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Grocery Chains Are Passing Trump Tariff Costs on to US Consumers With Higher Prices: Report
"Reckless tariff policy is wreaking warrantless chaos on our economy, with grocery giants shifting market uncertainty onto consumers," said Accountable.US president Caroline Ciccone.
Aug 26, 2025
As leading grocery chains increase prices on essentials, they are blaming US President Donald Trump's tariffs for raising the cost of living for households across the country.
According to the Consumer Price Index, the price of food has increased by 3% in the past year, with meats, poultry, fish, and eggs getting 5.6% more expensive from June 2024 to June 2025.
In a poll published this month by the Associated Press and the National Opinion Research Center, 90% of Americans reported that they considered the cost of groceries a source of stress, with 53% describing it as a "major" source of stress.
In earnings calls and public statements, executives of many of America's largest and most profitable grocery retailers are citing Trump's tariffs as justification for passing on the costs to consumers, according to a new report released on Tuesday by Accountable.US.
In a first-quarter earnings call in May, Walmart CEO Doug McMillon said that while the company was better positioned than others to absorb the cost of tariffs, they would still "result in higher prices" for consumers. Since then, some grocery items at America's largest retailer have shown 40% hikes that have outraged consumers, fueling calls for a boycott.
On another call Thursday, McMillon said, "We've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters."
"Trump's tariffs are making groceries more expensive," said Accountable.US. "Everyday Americans pay the cost while corporations and the wealthy profit."
Costco's chief financial officer, Gary Millerchip, told shareholders in May that the company "saw inflation as a result of tariffs because we import certain fresh items from Central and South America."
Kroger's CFO, Todd Foley, projected similar hikes to fresh food prices beginning in March. Though Foley said the impact would not likely be as significant as those experienced by their international competitors, he said the tariffs would likely cause "mid-single digit effects" on the costs of produce imported from Mexico and Canada.
Albertsons CEO Susan Miller has acknowledged that the company is raising prices on some goods to compensate for tariffs. But it has also turned the screws on its suppliers, demanding that they eat the cost of the new levies.
In the American Prospect, David Dayen described the latter as an example of how the tariffs were helping monopolies consolidate their power.
"Albertsons holds a significant market share in the grocery market, particularly in the western United States," he wrote. "Independent grocers, however, typically don't have the same ability to dictate terms to suppliers, and therefore will have to take whatever they can get."
Many of the companies currently raising prices have previously been caught or even admitted to price-gouging consumers to take advantage of inflation in the wake of the Covid-19 pandemic. The tariffs, a regressive tax that Trump has suggested as a way to offset the massive tax cuts given to the wealthy, have further exacerbated that pain.
"While Trump grants massive tax cuts to massive corporations and the ultra-rich," said Accountable.US President Caroline Ciccone, "his reckless tariff policy is wreaking warrantless chaos on our economy, with grocery giants shifting market uncertainty onto consumers."
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Lina Khan Is Big Tech's Worst Nightmare—Here's Why She Should Stick Around
You know you’re making an impact when you’re challenging the status quo and ruffling feathers on both sides of the aisle. Regardless of Trump's arrival, she should stay at the FTC as long as she possibly can.
Dec 18, 2024
This month, the FTC opened an investigation into tech giant Microsoft, which some have called Federal Trade Commission Chair Lina Khan’s “last swing” at Big Tech before her term concludes. But if you think Khan is slowing down, think again. Pencils-down orders be damned, Khan is sprinting through the tape, continuing her fearless crusade to rein in Silicon Valley’s excesses.
But who says her term is over? There are no laws requiring an agency Chair to resign from her post—it’s tradition. While her term expired this fall, she can remain on the Commission until her replacement is confirmed. After President-elect Trump’s norm-shattering run for president, followed by an array of questionable cabinet appointments, why are Democrats so obsessed with tradition? During this transition, it feels like we’re playing checkers when we should be playing chess. Here’s where we start.
We need a warrior like her to continue this fight, and we hope she does.
Given the uncertainty about what’s ahead, we strongly encourage FTC Chair Lina Khan to remain on the Commission. By staying, she could prevent Republicans from gaining a majority for months and help ensure she remains a bulwark against any rollbacks to the FTC’s tough-on Big Tech approach. And if you listen to the rhetoric from Republicans and the president-elect himself, they would be lucky to have her.
Most consider it wildly out of the realm of possibility. They’ll say that the president-elect has already named FTC Commissioner Andrew Ferguson as Chair and nominated Mark Meador to fill Khan’s seat. Both have expressed concerns about market power, but will they be as aggressive?
They’ll point to Trump confidant and billionaire Elon Musk’s tweet that Khan “will be fired soon.” But that’s the beauty of an independent agency. Khan can’t be fired or forced to resign without cause. Does that matter to the incoming president-elect? Probably not, but the courts could be an important backstop. In the meantime, she can continue to serve until Mr. Meador is confirmed.
My question to the American public is this: why change the driver in the middle of the proverbial antitrust highway? During Khan’s tenure, the FTC has faced down tech giants like Amazon, Facebook, and Microsoft, banned almost all noncompetes, sued to prevent grocery heavyweight Kroger from acquiring Albertsons, and stopped Nvidia from attempting a bloated merger. Under her leadership, the FTC has investigated and sued more than three dozen merger proposals and racked up a long list of accomplishments.
This isn’t to suggest that Khan’s achievements are only popular on one side of the aisle.
Vice President-elect JD Vance has not been shy about his approval of Khan’s leadership, previously saying, “I look at Lina Khan as one of the few people in the Biden administration that I think is doing a pretty good job.” While pro-business conservatives have accused her of “overstepping,” those Republicans are out of touch with the voters who put the president-elect back in power. Even some liberals have called her a “dope.” But as the saying goes, you know you’re making an impact when you’re challenging the status quo and ruffling feathers on both sides of the aisle.
