Amazon's $15/Hour Wage Could Give Competitors a Chill
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What is the main topic discussed in this episode?
With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York.
How did Amazon announce its $15 minimum wage and why does it matter?
Amazon's decision to raise its minimum wage to $15 an hour could usher in a wintertime chilling effect on its brick-and-mortar and online competitors alike. We'll explain in just a moment. First, these money and market stories you should know. The average cost of health coverage offered by employers rose to nearly $20,000 for a family plan this year, and that caps years of increases that experts say are tied to rising prices paid for health care.
How are employer health insurance costs and benefits changing for workers?
Annual premiums rose 5% to $19,616 for an employee family plan in 2018. Employers also continue to boost the deductibles that workers must pay out of their pockets to help blunt the premium increases. Nationwide, employees paid on average $5,547 a year, or 29% of the premiums for a family plan in 2018. And the Wall Street Journal Management and Careers Bureau reports that as companies compete for workers in the tightest labor market in years, and with student loan debt nationwide at $1.5 trillion, they're rolling out new education benefits like college coaching and student loan repayments to recruit employees. Research from the Society for Human Resource Management shows about half of U.S.
How does the tight labor market influence retailers' hiring and pay strategies?
employers offer to help fund undergraduate education for employees, up to $5,250 of which can be excluded from taxable income per year.
Amazon's decision to raise the minimum wage for its workers to $15 an hour is good news, unless you're the competition, in which case the fourth quarter could be filled with wintertime blues. Wall Street Journal heard on the street columnist Elizabeth Winkler is here to explain. So Elizabeth, the move by Amazon is an aggressive step in a very tight labor market.
Yeah, that's right. A few years ago, retailers were cutting staff in an attempt to reduce costs, but now they're short-staffed and they're scrambling and unemployment is low. So a lot have started raising wages to lure workers back into stores, but none have raised minimum wages quite as high as Amazon.
And among its competitors, Amazon's $15 per hour rate that takes effect November the 1st, it leads the pack.
How will Amazon’s $15 wage affect competitors like Target, Walmart, and stores hiring seasonal staff?
Target has raised theirs to $12 just last month. Walmart to $11 an hour. But yes, Amazon leads the pack.
And Target raised its hourly rate, but it doesn't take effect for a couple of years?
Well, it has raised it to $12 for now for newly hired employees. And it says it plans to get to $15 an hour, but not till 2020.
Okay. And some retailers actually started recruiting holiday season staff at the start of the summer. That tells you how competitive this is.
Exactly.
How might higher Amazon wages change shopper experience and store staffing decisions?
That's right. Kohl's and JCPenney started in June trying to learn workers.
Amazon's move could really ramp up the competition between brick and mortar and online merchants. And if the stores can't hire enough staff, let's say cashiers, shoppers could face crowding and long lines. That's the last thing they want to experience when they walk into a store.
Exactly. The real value that brick and mortar retailers can offer over online shopping like Amazon is the value of expertise, of having people there on hand to help you. So if they don't have that, you know, shoppers will happily go on Amazon.com.
And it'll also require some thinking on the part of the employee. Are they willing to work in a warehouse or settle for a lower rate and work maybe more comfortably under the roof of a store?
That's true. That is a decision they'll have to make. But I think if you're looking at $15 an hour versus $11, you know, it might not be such a hard one.
That's true. Money talks. And that's Wall Street Journal Heard on the Street columnist Elizabeth Winkler joining us here in our studio. Elizabeth, thanks for being with us.
My pleasure.
And that's your Money Briefing. I'm J.R. Whalen in New York at The Wall Street Journal.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
How did Amazon announce its $15 minimum wage and why does it matter?
0:09–0:35
3
How are employer health insurance costs and benefits changing for workers?
0:35–1:21
4
How does the tight labor market influence retailers' hiring and pay strategies?
1:21–2:24
5
How will Amazon’s $15 wage affect competitors like Target, Walmart, and stores hiring seasonal staff?
2:24–2:55
6
How might higher Amazon wages change shopper experience and store staffing decisions?
2:55–4:01
Speakers
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