When Amazon Raises Wages, Local Companies Follow Suit

📆 2021-03-06 02:45:00
📰 YahooNews

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Amazon has embarked on an advertising blitz this winter, urging Congress to follow the company’s lead and raise the federal minimum wage to $15 an hour. American workers “simply can’t wait” for higher pay, the company said in a recent blog post. In the areas where Amazon operates, though, low-wage workers at other businesses have seen significant wage growth since 2018, beyond what they otherwise might have expected, and not because of new minimum-wage laws. The gains are a direct result of Amazon’s corporate decision to increase starting pay to $15 an hour three years ago, which appears to have lifted pay for low-wage workers in other local companies as well, according to new research from economists at the University of California, Berkeley, and Brandeis University. The findings have broad implications for the battle over the federal minimum wage, which has stayed at $7.25 an hour for more than a decade, and which Democrats are trying to raise to $15 by 2025. For one, the research illustrates how difficult it can be for low-wage workers to command higher pay in the modern American economy — until a powerful outside actor, like a large employer or a government, intervenes. Sign up for The Morning newsletter from the New York Times Most directly, there is little evidence in the paper that raising the minimum wage would lead to significant job loss, even in low-cost rural areas, a finding consistent with several recent studies. Other research, including a recent report from the Congressional Budget Office, has found a larger negative effect on jobs, although still smaller than many economists believed in the past. The authors of the latest study — Ellora Derenoncourt of Berkeley and Clemens Noelke and David Weil of Brandeis — studied Amazon, Walmart and Target, which operate in areas where wages tend to be low. But even in those places, the researchers found, wage increases by the large corporate employers appear to drive up wages without driving down employment. “Wh

Trailers line a loading dock at an Amazon facility at Baltimore/Washington International airport, Oct. 24, 2019, in Baltimore.

The authors of the latest study — Ellora Derenoncourt of Berkeley and Clemens Noelke and David Weil of Brandeis — studied Amazon, Walmart and Target, which operate in areas where wages tend to be low. But even in those places, the researchers found, wage increases by the large corporate employers appear to drive up wages without driving down employment.

Many restaurants will grant the pay increase, Darden said, but at the cost of giving workers fewer hours or hiring fewer employees — a common contention among small-business owners. But while that may be true in individual cases, the Berkeley and Brandeis researchers found little evidence of broad-based job cuts as wages rose. A 10% increase in the base wage at a company like Amazon, they found, translated into a 1.7% loss in local jobs — and a 0.4% loss in jobs for low-wage workers.

Dube said that in the 1980s, the spread of Walmart and other national retailers helped push down wages, as they displaced smaller, often unionized local chains. Now big national retailers seem to be helping to push wages up.Tad Mollnhauer, who runs two printing and shipping retail stores near Orlando, Florida, said entry-level workers typically earned about $10 to $12 an hour. But these days, anyone paying that rate risks losing workers to Amazon.

“There’s just no way to be sure to reach the tens of millions of hardworking but poorly paid workers without significantly raising the national minimum wage,” he said. Other business groups accused Amazon of using its scale and political influence to squeeze smaller competitors.

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