There’s a real threat that the new administration’s anti-Big Tech rhetoric from the campaign trail will fizzle out, and CEOs will work quickly to rebuild bridges with the president-elect. It’s rare for a new administration to alter the course of ongoing antitrust cases significantly. However, what could change significantly are the remedies the government seeks for companies found guilty. If you agree that the only remedy for companies like Apple and Google is to be broken up, we need Lina Khan to stay.
She deserves to finish the job she started. Her work has benefited consumers, competition, and the country at large. We need a warrior like her to continue this fight, and we hope she does.
Chair Khan, your move.
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Judges Block Kroger-Albertsons Merger in 'Win for Farmers, Workers, and Consumers'
"We applaud the FTC for securing one of the most significant victories in modern antitrust enforcement," said one advocate.
Dec 10, 2024
Antitrust advocates on Tuesday welcomed a pair of court rulings against the proposed merger of grocery giants Kroger and Albertsons, which was challenged by Federal Trade Commission Chair Lina Khan and multiple state attorneys general.
"The FTC, along with our state partners, scored a major victory for the American people, successfully blocking Kroger's acquisition of Albertsons," said Henry Liu, director of the commission's Bureau of Competition, in a statement. "This historic win protects millions of Americans across the country from higher prices for essential groceries—from milk, to bread, to eggs—ultimately allowing consumers to keep more money in their pockets."
"This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their everyday needs, whether that's a Fry's in Arizona, a Vons in Southern California, or a Jewel-Osco in Illinois," he added. "This is also a victory for thousands of hardworking union employees, protecting their hard-earned paychecks by ensuring Kroger and Albertsons continue to compete for workers through higher wages, better benefits, and improved working conditions."
While Liu was celebrating the preliminary injunction from Oregon-based U.S. District Court Judge Adrienne Nelson, later Tuesday, King County Superior Court Judge Marshall Ferguson released a ruling that blocked the merger in Washington state.
"We're standing up to mega-monopolies to keep prices down," said Washington Attorney General Bob Ferguson. "We went to court to block this illegal merger to protect Washingtonians' struggling with high grocery prices and the workers whose jobs were at stake. This is an important victory for affordability, worker protections, and the rule of law."
Advocacy groups applauding the decisions also pointed to the high cost of groceries and the anticipated impact of Kroger buying Albertsons—a $24.6 billion deal first announced in October 2022.
"American families are the big winner today, thanks to the Federal Trade Commission. The only people who stood to gain from the potential merger between Albertsons and Kroger were their wealthy executives and investors," asserted Liz Zelnick of Accountable.US. "The rest of us are letting out a huge sigh of relief knowing today's victory is good news for competitive prices and consumer access."
Describing the federal decision as "a victory for commonsense antitrust enforcement that puts people ahead of corporations," Food & Water Watch senior food policy analyst Rebecca Wolf also pointed out that "persistently high food prices are hitting Americans hard, and a Kroger-Albertsons mega-merger would have only made it worse."
"Already, a handful of huge corporations' stranglehold on our food system means that consumers are paying too much for too little choice in supermarkets, workers are earning too little, and farmers and ranchers cannot get fair prices for their crops and livestock," she noted. "Today's decision and strengthened FTC merger guidelines help change the calculus."
Like Wolf, Farm Action president and co-founder Angela Huffman similarly highlighted that "while industry consolidation increases prices for consumers and harms workers, grocery mergers also have a devastating impact on farmers and ranchers."
"When grocery stores consolidate, farmers have even fewer options for where to sell their products, and the chances of them receiving a fair price for their goods are diminished further," Huffman explained. "Today's ruling is a win for farmers, workers, and consumers alike."
Some advocates specifically praised Khan—a progressive FTC chair whom President-elect Donald Trumpplans to replace with Andrew Ferguson, a current commissioner who previously worked as chief counsel to Senate Minority Leader Mitch McConnell (R-Ky.) and as Republican counsel on the Senate Judiciary Committee.
"Today's decision is a major win for shoppers and grocery workers. Families have been paying the price of unchecked corporate power in the food and grocery sector, and further consolidation would only worsen this crisis," declared Groundwork Collaborative executive director Lindsay Owens in a statement.
"FTC Chair Lina Khan's approach is the blueprint to deliver lower prices, higher wages, and an economy that works for everyone," Owens argued. "The rebirth of antitrust enforcement has protected consumers against the worst of corporate power in our economy and it would be wise to continue this approach."
Laurel Kilgour, research manager at the American Economic Liberties Project, called the federal ruling "a resounding victory for workers, consumers, independent retailers, and local communities nationwide—and a powerful validation of Chair Khan and the FTC's rigorous enforcement of the law."
"The FTC presented a strong case that Kroger and Albertsons fiercely compete head-to-head on price, quality, and service. The ruling is a capstone on the FTC's work over the past four years and includes favorable citations to the FTC's recent victories against the Tapestry-Capri, IQVIA-Propel, and Illumina-Grail mergers," Kilgour continued.
"The court also cites long-standing Supreme Court law which recognizes that Congress was also concerned with the impacts of mergers on smaller competitors," she added. "We applaud the FTC for securing one of the most significant victories in modern antitrust enforcement and for successfully protecting the public interest from harmful consolidation."
Despite the celebrations, the legal battle isn't necessarily over.
The Associated Press reported that "the case may now move to the FTC, although Kroger and Albertsons have asked a different federal judge to block the in-house proceedings," and Colorado is also trying to halt the merger in state court.
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Kroger Posts Massive Profits Amid Price Gouging Outcry and Merger Push
Kroger executives have "proven they'll take advantage of their customers to bolster their profits," said watchdog Accountable.US.
