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October 3 2018

Amazon Leapfrogs Over Other Retailers with New $15 Minimum Wage

by Patrice Lee Onwuka

In a surprising move, Amazon announced that it is raising its lowest hourly pay for full-time, part-time and seasonal workers to $15 an hour adding to mounting evidence that this red-hot jobs market is boosting pay for workers.

Starting November 1, some 250,000 current Amazon employees, which includes those at the grocery chain Whole Foods, will get a nice bump in their paychecks to $15 an hour. Another 100,000 seasonal employees coming on board for the busy holiday season will also benefit from the higher starting salary.

The union-backed Fight for $15 campaign was quick to claim credit, but they should hold off on their victory dance. A competitive jobs market is likely the more powerful force behind Amazon’s move.

The holiday season is approaching and major retailers like Macy’s, Target and J.C. Penny have been trying to get a jump on hiring seasonal workers starting recruitment super early and offering bigger salaries, bonuses or other incentives to attract workers to their stores and warehouses. It’s the basic economic principle of scarcity; employers must pay more to attract fewer workers.

According to Wall Street Journal reporting, wages in low-skill occupations like warehouse workers, retail clerks, and restaurant waiters are rising at a faster rate this year than overall hourly pay, according to Labor Department data.

In January, Wal-Mart raised hourly pay to $11 thanks to tax reform. Target announced that it would raise hourly pay to $12 an hour this year and eventually get to $15 an hour by 2020.

Amazon needs workers for their fulfillment centers and the best way to bring workers their way is to hop-skip over the competition by setting the highest hourly pay rate among big retailers.

Even after the holiday season ends, the wage race among retailers will continue and Amazon seems intent on leading the pack. The company’s head Jeff Bezos explained:

“We’re excited about this change and encourage our competitors and other large employers to join us.”

The big lesson: Despite calls for more government-imposed wage increases, what’s needed is a strong economy and a tight labor market. The U.S. has both right now, due to pro-growth economic policies like tax cuts and regulations.

In the end, workers benefit. And they benefit not just from higher wages, but potentially new or better benefits such as paid leave.

Also read: Coming This Holiday Season: New Perks for Retail Workers Courtesy of the Economy

 


Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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