Amazon’s $15 wage may help lift pay elsewhere

After years of sluggish pay gains, the economy may be starting to work for America’s low-wage workers.

Amazon’s announcement Tuesday that it will raise its minimum wage to $15 an hour will intensify pressure on other companies to lift their pay levels as well. Among the most likely to do so: Amazon’s rival retailers and warehouse operators, many of which are facing the prospect of staff shortages as they ramp up for the holiday shopping season.

“This is going to be a big deal for very low-wage workers,” said Ben Zipperer, an economist at the liberal Economic Policy Institute. “It’s going to compel other businesses to raise wages as well.”

Low-wage workers typically receive higher pay from an expanding economy only after higher-income people have benefited, economists note. Now, with the unemployment rate near a 50-year low and the number of job openings exceeding the number of unemployed, more lower-income Americans are finally receiving meaningful raises.

Low-paid workers “get kicked the most in the recession, and they generally benefit more later in the boom,” said David Neumark, an economist at University of California, Irvine.

Accordingly, retailers, who employ a sizable share of the nation’s lower-paid workers, have been stepping up pay increases. Average hourly wages for retail workers, excluding managers, rose 4 per cent in August compared with 12 months earlier.

Amazon’s announcement will likely embolden labour activists and unions that have been pressing large fast-food and retail chains to raise pay, provide more reliable work schedules, and allow for union representation.

Among the critics Amazon has faced over its pay and work conditions, Sen. Bernie Sanders of Vermont has noted that some of its workers receive food stamps and other benefits that are geared for the poor, while its owner Jeff Bezos has become the world’s wealthiest person.

“Now that activists have succeeded, they can now take that demand to other employers,” said Marshall Steinbaum, a fellow at the Roosevelt Institute. “You say you can’t afford this, but your competitor obviously can.”

Indeed, shares of retail companies fell sharply Tuesday in a sign that investors expect them to have to raise pay to compete with Amazon, a step that would potentially slow their profits.