Sep 12, 2024
Grocery giant Kroger's practice of price gouging in order to pass on its "inflation to consumers," as one executive recently said, has paid off for the $37 billion company, according to its quarterly earnings posted on Thursday.
The company, which is facing a legal challenge from the Federal Trade Commission (FTC) over its proposed acquisition of rival store Albertsons, reported that it earned $466 million in the second quarter of 2024, with year-to-date earnings of $1.4 billion—nearly double the amount it earned last year.
The government watchdog Accountable.US accused Kroger of profiting off "rising costs" for families across the United States—ones that are caused not by inflation but by "greedflation": the practice of purposely keeping prices high to increase profits, even though higher labor costs and supply chain woes from the coronavirus pandemic era have subsided.
"Should consumers pay the price for corporate greed?" said the group.
The Biden administration is working to block Kroger's proposed merger with Albertsons, which the FTC says would result in "a straight-up monopoly" in some communities where Albertsons stores would likely close.
The FTC has raised concerns both about how the merger would raise prices at stores whose owners already engage in price gouging and would no longer have to compete with Albertsons, and about likely job losses for many employees. In two counties in Southern California, for example, 115 out of 159 Albertsons stores are located within two miles of a Kroger, raising concerns among unionized workers that their stores could be seen as "redundant" after the potential merger.
"Corporate price gouging has cost consumers enough, yet Kroger wants to make matters worse by cornering the market to maximize profits."
Accountable.US said Thursday that the merger could cost $334 million in wages for nearly 1 million grocery workers.
"The Biden-Harris administration is putting American families first by challenging the ill-advised merger between Kroger and Albertsons," said Liz Zelick, director of the group's Economic Security and Corporate Power Program. "Corporate price gouging has cost consumers enough, yet Kroger wants to make matters worse by cornering the market to maximize profits. Make no mistake: If the merger goes through, it will leave many families worse off with higher prices and fewer store locations."
Late last month, Kroger's senior director of pricing, Andy Groff, told an FTC attorney during questioning that the grocery chain had raised the prices of milk and eggs above the rate of inflation.
The company has also used "dynamic pricing" in some of its stores for years—changing prices throughout the day—and has partnered with an artificial intelligence company to develop software that could tailor the cost of products to individual shoppers by collecting their personal data.
While reporting a massive financial windfall, said Accountable, Kroger executives have "proven they'll take advantage of their customers to bolster their profits."
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'Corporate Greed at Its Absolute Worst': FTC Challenges Kroger Merger
"As grocery store 'price gouging' reaches the top of the political ticket, the FTC is intervening to protect consumers and workers from further harm."
Aug 26, 2024
As grocery giants Kroger and Albertsons faced the U.S. Federal Trade Commission in a federal court Monday, economic justice advocates said Americans should be wary of the corporate media's reporting on the FTC's lawsuit, which aims to block the companies' proposed $24.6 billion merger.
"Get ready for more takes like these from corporate media," said the American Economic Liberties Project (AELP), posting on social media a clip from CNBC in which anchor Joe Kernen echoed Kroger and Albertsons' claims that the merger would help them compete with big box stores like Walmart, lower prices for consumers, and benefit workers.
"With a merger this blatantly harmful to consumers, workers, and countless local communities, Wall Street cheerleaders can't help but rely on misleading arguments," said AELP.
The trial, kicking off in a U.S. District Court in Portland, Oregon, centers on a claim by the FTC along with eight states and the District of Colombia that the merger would reduce industry competition—creating "a straight-up monopoly" in small communities like Gunnison, Colorado where 6,000 residents "would have to drive 65 miles to reach a non-Kroger supermarket," according to AELP.
FTC Chair Lina Khan is also opposing the merger because it would weaken unionized workers' bargaining power, particularly in parts of the country where dozens of Kroger and Albertsons stores are located near each other.
With 115 of 159 Albertsons stores located within two miles of a Kroger in Los Angeles County and Orange County, California, the United Food and Commercial Workers International Union (UFCW) has warned that hundreds of unionized workers could see their stores close if the merger is finalized.
As the trial began Monday, The New York Times published an interview with an employee of an Albertsons subsidiary in Woodland Hills, California. Leonard De Monte was represented by the UFCW in 2015 when the grocery store he was working at was sold as part of Albertsons' merger with the store's parent company—a deal that was called "an unmitigated disaster" for workers by AELP senior legal counsel Lee Hepner.
De Monte found another job at the Albertsons subsidiary, but was demoted to minimum wage. Now nine years later, after working his way up to a $27-per-hour union wage, the store De Monte works at is once again at risk of being sold if the merger goes through, and he fears being demoted to minimum wage again and losing his benefits.
"I have great health benefits because I've been with the company so long," he told the Times. "If I lose my health benefits, I would have to pay out of pocket."
Despite the stores' claim that they need to compete with Walmart and Amazon, AELP pointed out in March that Kroger and Albertsons acknowledge one another as their top competition. Without the two stores competing, said the group, "grocery workers will lose bargaining power, both because individually they won't have a competing employer to go work for, and because unions will lose leverage during contract negotiations. As a result, workers will potentially face lower wages, worse working conditions, and layoffs."
According to an analysis by the Economic Policy Institute, the merger would reduce the total annual earnings of grocery store workers in affected metropolitan areas by $334 million.
In court on Monday, the FTC displayed text messages showing that Kroger executives have complained that Albertsons has forced it "to accept more worker compensation."
The progressive think tank Roosevelt Institute said the trial, which is expected to go on for three weeks, shows that Khan and the FTC are "taking the harms of corporate consolidation on workers seriously."
