The Economic Policy Institute, an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States, said in a policy memo that workers at Albertsons and Kroger could lose a total of $300 million annually if the $24.6 billion merger between the two grocers takes place.
“A recent wave of economic research has called attention to potential damages to workers’ bargaining power over wages stemming from concentration in labor markets,” according to the memo. “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.”
Using grocery employment and earnings data at specific Kroger and Albertson stores, the institute released 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 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.
- The expected earnings losses are a pure windfall for the employers. The decrease in wages is equivalent to 2% of Kroger and Albertson’ profits.
In a joint op-ed by Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran, the two leaders 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.
