity, household economic uncertainty, and growing monopoly concentration in businesses. There is room for a healthy multi-stakeholder engagement and debate about whether this bonus pay initiative should be made a permanent part of essential workplace policies as everybody should be able to make a livable income. Unfortunately, neither the industry nor government is currently leading the call for public interest hearings or discussion forums. At a time of widespread vulnerability and stress nation-wide, that is an opportunity lost.

Knowledgebase comments, presentations and discussion panels have generated various ethical issues that could be debated, were there were open public interest forums to do so, including the following topics:

1. Assess the need for a living wage for all Canadians: that is, normalizing a living wage for essential services is arguably long overdue, especially during a public-health emergency like this.

2. Evaluate the costs, benefits and moral effects on families and communities of not sustaining a decent living wage. Do we agree on a moral duty to care for front-line caregivers?

3. Strategize how best to address seemingly disparate changes in the workforce landscape that can include major changes to journeys-to-work, the sustainability of local economies, supply chain decisions, personal privacy, community cohesion, and health status effects.

4. Understand the magnitude and efficacy of pandemic planning: that is, documenting the degree to which voluntary and compulsory worker absenteeism due to “mortality salience” are growing threats.

5. Address the effects of monopoly capitalism: that is, oligopoly, lessened competition, the growing gap between the rich and poor, and profits of supermarket chains.

6. Plan to repair or remove social divisions. More poor and powerless citizens are being asked to risk their personal safety in comparison to wealthier ones, and in a rich and developed nation, that is shameful.

7. Act upon forecasts that living costs for wage employees will not be improving anytime soon. This includes forecast supply-chain disruptions; higher delivery costs; growing food insecurity; and food and grocery price increases.

An Agenda for Change:

Notwithstanding avid competition between retail chains, several stakeholders would benefit from more, longer-range scenario development and testing. Twenty rather than two year horizons. Consumers, workers, farmers, investors, small business owners, insurers, food processing companies, homeless shelters, food buying associations, and others deserve ways and means to debate these national unity, social contract and pandemic health challenges. Examples include:

Recall Parliamentary sub-committee debate on this topic with a focus on industry changes.
Allocate money for better public research data on disease transmission in groceries.
Commission pilot studies on implementing a living wage in Canada.
Mandate further federal financial support for essential worker wage supports until the pandemic ends.
Discuss the topic of national revenue and fiscal policy instruments on food-industry supply-chain choice alternatives—off-shoring vs. reshoring.

Conclusion

Food and grocery workers have always been essential, and have always deserved better reward and recognition. The pandemic did not make them essential and did not create the inequities in retail; it simply exposed them as we struggle deeply in the second wave of this pandemic. While the idea of offering some sort of danger pay to front-line workers in the food industry has clearly lost steam, there is reason and opportunity for multi-stakeholder dialogue, large profitable chains taking more responsible positions, and scenario development and testing, as well as debating alternative preferred futures.

Need More Answers?

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More EthicScan Resources

EthicScan Blog – Radically Remaking the Future of the Retailing Industry Post COVID:
http://ethicscan.ca/blog/2020/11/12/radically-remaking-the-future-of-retailing-industry-post-covid/

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EthicScan Blog – COVID Adaptation – Future Scenarios in Grocery Retailing:
http://ethicscan.ca/blog/2020/06/20/covid-adaptation-future-scenarios-grocery-retailing/

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EthicScan Blog – COVID ADaptation Scenarios – Retailing:
http://ethicscan.ca/blog/2020/07/04/covid-adaptation-scenarios-retailing/

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comments and panel discussions in the Knowledgebase