Kroger's arguments and business practices—including using "dynamic pricing" to price gouge and its exorbitant CEO pay—represent "corporate greed at its absolute worst," said former U.S. Labor Secretary Robert Reich.
"The Kroger-Albertsons merger would eliminate head-to-head competition between grocery stores across the country," said Hepner. "As grocery store 'price gouging' reaches the top of the political ticket, the FTC is intervening to protect consumers and workers from further harm."
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FTC and State AGs Sue to Block Kroger-Albertsons 'Mega Merger'
"By suing to block the Kroger-Albertsons merger, the FTC is keeping grocery bills down and workers in their jobs," said one anti-monopoly campaigner.
Feb 26, 2024
The Federal Trade Commission and a bipartisan group of state attorneys general joined forces Monday on a lawsuit aimed at blocking the supermarket giant Kroger from buying up the Albertsons grocery chain, warning the merger would hamper competition, further drive up food prices, and harm workers.
If completed, the $24.6 billion deal would mark the largest supermarket merger in U.S. history at a time when grocery chains are facing growing scrutiny for driving up prices to pad their bottom lines. A Kroger-Albertsons grocery behemoth would control more than 5,000 stores and 4,000 retail pharmacies across the country, according to the FTC.
"This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years," said Henry Liu, director of the FTC's Bureau of Competition. "Kroger's acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today."
"Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating," Liu added.
The attorneys general of Arizona, California, Washington, D.C., Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming are joining the FTC's suit, which was filed in the U.S. District Court for the District of Oregon.
The lawsuit drew immediate praise from progressive advocacy groups and opponents of food industry consolidation.
Stacy Mitchell, co-executive director at the Institute for Local Self-Reliance (ILSR), said the decision to sue shows that the FTC "sees what we have long argued—there was no upside to this merger for anybody other than the top executives at these two companies and their investors."
ILSR has estimated that if the deal survives legal challenges, Kroger-Albertsons and Walmart—the largest low-wage employer in the U.S.—would control 70% of the grocery market in over 160 cities.
"Concentration in grocery retail has already caused food prices to skyrocket," said Mitchell. "We know from past grocery mergers that this one would have sent prices for consumers even higher. It would have left many communities, especially on the West Coast, with little to no competition or choice about where to shop. And it would have hurt retail workers by giving the combined companies even more leverage to push down wages and dictate terms."
Grocery prices have outpaced overall inflation in the U.S. over the past four years, surging by roughly 25%—and they remain stubbornly high even as inflation has fallen substantially from its peak of 9.1% in the summer of 2022.
The FTC, which has been assessing the proposed merger for more than a year, said Monday that because Kroger and Albertsons are direct competitors, a merger of the two "would eliminate head-to-head price and quality competition, which have driven both supermarkets to lower their prices and improve their product and service offerings."
"If the merger takes place, grocery prices will increase, and Kroger and Albertsons' incentive to improve product quality and customer service will decrease, further harming customers," the agency said.
The deal would also bring economic pain for workers, according to merger opponents. The Economic Policy Institute (EPI) has estimated that if the acquisition is completed, roughly 746,000 grocery store workers in over 50 metropolitan areas of the U.S. would see their annual earnings fall by a combined $334 million.
"Workers' ability to negotiate better pay and working conditions rests on their capacity to switch jobs," EPI senior economist Ben Zipperer explained in a 2023 memo. "By decreasing the number of outside options available to workers, the merger will limit competition for hiring and retaining employees, and grocery store worker earnings will fall as a result."
The FTC said Monday that executives at both Kroger and Albertsons have admitted that the proposed merger is anticompetitive. The agency quotes one unnamed executive as saying, "You are basically creating a monopoly in grocery with the merger."
Morgan Harper, director of policy and advocacy at the American Economic Liberties Project, said in a statement that "by suing to block the Kroger-Albertsons merger, the FTC is keeping grocery bills down and workers in their jobs."
"From higher prices for consumers, worse wages and benefits for workers, a tighter squeeze on producers and farmers, to an increased risk of grocery and pharmacy deserts across the 48 states this merger affects, the harms of this deal were clear from the start," said Harper. "No divestiture or concession would make it work—which is why over 100,000 workers and countless advocates have spoken out against this disastrous merger."
"Kroger and Albertsons would be wise to save everyone's time and abandon this deal," she added.
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Grocery Store Workers Stand to Lose Over $300 Million Annually if Kroger and Albertsons Merge
Workers’ ability to negotiate better pay and working conditions rests on their capacity to switch jobs. By decreasing the number of outside options available to workers, the merger will limit competition.
May 07, 2023
In October 2022, Kroger, the largest supermarket chain in the U.S., announced plans to acquire Albertsons, the second largest, for $24.6 billion—a deal that faces antitrust scrutiny from the Federal Trade Commission and state regulators. Historically, antitrust concerns have focused on the damage to consumers caused by concentration in product markets that gives large firms pricing power. However, a recent wave of economic research has called attention to potential damages to workers’ bargaining power over wages stemming from concentration in labor markets. In this policy memo, we discuss these labor market implications of the proposed merger. 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.
Workers’ ability to negotiate better pay and working conditions rests on their capacity to switch jobs. By decreasing the number of outside options available to workers, the merger will limit competition for hiring and retaining employees, and grocery store worker earnings will fall as a result. Crucially, the wage effects we identify are solely driven by this increase in labor market concentration. If the merger also leads to layoffs or hours cuts, this would add another dimension of damage to affected workers.
Our analysis uses grocery store employment and earnings data and the specific locations of Kroger and Albertsons stores. We find that:
- 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 store 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. In areas with weaker worker bargaining power, workers will experience larger wage declines; and
- The expected earnings losses are a pure windfall for the employers. In our analysis, wages fall solely because of a change in labor market power brought about by increased concentration. Quantitatively, this windfall represents a significant transfer of income from wages to profits: The decrease in wages is equivalent to 2% of Kroger and Albertsons’ profits or three times the companies’ CEO compensation.
