Amazon Is Raising Wages to Hold Onto Workers as the Labor Market Remains Tight

Prepare to see continued wage inflation as businesses struggle to onboard and retain necessary talent.

By: Rebecca Deczynski

Amazon is feeling the crunch of the still-tight labor market–and that’s liable to hit you one way or another.

Yesterday, the Seattle-based company announced that it is investing nearly $1 billion in increased wages for hourly employees. Starting in October, average starting hourly pay for front-line employees in customer fulfillment and transportation will increase from $18 to more than $19 per hour; hourly wages will range from $16 to $26 per hour, depending on employee position and location.

Amazon additionally announced the expansion of its wage access program, Anytime Pay, which now allows all U.S. operations, corporate, and technology employees to access up to 70 percent of eligible earned pay outside of normal pay periods.?

This announcement comes just as the U.S. Department of Labor released jobless claims for the week ending September 24, which fell to a five-month low. As the labor market remains tight, firms are still struggling to fill roles, which has led to wage inflation for employers of all sizes. In August, wages at U.S. small businesses increased by 5.18 percent, matching the previous record hit in May 2022, according to data from the payroll services company Paychex and information services provider IHS Markit.

Amid tight labor markets, unionization efforts at Amazon, Starbucks, and Apple may have also spurred companies to increase wages in response to employee demands. Apple previously increased wages for corporate and retail staff in May, and in August, Starbucks increased hourly wages nationwide.

While your business may not face the same unionization pressures, wage inflation is still very real–and will continue to be a struggle for businesses, especially as hiring for the peak holiday season is well underway.