Amazon raises the wage-scale bar

Amazon, the online retail octopus, began paying all of its 350,000 workers throughout the U.S. at least $15 an hour on November 1, 2018. This compares with a patchwork of state and local rates, the federal minimum wage of $7.25 an hour, and a labor rallying cry for a $15 minimum wage that few jurisdictions have embraced so far.

Amazon’s action effectively raises the wage-scale bar for employees at competing retail firms – and also for hourly and salaried workers in other service industries, including hospitality. If you’ve been pegging the wages of the employees at your resort or enterprise to some other compensation benchmark at a lower minimum hourly rate, heads up. Amazon has now set a publicly available, broadly applicable standard against which your employees and prospective hires can measure the compensation you offer them.

If you can’t or won’t meet that standard, expect an impact in terms of the quality of the people willing to work for you, and your ability to keep them. Performance is likely to suffer; turnover Is likely to increase.

To compete effectively for personnel, you’ll need to pay a bit above the standard, and provide for a regular schedule of increases based on length of service and skills development to aid retention. This is especially true in the current job market, with unemployment near a half-century low. Assume that many of the people whom you want to hire are working already for someone else. Design your compensation structure to attract these desirable people to work for you.

The foregoing doesn’t mean you should abandon other sources that monitor compensation in your community or region. They are still useful to tell you the extent to which your staffing competitors have reacted to the new Amazon standard, which helps you decide how you should react. These sources may include:

— Your local chamber of commerce.

— Local or regional employers’ associations that conduct anonymous surveys and distribute the results to their members.

— Consulting firms specializing in compensation analysis.

— The U.S. Bureau of Labor Statistics, which provides wage data by area and occupation from the National Compensation Survey, Occupational Employment Statistics Survey, and the Current Population Survey.

By Kristina Payne January 28, 2019 24 Comments