Analysis
Recent research has established that concentrated labor markets can reduce worker pay. As explained in Abdela and Steinbaum (2018), much of this research estimates the expected change in average wages for a given change in employer concentration in a particular industry- or occupation-specific labor market.
This analysis uses estimates from that research and applies them to labor markets, which we define as grocery store industry employers or employees in metropolitan areas using the 4-digit North American Industry Classification System (NAICS) industry 4451, Grocery and Convenience Retailers. For each of these metropolitan area labor markets, total grocery store wage losses are calculated by estimating percent changes in employer concentration due to the merger and multiplying those concentration changes by the wage responses estimated in the research literature described above.
To estimate the percent change in concentration due to the merger, we first estimate the level difference in the metropolitan area grocery store industry concentration before and after the merger and then divide that level change by an estimate of the baseline, pre-merger concentration.
On average, each of the affected 746,000 workers will lose about $450 in annual wage income.
To estimate the pre-merger concentration levels, we choose an average pre-merger concentration level by relying on the existing research literature that calculates trends in retail or grocery concentration. Measuring concentration as the Herfindahl-Hirschman Index (HHI) for 4-digit NAICS industries in commuting zones, Rinz (2022) found that the average HHI for the retail trade sector trended between 0.1 and 0.2 between 1976 and 2015. Zeballos, Dong, and Islamaj (2023) also calculated that the average HHI for two 6-digit industries associated with food retail markets in metropolitan areas rose from about 0.1 in 1990 to about 0.2 in 2019. In the following analysis, we choose a constant 0.15 as the average pre-merger concentration level in metropolitan areas for the grocery store industry. Coincidentally, 0.15 is the threshold at which the Department of Justice considers a market to be “moderately concentrated.”
In our analysis, the pre- and post-merger difference in concentration levels assumes Kroger and Albertsons act as two separate firms prior to the merger and as one single firm after the merger, and then we calculate the level change in HHI where it is possible to estimate store-level employment for each Kroger and Albertsons store. This estimate is a linear prediction based on a subset of 153 stores for which we have employment estimates, square footage data, and Quarterly Census of Employment and Wages (QCEW) metropolitan area-level average employment per establishment.
All told, this analysis covers 205 metropolitan areas containing 3,770 Kroger and Albertsons stores for which we can estimate store-level employment—and hence potential concentration changes—and for which we have 2022 QCEW data for baseline metropolitan area grocery store employment and earnings levels. According to the 2022 QCEW data, there are about 1.6 million grocery store workers in these cities and about 2.8 million grocery store workers nationwide. In 55 of these metropolitan areas, concentration will increase after the merger because these areas contain both Kroger and Albertsons stores.
Wages will fall on average for all grocery store workers in these areas due to the decrease in employer competition. (In other metropolitan areas, we assume there will be no wage change due to the merger because there is no estimated change in concentration.) The exact magnitude of the wage response is based on estimates published in Rinz (2022): Specifically, our analysis assumes that a 10% increase in concentration in a labor market will lower the average wage by 0.4%.
Table 1 summarizes the results. The metropolitan areas with concentration increases contain 746,000 grocery store workers, and the total annual wage bill is $26.3 billion. Across these areas, earnings-weighted average concentration will increase by 32% because of the merger. As a result, wages will decline by 1.3%, given the assumed elasticity of wages with respect to a concentration of -0.04. The Kroger-Albertsons merger will cause annual wages to fall in these affected cities by a total of $334 million. On average, each of the affected 746,000 workers will lose about $450 in annual wage income.
Because the wage losses will, on average, affect every grocery store worker in a metropolitan area where there is a merger of Kroger and Albertsons’ stores, cities with large grocery employment bases will experience particularly large losses in total wage income. Table 2 shows the 10 largest wage losses by metropolitan area. For example, the merger will cause annual grocery store wages to fall by $51 million in the Los Angeles-Long Beach-Anaheim, California, metropolitan area and $32 million in the Chicago-Naperville-Elgin, Illinois-Indiana-Wisconsin, metropolitan area
The effects described above represent average losses, and some individual workers may experience larger or smaller wage declines. In particular, the losses may be reduced in labor markets where workers have more bargaining power. Benmelech, Bergman and Kim (2022), in the case of manufacturing, and Prager and Schmitt (2021), in the case of hospital workers, show that the negative wage effects of employer concentration are larger in areas where union density is below average or right-to-work laws reduce unions’ bargaining power. For example, union coverage rates in the grocery store industry are only 8% in the South, but 20% in the Northeast.
As wage declines entail significant losses for grocery store workers, they simultaneously represent sizable parts of Kroger and Albertsons’ bottom lines. Some reports estimate total employment at Kroger and Albertsons to be about 710,000 workers, about one quarter of the total 2.8 million employees in the grocery store industry. Accordingly, a reasonable expectation for wage losses for employees at Kroger and Albertsons is one quarter of the $334 million, or about $84 million. Since Kroger’s profits were $2.3 billion and Albertsons profits were $1.5 billion in 2022, the merger-induced decline in grocery store worker wages is equivalent to about a 2% increase in Kroger and Albertsons’ profits. Because grocery profits were relatively high in 2022, the wage reductions would represent an even higher share of “normal” pre-pandemic profits. The wage losses also represent a significant windfall for company executives: Wage losses for workers at Kroger and Albertsons are about three times the size of the total CEO compensation of the two companies.
