Amazon’s Wage Boost Creates More Pain for Competition

By Anonymous
Amazon’s Wage Boost Creates More Pain for Competition

Amazon’s new minimum wage is set to kick in on Nov. 1, right when holiday shopping heats up. Photo: Rick T. Wilking/Getty Images

Faced with a tight labor market and a busy holiday shopping season, retailers have boosted wages to lure workers. In typical fashion, however, Amazon has outdone them.

The e-commerce giant’s decision to raise its minimum wage to $15 an hour will make it harder for traditional retailers to hire the staff they need. The result could be lost sales or, worse, crowded stores without enough staff, sending shoppers online, most likely to Amazon.

Retailers like Kohl’s KSS -3.92% and J.C. Penney JCP -8.24% started their seasonal hiring binge in June—three months earlier than usual. In September, Target TGT -2.09% announced that it is hiring 120,000 seasonal workers, 20% more than last year.

Amazon’s new minimum wage is set to kick in on November 1. That is a savvy start date, right when holiday shopping heats up. Though other retailers are raising wages, none has yet reached a $15 per hour minimum. Last month, Target started offering new employees $12 an hour, while Walmart has been offering $11 since February. Target has said it plans to hit $15 an hour--but only by 2020.

Assuming a person is willing to work in a warehouse instead of a store, taking a job at Amazon is an easy decision. For retailers that are already struggling with staff shortages, this is bad news, and the problem extends beyond mere logistics.

“Brick and mortar retailers need quality employees to differentiate themselves from purely online shopping,” says James Bohnaker, a director at IHS Markit. If consumers can’t find helpful staff at stores or, worse, a shortage of staff makes in-store shopping a nightmare, brick and mortar retailers can expect to lose traffic.

Jeff Bezos, Amazon’s chief executive, has been praised for making such a conscientious, worker-friendly decision. But the move may in fact be something far more Amazonian--a clever way to create even more pain for the competition.

Write to Elizabeth Winkler at [email protected]