Are You Still Waiting to Raise Wages? Here’s What You Need to Know

On October 3, Amazon made a major move which could impact employers nationwide and beyond: The company increased its minimum wage for nearly 350,000 workers to $15 an hour. This rate applies not only to FTEs but also to part-time and temporary workers, as well as the 100,000 seasonal employees that Amazon plans to bring on board. It’s a clear sign of a company viewing its cost through a low unemployment, candidate-driven lens.

Every Amazon hourly associate will get a raise, even if they already earn more than $15 an hour. As one company worker noted, the move “helps Amazon keep a certain caliber of employee.” And in the words of CEO Jeff Bezos, Amazon “thought hard about what we wanted to do and we decided we wanted to lead.”

Other companies are following a similar strategy. Radial, Inc., a Pennsylvania firm that operates distribution centers for various retail brands, is hiking wages and bonuses by 10 to 15 percent in order to attract a needed 20,000 seasonal workers. In September, Target raised the minimum wage for its new hires to $12, with plans to up it to $15 by the end of 2020.

Setting the Scene

Amazon’s wage increase has put pressure on other businesses to boost pay – or at least give the idea some thought. This move is further evidence that the current job market is forcing companies to bid up wages – especially for lower-skilled workers – and spreading the benefits of a long-running economic expansion.

• The national jobless rate is at 3.9 percent, nearing low levels last seen in 2000.

• There are more available jobs in the U.S. than unemployed workers ready to fill them.

• In July, there were a record-high 6.9 million job openings across the country.

What’s it to you?

Keep a close eye on how Amazon’s precedent impacts the minimum wage landscape, as well as the job market. Your company may fall into one of the following buckets:

You could be a fast follower, incited to match Amazon’s offerings in the very near future. Influencing factors could include proximity to Amazon fulfillment centers and holiday seasonality. Business fulfillment needs will drive pressure in industries including logistics and supply chain management.

If a wage hike is prohibitive and/or you’re used to a higher level of staff turnover, you may need to double down on your current practices. This will help you to maintain stable labor costs.

Are you undecided? Do you understand the pressure that could stem from Amazon’s move, yet are unable to fundamentally reconcile an increase in one of your largest cost buckets at this time? Take comfort in knowing you are not alone; in fact, you make up the largest sector of the U.S. employer mix. There are a number of alternative tactics you can use, including signing, performance, longevity and referral bonuses, as well as surge wages for peak shift times, transportation credits, flexible schedules, and instant payments, whereby employees can collect their earnings as often as five times a day.

The TRC Professional Solutions team can help you stay abreast of job market trends that impact your company – and help you mold your short and long-term staffing plans to meet them. Contact us today to learn more about our consultative approach and personalized service.