Dive Brief:

• Eighteen states have raised their minimum wage this year, according to Forbes. That brings the total number of states with minimum pay above the federally mandated $7.25 per hour to 29. The federal minimum wage has not risen since 2009.
• Twenty cities, including Los Angeles and Washington, D.C. also have pay increases that have taken effect. Thirteen of these cities, including D.C. and New York, have minimum wages of $12 an hour or more.
• According to the National Employment Law Project, 17 additional states are facing pressure from campaigns aimed at raising the minimum wage. The fight for a $15 minimum wage has also gained steam, and Forbes estimates that by 2022, 17% of Americans will live in a state with a $15 pay minimum.

Dive Insight:

The federal minimum wage has stayed at $7.25 since 2009, but that hasn’t stopped states and cities across the country from passing their own pay increases. Seattle famously passed its $15 minimum wage law in 2014, while cities like New York and Los Angeles have inched closer to that mark as they’ve tried to keep pace with inflation and high living costs. And while states like Ohio and Kentucky have blocked wage increases, others like Colorado and Hawaii just instituted pay raises of nearly a dollar.

What does this mean for the supermarket industry? Quite a bit. Food retail is a low-margin business, and pay increases can trim earnings. Publicly traded companies, in particular, are closely scrutinized for their labor spending.

However, with unemployment low right now, grocers have instituted pay increases on their own in an effort to attract — and retain — good workers. Kroger and Walmart both raised their starting pay for hourly workers recently, and are offering added perks to keep employees happy. Kroger recently contributed $1 billion to its employee benefits fund, while Walmart rolled out a new service that allows workers to receive their money before payday.

Whole Foods, meanwhile, offers pay that’s above minimum wage in the states where it operates. Costco pays many of its workers $20 an hour and up, and Publix offers all its workers an ownership stake in the company. Target has said it plans to pay a minimum wage of $15 per hour by 2020.

According to a September report from UBS analyst Michael Lasser, 31% of U.S. grocery stores are in states with wage increases planned over the next three years. Two of the most vulnerable retailers, he noted, are Kroger and Sprouts Farmers Market. The latter has 61% of its stores in affected states, making it the most exposed grocer in the country.

Supermarkets, however, aren’t getting caught off guard by these increases. In a recent interview with Food Dive, Sprouts CEO Amin Maredia dismissed any concerns over rising wages. The company, he said, has increased wages recently, and has efficiency measures in place that will help it save in other areas.

“This is something that we’re ahead of, and it’s not a large number in the context of overall labor for us,” Maredia said. “It’s not something that keeps me up at night.”