Conclusion
The Kroger and Albertsons merger will reduce the number of outside employment options available to workers and place downward pressure on grocery store workers’ wages. Based on existing empirical research showing the labor market effects of employer concentration, we find that the merger will permanently reduce the wages of 776,000 grocery store workers. Their annual earnings will fall by $334 million—about a $450 loss in annual wages per worker. If unionization rates were significantly higher in areas affected by the merger, union contracts and bargaining power could mitigate some of these losses.
For additional notes and references, see the original Economic Policy Institute report.
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Coalition Rises to 'Stop the Merger' of Kroger and Albertsons
"This deal is an antitrust travesty and it must be stopped," says a letter urging the FTC to block the proposed $25 billion merger between two of the nation's largest grocery chains.
Mar 14, 2023
A progressive coalition of more than 100 unions and consumer advocacy groups from across the United States has come together to build the "Stop the Merger" campaign, a national and state-level effort to prevent Kroger from acquiring Albertsons and establishing the country's most powerful grocery cartel.
On Tuesday, the coalition announced the launch of NoGroceryMerger.com, which includes information about the negative impacts of the proposed $25 billion merger between two of the nation's largest grocery chains, testimony from unionized grocery workers and elected officials, and tools for people to express their opposition to the potential deal.
Individuals and organizations can sign the coalition's letter to the Federal Trade Commission (FTC), which is currently reviewing the grocery giants' proposal and has the regulatory authority to reject it.
If approved, the merger would likely "lead to store closures, worsen food deserts, increase prices for consumers, and destroy thousands of unionized grocery jobs," the letter warns. "This deal is an antitrust travesty and it must be stopped."
Since the Covid-19 pandemic and Russia's invasion of Ukraine disrupted international supply chains—rendered fragile by decades of neoliberal globalization—Kroger, Albertsons, and other mega-grocers have capitalized on these crises as well as the bird flu outbreak, citing them to justify price hikes that far outpace the increased costs of doing business.
Such price gouging has been exacerbated by preceding rounds of supermarket consolidation, and the coalition warns that if the proposed merger between Kroger and Albertsons goes through, it "will no doubt create a monopoly in the grocery industry."
Less competition, says the coalition, would result in even higher food prices and hundreds of shuttered stores—intensifying unequal access to healthy food. It also threatens to destroy thousands of jobs and hurt the ability of farmers and other suppliers to sell their products.
"It's simple: This merger will be bad for workers, bad for customers, and bad for our communities."
Cincinnati-based Kroger trails only Walmart in grocery sales, while Boise-based Albertsons is the fourth largest grocery chain in the U.S., behind Costco. Together, Kroger and Albertsons, including their numerous subsidiaries, employ more than 700,000 workers at roughly 5,000 retail stores and more than 50 manufacturing facilities across 48 states plus Washington, D.C.
According to the campaign's fact sheet, "If this merger goes through, the resulting company will become the largest supermarket by revenue in the United States with a current national market share of 36% and a combined annual sales of more than $200 billion."
As Michelle Freitas, a United Food and Commercial Workers (UFCW) Local 7 member who works at a Safeway in Gunnison, Colorado, noted: "My town only has two standalone grocery stores. If one closes and we only have one option, it will be a monopoly which means this new grocery company could raise food prices to exorbitant amounts."
"If the prices for essential goods go up, how are people who are lower-income or middle-income going to be able to survive?" she asked. "Many people who work at my store live paycheck to paycheck, including parents with small children and single moms."
Lawanna Archer, a UFCW Local 770 member who works at a Vons in Gardena, California, described the devastation that accompanied a merger between Albertsons and Haggen eight years ago.
"The deal between Albertsons and Haggen in 2015 was really bad for workers," said Archer. "I saw massive layoffs, cars being repossessed, foreclosures, and loss of benefits. I am a single mother and I provide for my daughter and myself. The Kroger and Albertsons merger could possibly impact us in the most harmful way ever."
Christina Robinett, another UFCW Local 770 member who endured that merger and now works at a Vons in Ojai, California, said, "After Haggen went bankrupt and shut down my store, I applied for work at four different stores."
"I wasn't able to get a job for three months and I had to take side jobs as a seamstress and cleaning houses to make ends meet," she said. "That merger caused me a lot of anxiety. No worker should go through this kind of hardship again."
The campaign's website features several videos, including one in which Robert Reich, a professor at the University of California, Berkeley and former U.S. labor secretary, explains how the proposed merger "could send skyrocketing food prices through the stratosphere unless government sees the deal for what it is: a rotten egg."
Soon after the proposed deal was announced in October, Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) implored the FTC to block it.
Although consolidation in the grocery sector has, according to the American Economic Liberties Project, "previously been mismanaged by antitrust enforcers," approval of Kroger's buyout of Albertsons—the largest supermarket deal since Supervalu, CVS, and a group of investment firms bought Albertsons for $9.7 billion in 2006—is far from guaranteed.
Federal officials, including FTC Chair Lina Khan and Jonathan Kanter, assistant attorney general of the U.S. Department of Justice's Antitrust Division, have both taken a more hard-nosed approach to mergers following decades of lax enforcement.
The decision before regulators should be easy, the coalition argues.
Its members have "written numerous letters to the FTC and state attorneys general, held meetings with federal and state elected officials and regulators, held press conferences and virtual town halls, attended public events on the merger hosted by government officials, and participated in various local community activities opposing the merger," the coalition said in a statement. "All this activity has helped reveal growing evidence that shows the real motives for the proposed merger: corporate greed at the hands of C-suite executives and the private equity firms that are significant owners of their stock."
"It's simple: This merger will be bad for workers, bad for customers, and bad for our communities," reads the campaign website. "Union grocery workers, consumers, elected officials, and community members are standing together to fight for access to nutritious food, safe shopping experiences, and investment in good jobs in our communities."
