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Amazon’s $15 minimum wage is a wake up call to other retailers

Amazon’s Minimum Wage $15 a must, not an option

Minimum Wage

Amazon’s move to increase its Minimum wage of $15/hour comes at a time as U.S unemployment rate are near record lows of 3.7% by September 2018.  The tight labor market. Followed by a high turnover rates on the Industry. It has given employers a difficult time in finding extra manpower around the up coming holiday season. Add that up with projections for record-breaking holiday total retail sales of $1.10 trillion . It makes definite sense for Amazon to increase its minimum wage. Especially during a time as it prepares to hire 100,000 temporary workers for the holiday season.



Why an increase to $15 Minimum Wage? 

1. The increase in hire of Seasonal workers 

Big retail giants like Target for example are already targeting to hire at least 120,000 seasonal workers in 2018. Which is a 20% increase from last year’s numbers. The hiring announcement made by Target is followed by other retailer giants. Macy, the country’s big retail department store is adding 80,000 temporary workers, with competitor KOHL to hire 90,000 seasonal workers to hire the holiday rush. Even package delivery companies are also increasing their hire of temporary employees. With UPS plan’s to hire 100,000 temporary workers, up 5% from 2017. And FedEx to hire 55,000 workers, up about 10% compared with a year earlier. In total, retailers are expected to hire 700,000 seasonal workers in this holiday season. Up by 5% compared to last year.


2. The Federal Minimum Wage is no longer competitive

The federal minimum wage that has been set at $7.25 since 2009 have made states to act on their own to raise their wage base. As of 2017, 29 states, plus the district of Colombia and nearly 2 dozen cities and counties have set their own minimums. With some states even doubling the amount to $15 an hour. As the annual inflation rate reached 2.9%, higher than the wages growing annual rate of 2.7%. The once competitive Federal Minimum wage is no longer able to woo retail and labor workers.

The last minimum wage was set in 2009

The last minimum wage was set in 2009


The war for Talent has begin 

Retailers have been increasingly hiring seasonal workers. With some companies like Kohl, hiring as early as July to fight against the tight job market. To attract talent in the already tight Labor market. Big retailers are taking steps which includes raising base wages and offering longer paid maternity leaves as ways to lure in applicants. Big giants retailers like Target for example are giving out benefits to attract its temporary workers. Examples include a 10% discount on and a 20% off for its wellness merchandises like vegetables, fruits and fitness gears. While Fast Food Chains like Mc Donald promised tangible benefits such as free meals and $50 worth of monthly metro. Some even goes further, like Kohl who is giving out a turkey dinner on Thanksgiving and gift cards for those employees who scored a perfect attendance.

Higher pays and attractive perks is now a common tactics in wooing temporary holiday workers. With retailers now finding it even harder to find interested associates who are willing to work for them. Getting enough people to fill up empty posts could have a real impact on sales.



Conclusion : A wake up call for other Giants

The fight for the $15 movement, political pressures by various politicians from Bernie Sanders to President Trump and various bad press that has enveloped around Amazon in recent months about its labor practices. Together, these not so positive reports could make it difficult for the already limited number of job seekers in the market to choose Amazon. Add that with the high employee turnover in Amazon, and the costly burden of constantly recruiting & training new workers. Paying a higher wage will help Amazon in retaining workers. Although the wage increase will mean extra costs. It will also mean that now Amazon associates will have more financial capability on spending of goods.

Indirectly, this may make up for its wage hikes, and on the long run, benefit the Giant retailer itself. Amazon’s primary decision to increase wages is seen as an understanding of how wage increase can benefit both businesses and employers. Following the hype on Amazon’s $15 minimum wage increase. The new tax laws that slashes corporate taxes to from 35% to 21% earlier this year have given more rooms for Corporates to increase wage growth.

Big Corporates like Walmart for example has already announced plans to boost its starting wage to $11, an increase from $9. Target the 2nd largest department store retailer has also vowed to increase its base starting wage at $15 starting from 2020. Earlier in June, Costco has already increased its minimum wage to $14 an hour. Facebook has also boosted its minimum wages to $15/hour for its contracted workers, from food-service workers to janitorial staffs, etc. Undeniably, it is only a matter of time before other retail giants follow Amazon.


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