On Tuesday, October 2, Amazon announced that it would raise its internal minimum hourly wage for US employees, including part-time workers and those hired through temporary agencies, to $15 an hour. This includes workers at the company’s warehouses or “fulfillment centers,” as it calls them, in addition to store employees at Whole Foods, which Amazon acquired last year. The e-commerce giant also said it planned to lobby the US government to raise the federal minimum wage from its current hourly rate of $7.25, last updated in 2009, the New York Times reported:
The new wages will apply to more than 250,000 Amazon employees, including those at the grocery chain Whole Foods, as well as the more than 100,000 seasonal employees it plans to hire for the holiday season. The change will not apply to contract workers. It goes into effect on Nov. 1. “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Amazon’s chief executive, Jeff Bezos, said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
The move came amid growing pressure on Amazon from the media and politicians regarding its pay practices and the work conditions of its lowest-paid employees, particularly those at its warehouses or “fulfillment centers.” Vermont Senator and former presidential candidate Bernie Sanders has been an outspoken critic of Amazon’s CEO Jeff Bezos, who is currently estimated to be the wealthiest individual in the world, citing news reports that large numbers of Amazon’s low-wage employees were dependent on public assistance. Sanders and California congressman Ro Khanna have been pushing legislation that would require companies to compensate the federal government for the cost of public assistance benefits received by their employees, including food stamps, Medicaid, and public housing.
The next day, however, Bloomberg reported that Amazon was cutting monthly bonuses and stock awards for hourly employees to help offset the costs of the minimum wage hike. Still, the company insists that these workers’ total compensation is rising:
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The latest compensation data from the US Labor Department’s Bureau of Labor Statistics show that total compensation for US employees has increased modestly over the past year, from $35.28 per hour worked in June 2017 to $36.22 per hour worked in June 2018. Wages and salaries averaged $24.72 per hour worked and accounted for 68.3 percent of these costs, while benefits averaged $11.50 and accounted for 31.7 percent. For private sector employees, compensation has increased from $33.26 per hour worked to $34.19. Wages made up $23.78 or 69.6 percent of that figure, while the remaining $10.41 (30.4 percent) consisted of benefit costs, in which the BLS includes supplemental pay.
While the percentage ratio of wages to benefits was unchanged from June 2017, benefit costs grew at a slightly higher rate than wages year-over-year, nearly 3 percent compared to 2.7 percent. This reflects a nearly 12 percent increase in bonuses and other forms of supplemental pay, from $1.18 per hour to $1.32; supplemental pay made up 3.8 percent of the total compensation mix in June 2018, compared to 3.5 percent a year earlier. Paid leave, including vacation time, also increased slightly.
Taking a longer-term view, over the past five years, benefit costs for private-sector employees have increased by over 20 percent, from $8.64 per hour worked in June 2013; whereas wages and salaries have increased 16 percent, from $20.47 that month. Supplemental pay, by comparison, has increased 65 percent from 80¢ per hour worked in June 2013. This trajectory reflects the increasing tendency we’ve observed among employers in recent years toward variable pay schemes that reward employees for high performance with one-time bonuses rather than standard annual raises.
Walmart, the world’s largest private employer, announced on Thursday that it was raising its starting hourly wage from $9 to $11 per hour, introducing a more generous parental leave policy, and offering one-time cash bonuses based on length of service for its US workforce. CEO Doug McMillon revealed the changes in a note to employees:
[W]e’re raising our starting wage to $11 an hour for Walmart U.S., Sam’s Club, Supply Chain, eCommerce and Home Office hourly associates effective in February. We’re also providing a one-time bonus to hourly associates that pays a larger amount the longer you’ve been with our company. Associates that don’t benefit from the new starting wage increase are eligible for the bonus and it will range from $200 to $1,000 depending on your length of service. …
I’m also excited to tell you that we’re making an important change to benefits by expanding our paid leave policy to provide full-time hourly associates with 10 weeks of paid maternity leave and six weeks of paid parental leave. This expanded parental leave also applies to salaried associates and to parents who adopt. We will also contribute $5,000 to the cost of adoption.
McMillon cited the corporate tax cut passed by the US Congress in December as part of what prompted the company’s decision. Several other major US employers, including AT&T, Wells Fargo, and Boeing, have also announced plans to invest part of their tax savings in raises or bonuses, though most companies have said these savings will mainly be spent on debt repayment, dividends, and stock buybacks.