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Citing 'Aggressive Profiteering,' Sanders and Warren Urge FTC to Stop Kroger-Albertsons Merger
"Kroger's and Albertsons' anti-competitive policies have harmed consumers, workers, small businesses, and the economy as a whole," the two senators wrote in a letter also signed by Rep. Jan Schakowsky.
Oct 26, 2022
Citing the "anti-competitive and antiworker records of Kroger and Albertsons," U.S. Sens. Elizabeth Warren and Bernie Sanders, along with Rep. Jan Schakowsky, on Tuesday urged the Federal Trade Commission to oppose the supermarket giants' proposed merger.
"The new Kroger could increase its monopoly power and further disenfranchise its own workers and consumers."
In a letter to Federal Trade Commission (FTC) Chair Lina Khan, Warren (D-Mass.), Sanders (I-Vt.), and Schakowsky (D-Ill.) warned that the $24.6 billion merger of two of the nation's biggest supermarket chains "could exacerbate existing antitrust, labor, and price-gouging issues in the grocery sector and further raise prices for vulnerable Americans."
"Throughout the pandemic and its economic aftermath, Kroger and Albertsons reported record profits and richly rewarded their shareholders and executives with bonuses and stock buybacks, even as both companies took steps to prevent workers from receiving hazard pay and boasted about their abilities to raise consumers' prices," the letter notes. "Kroger's and Albertsons' histories of aggressive profiteering during the pandemic present a dangerous roadmap for how a larger and more powerful company would act if this acquisition were allowed to proceed."
"The new Kroger could increase its monopoly power and further disenfranchise its own workers and consumers," the lawmakers continued. "The FTC, when evaluating the potential market and consumer effects of the Kroger-Albertsons acquisition, should closely consider both companies' history of monopoly, labor, and consumer abuses, and whether this acquisition would exacerbate these abuses for American families."
As Warren's office notes:
Early in the pandemic, both companies faced allegations of price-gouging. A lawsuit filed in Texas alleged that 19 grocery stores, including Kroger and Albertsons, participated in price-gouging in the first months of the pandemic, nearly tripling the price of eggs during the state of disaster in March 2020. In 2021, Kroger and Albertsons continued to raise their prices, citing rising costs and inflation, even as they reassured investors that their businesses stood to benefit. In June 2021, on a call with investors, Kroger CEO Rodney McMullen admitted that "our business operates the best" with some inflation, allowing the company to raise prices and boost profits at the expense of consumers.
In addition, lawmakers caution that Albertsons' proposed $4 billion dividend to shareholders may weaken Albertsons' ability to compete regardless of whether the acquisition is finalized and may constitute "gun jumping," a form of collusion illegal under the Sherman [Antitrust] Act.
"If the merger is approved, the $4 billion payout will weaken both the merged entity and the new SpinCo company, saddling those companies with excess debt rather than allowing them to invest in workers, improving stores, or reducing prices for customers," the lawmakers assert in their letter.
Kroger and Albertsons are currently the country's second- and fourth-largest grocers, respectively. As HuffPost reports, the two companies "have a combined 5,000 stores and 710,000 workers in the U.S., with dozens of chains between them, such as Fred Meyer and Ralphs (Kroger) and Safeway and Jewel-Osco (Albertsons)."
The outlet continues:
Workers at many stores under both companies are represented by the United Food and Commercial Workers union. At least four affiliates of that union have come out against the merger, saying they have concerns about store closures and layoffs. One Kroger worker recently told Reuters: "I wish they would put their money toward trying to lower prices and increase wages, rather than gobbling up the competition."
"Kroger's and Albertsons' anti-competitive policies have harmed consumers, workers, small businesses, and the economy as a whole," the lawmakers' letter concludes, "and the FTC should use its authority under the Clayton Act and the Sherman Act to prevent the companies from merging, reducing competition, and making these problems even worse."
Labor unions and numerous Democratic U.S. lawmakers including Sens. Amy Klobuchar (Minn.), Cory Booker (N.J.), and Richard Blumenthal (Conn.), Reps. Jimmy Gomez (Calif.), Katie Porter (Calif.), and Kim Schrier (Wash.) have voiced opposition to the merger. So have progressive advocacy groups such as the American Economic Liberties Project, Food & Water Watch, and Public Citizen.
"With food prices rising, the last thing Americans need is a supermarket merger that will spike food prices even further," Public Citizen president Robert Weissman argued earlier this month. "Rejecting this merger proposal should be a no-brainer for federal antitrust officials."
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Workers Will Lose Out If Union Backs Kroger-Albertsons Grocery Merger
The UFCW may be contemplating supporting Kroger's mega-merger. That should give every union member a sinking feeling.
Oct 23, 2022
There has always been a fundamental tension in the organized labor world between people who think that unions exist to counteract the self-serving tendencies of businesses, and people who think that unions should copy the self-serving tendencies of businesses. The gap between the view that unions should change capitalism and the view that unions should just help working people get their piece of capitalism is not just fodder for theoretical arguments--billions of dollars, thousands of jobs, and the entire direction of the post-neoliberalism economy could ride on it. We're seeing that tension painfully demonstrated right now, at the grocery store.
Why do companies find this sort of mega-merger so attractive? It allows them to squeeze suppliers for lower prices, and, on the flip side, it gives them greater pricing power over consumers.
Last week, Kroger announced its plan to merge with Albertsons. That merger would create a $25 billion grocery giant that would control more than 15% of the American grocery market, second only to Walmart. (In certain local markets, it would control the majority of the grocery business.) Kroger argues that it needs such massive scale in order to compete with Walmart and Amazon--a strange claim, since Kroger's profits grew 14% in the past year.
