Amazon wage hike aims to secure holiday help in job market

Bloomberg

Jeff Bezos scored a public-relations victory by giving his workers a raise, even drawing praise from Amazon.com Inc. scold Bernie Sanders. But at its root, the $15-an-hour minimum pay is an incentive for people to come work for Amazon — rather than Walmart or Target — as the retail industry gears up for the holiday shopping season amid historically low US unemployment.
Amazon plans to hire 100,000 temporary warehouse workers this year to help fulfill orders during the gift-giving crush, when it needs people most and when the job market offers many other opportunities. The world’s biggest online retailer is on pace for another record year, with spending on its site projected to surge 28 percent to $394 billion in 2018, according to EMarketer Inc. To get there, Amazon has to lure a lot of people into its warehouses for 10-hour shifts plucking products from bins and packing boxes — work that may seem monotonous compared with customer-service jobs that involve interacting with people.
Target Corp., for instance, will hire a record 120,000 seasonal workers, 20 percent more than last year, and pay them the retailer’s new starting wage of $12 per hour. Boosting warehouse workers’ wages to $15 an hour — including temporary workers just doing holiday-season stints — will help ensure that Amazon can find people willing to choose these jobs, which people are still better at doing than machines, over those at brick-and-mortar retailers like Target, Gap and Macy’s.
“Especially around the holidays when people have so many other options for work, $15 an hour will help Amazon find more people,” said Jeff Burnstein, president of the Association for Advancing Automation. “Amazon needs to hire a lot of people in a short period of time, and the question is how many people want to do that kind of work? Fifteen dollars an hour will help.”
The across-the-board minimum hourly pay makes Amazon’s starting wages slightly better than the national average. Warehouse laborers had median hourly pay of $14.28 in 2017, according to the US Bureau of Labor Statistics. Forklift drivers and equipment operators, who require special certifications, had median hourly pay of $16.43.
The raises also help Amazon neutralize political pressure from unions such as the United Commercial Food Workers Union, which has been pushing politicians to take a harder line with the company on pay and working conditions since its purchase of Whole Foods Market last year, said Burt Flickinger, managing director of the Strategic Resource Group.
Still, the main motivation to boost wages is the competitive job market, and the raises will put pressure on every retailer except Costco Wholesale Corp., which already has the best pay and benefits in the industry, he said.
“This is the tightest labor market in history,” Flickinger said. “It was very difficult to find warehouse workers for what Amazon was paying.”
In addition to the recent pressure from Sanders, the Democratic senator from Vermont, Amazon’s move follows wage hikes announced by Walmart Inc., Target and others — raises that were funded in large part from a tax-cut windfall corporations received. These rivals won’t have that one-time benefit going forward, so matching Amazon will be tougher.