Retail

Why Amazon's minimum wage hike was 'inevitable', and how others may soon follow in its footsteps


Amazon employees who package your order will soon be getting paid more. But will you be paying more because of it?

On November 1st, Amazon is expected to hike its minimum hourly employee wage to $15. The move will impact 250,000 current employees, plus 100,000 seasonal workers. That rate exceeds the federal rate, which has remained at $7.25 an hour for nearly a decade.

Previously, Amazon was paying an hourly average of $11 for employees in its fulfilment centers, prompting questions about the move’s timing.

“They accelerated the inevitable and they were able to grab a victory from something that was a negative for them,” retail consultant Gerald Storch told CNBC’s “On the Money” in a recent interview.

While Amazon founder and CEO Jeff Bezos has become the richest person in the world, the company has faced criticism and political pressure for low wages and poor working conditions at some of its warehouses.

Storch, who was Toys ‘R’ Us Chairman and CEO from 2006 to 2013, the ex-vice chair of Target and former CEO of Hudson Bay Companies — parent to retailers like Lord & Taylor and Saks Fifth Avenue – said that other retailers had been contemplating the same move before Amazon beat them to it. The company’s rivals have been increasingly raising pay to attract and keep workers.

“I talk to a number of retailers constantly, and many were already thinking about doing this,” Storch said, adding that businesses are being spurred by a high demand for workers amid the tightest labor market in 49 years.

“Even to get workers (now), retailers are having to pay more already,” he added.

In January, Walmart’s minimum wage jumped to $11 an hour, up from $9, three years ago. In March, Target raised its wage from $11 to $12 and plans to reach the $15 level by 2020. And Costco hiked its minimum wage to $14 back in June.



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