Why do companies find this sort of mega-merger so attractive? It allows them to squeeze suppliers for lower prices, and, on the flip side, it gives them greater pricing power over consumers. (Mergers also create a ton of fees for advisors and potential bonuses for executives, and a little sugar rush jolt to the stock price--all things that create personal incentives for the people in charge to do deals, whether or not they end up being wise.) What companies say when they do such mergers is "It will help us lower prices for consumers, and it will help us strengthen our company for shareholders," as if corporate dealmaking was an altruistic process. What they mean is "It will help us proceed one step closer to monopoly power, the ultimate goal of all corporations, and also it will help the CEO buy a new house."
Then there is the labor angle. These grocery companies have an enormous number of employees who are unionized with the United Food and Commercial Workers (UFCW)--the merger, in fact, could create the biggest single private sector union employer in the country, even bigger than the Teamsters unit at UPS. Common sense should tell you that bigger, more omnipotent companies with more extreme market power are not generally a good thing for their own blue collar workers, for many of the same reasons they are not a good thing for consumers. Companies want to get bigger to squeeze suppliers, customers, and workers in service of shareholders and executives. That is Capitalism 101, and it has been demonstrated countless times. It is an easy call for anyone who considers themself a progressive, or who cares even a bit about the balance of power between capital and labor, to oppose this merger and others like it. It is quite a tell that the fairytale of the free market's benefit is all about how competition will create an optimal outcome for everyone, but the reality of capitalism is that companies seek to eradicate every possible trace of competition in order to accrue benefits for themselves and screw everyone else.
This merger needs approval from the Biden administration's Federal Trade Commission. That means this is a political issue, and opens a door for organized labor--particularly the UFCW--to have an extraordinarily large say, given the fact that this administration actually listens to unions more than any other in living memory. As soon as the merger was announced, a group of five UFCW locals representing tens of thousands of grocery workers in the Western United States put out a statement opposing the merger, saying it would be "devastating for workers and consumers alike and must be stopped," for all of the reasons just mentioned. Their position was very clear. They knew this would be bad, and they immediately stood against it. The internal reform caucus called Essential Workers for a Democratic UFCW is also agitating against the merger.
Oddly, though, a full day then went by with silence from the UFCW's International headquarters. Then, the union dropped a statement that was excruciating in its refusal to take a stand. Rather than clearly coming out against the merger, it said that "Given the national impact such a merger would have, the UFCW and our Local Unions are discussing this and will stand together to prioritize the best interests of our members, their families, and the communities they proudly serve," adding that the union "will oppose any merger that threatens the jobs of America's essential workers, union and non-union, and undermines our communities." It was a glaring, flashing siren that the leadership of the UFCW may be considering cutting a deal.
And here is where we come to my initial point about how union leaders see their mission. In theory, the UFCW could reach an agreement with Kroger that, for example, ensured the company would be neutral as UFCW went about organizing more of its workers. It could be a way to deliver hundreds of thousands of new members into the UFCW's ranks. (Of course, thousands of existing UFCW members could be laid off as a result of the store divestments that would go along with this merger.) But no matter what the company offered, common sense again tells you that they will not give up the underlying benefits of this mega-merger--which are structurally bad for suppliers, consumers, and workers. A union thinking they will get a "good deal" out of a merger like this is like someone who decides they are a savvy businessman because they sold their home for firewood. Time will pass, and they will regret it. The inherent nature of these deals is bad news for workers. That is why the UFCW locals found it such an easy call to oppose this.
The UFCW is huge, and it has many fine people working for it, and many inspirational members. But, generally speaking, it is a weak union compared to what the Teamsters have built at UPS. Grocery workers were devastated by the pandemic. They did not, by and large, use the leverage they had at that crucial moment to win any lasting benefits. A report commissioned by UFCW in January showed dire conditions for Kroger workers: widespread homelessness, inability to pay for basic expenses like food, and an average wage under $30,000 per year. These facts are a moral stain on the company. Left unstated, though, was the fact that all those workers are UFCW members. The union has an extremely difficult job, but there is no denying the reality that it has not shown itself to be up to the task of making grocery work, as a whole, a living wage career. To the extent that the union is in a long-term battle with the employers, it is losing. So while the leadership of the UFCW might find it enticing to support the merger in exchange for a possible membership boost, there is good reason to doubt that the uncertain benefits to grocery workers themselves would outweigh the guaranteed harm.
The path to building power for those workers is to organize, not to strike a deal with a corporation that everyone knows will erode labor's position in the long term.
No union should think of workers as pawns to be traded back and forth with companies, in order to benefit the union. The workers are the point. The path to building power for those workers is to organize, not to strike a deal with a corporation that everyone knows will erode labor's position in the long term. If UFCW is concerned about Walmart's power, they should organize Walmart--something they have spent a ton of money failing to do for more than a decade. Trader Joe's, an obvious grocery organizing target, had to organize its first unions independently. New Seasons Market also has a burgeoning independent union drive. These independent unions popping up squarely inside of UFCW's jurisdiction are a sign that the union has long failed to build an organizing program capable of covering the industry it is supposed to cover. Focusing on that would be a good use of the union leadership's time and money.
With 1.3 million members, UFCW should be a leading force in the labor movement. That is simply not the case right now. Inside of any union that large are countless fiery, inspiring workers and organizers, and I have spoken to many of them over the years. They know corporate consolidation is poison. They know that organizing needs to be energized. They know that grocery workers deserve much more than they got for risking their lives to keep America fed during the pandemic. The question is whether the leadership of this massive union can make it an institution that lives up to its potential. There has been no formal position taken on this merger yet, so all could still turn out well. But the UFCW's actions so far do not seem to indicate that they understand that they are supposed to be leading this fight, rather than deciding which side they're on.
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