Ripple effect? $15 minimum wage may help lift pay elsewhere

WASHINGTON» After years of sluggish pay gains, the economy may be starting to work for America’s lowwage 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 lowwage workers,” said Ben Zipperer, an economist at the liberal Economic Policy Institute. “It’s going to compel other businesses to raise wages as well.”

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

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

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

Amazon’s announcement will likely embolden labor activists and unions that have been pressing large fastfood 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 Amazon’s workers receive food stamps and other benefits that are geared for the poor, while Amazon 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. Best Buy’s share price dropped nearly 5 percent; Kohl’s Stores fell 3.9 percent.

Amazon — the world’s largest online retailer — also said Tuesday it will lobby to raise the federal minimum wage from $7.25 an hour, though it didn’t say which figure it would push for. The impact of a higher federal wage, though, would likely be modest, because more than 20 states have minimum wages above the federal level.

A higher federal minimum wage could intensify pressures on smaller businesses that don’t have the financial resources that Amazon has to raise pay significantly.

Historically, large companies have been a driving factor in pushing up the minimum wage, Steinbaum said. Once they start to raise pay in response to competitive forces, they typically lobby to push others to follow suit, to prevent other companies from undercutting them.

Darren Moscato, who owns an Express staffing agency in Buffalo, N.Y., where Amazon has built a warehouse, said the higher pay offered by Amazon “will make it harder for local businesses to compete for workers.” Moscato noted that smaller companies typically spend more on labor than does Amazon.