The new overtime rule announced by the US Department of Labor back in May, which will raise the salary threshold for exempting employees from overtime pay from$23,660 to $47,476 a year when it goes into effect on December 1, is expected to hit small businesses particularly hard. Today, the National Federation of Independent Businesses, the country’s largest association of small businesses, urged the Labor Department to delay implementation of the rule, USA Today reports:
“In many cases, small businesses must reorganize their work forces and implement new systems for tracking hours, record keeping, and reporting,” says NFIB president Juanita Duggan. “They can’t just flip a switch and be in compliance.” The group is asking for a delay until June 1.
But in a statement, David Weil, administrator of Labor’s wage and hour division, says officials provided businesses 190 days to comply, “more than three times what’s legally required.” He added, “The December 1 implementation date is a sufficient amount of time (more than six months) for employers to adjust to the new salary level.” …
The requirement will affect about 44% of the 5.5 million U.S. businesses with fewer than 500 employees, NFIB says. About 3.2 million of them employ 10 workers or less. Large corporations with “lawyers, accountants and human resources specialists” who read technical federal notices “may prove able to cope with the new (rule) in a 25 week window of time,” NFIB said in its petition. “But the department cannot reasonably expect America’s small businesses to match them.”
In addition, as Bloomberg BNA notes, the National Retail Federation, Chamber of Commerce, and the American Hotel and Lodging Association are among almost 100 business groups backing a piece of bipartisan legislation which “would phase the rule in over three years and eliminate automatic increases to the salary threshold under which workers are eligible for overtime pay.”
In the US, the “hollowing out” of the middle class has been this generation’s tale of economic woe. According to the Federal Reserve Bank of New York, however, “the tide has begun to turn” and middle-class jobs appear to be making a comeback. Andrew Soergel has the story at US News and World Report:
[New York Fed president and CEO William] Dudley doesn’t deny that a prolonged hollowing out of the middle class was evident in the U.S. labor market, suggesting that “growth of middle wage jobs has been lackluster for the past few decades, with gains occurring disproportionately in higher and lower wage sectors.” Even in recent years, Dudley and his colleagues found that more than 78 percent of the jobs added to the labor market between 2010 and 2013 were concentrated in high-wage – with annual pay north of $60,000 – and low-wage – with annual pay south of $30,000 – positions.
The evidence continues to mount that many American workers—even in professional fields—are struggling to make ends meet. Last month, a labor market analysis from Indeed showed that fewer than one in five US jobs paid enough to keep pace with rising living costs, and now a new CareerBuilder survey finds that 75 percent of Americans are living paycheck-to-paycheck:
Thirty-eight percent of employees said they sometimes live paycheck-to-paycheck, 15 percent said they usually do and 23 percent said they always do. While making ends meet is a struggle for many post-recession, those with minimum wage jobs continue to be hit the hardest. Of workers who currently have a minimum wage job or have held one in the past, 66 percent said they couldn’t make ends meet and 50 percent said they had to work more than one job to make it work. …
It’s not just minimum wage workers who are struggling. Nineteen percent of workers at all salary levels were not able to make ends meet every month during the past year, and while the likelihood of living paycheck-to-paycheck naturally decreases for workers with higher salaries, it’s affecting all salary ranges. Nine percent of workers making $100,000 or more feel they usually or always live paycheck-to-paycheck. Twenty-three percent of workers making $50,000-$99,999, and 51 percent of those making less than $50,000 feel they usually or always do to make ends meet.
Strong jobs reports in June and July have done much to calm fears that the US economy could head into a recession this year. The Job Openings and Labor Turnover Survey for June, just released on Wednesday, gives more detail about the labor market and appears to confirm the story of fairly steady economic growth, the Associated Press reports:
The number of job openings rose a modest 2 percent to 5.6 million in June from 5.5 million in May, the Labor Department said Wednesday. Still, that figure remains below the 5.8 million openings advertised in April, the highest on records going back 16 years. Hiring increased 1.7 percent in June to 5.1 million, a solid level but below a recent peak of 5.5 million in February.
Businesses are hiring at a healthy pace even as economic growth has lagged, in part because the workforce has become less productive. The economy expanded at an annual rate of just 1 percent in the first half of the year, though analysts expect growth to accelerate to about a 3 percent annual rate in the current July-September quarter. … “We see no sign of any downturn, suggesting employers remain fundamentally bullish,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, a forecasting firm.
It’s not all good news, though. Andrew Soergel at US News and World Report notes that “a sizable chunk of June’s openings were concentrated in what are often low-paying service industries”: