When businesses raise wages, everyone wins
While debate has raged in recent months about the pros and cons of raising the minimum wage, there's one particular set of people in agreement regarding the benefits: hourly wage workers, like Remington*.
In September 2020, Remington began working in an Amazon fulfillment center in DuPont, Washington, after his hours were cut at his restaurant job because of COVID-19. A few months into his new job, which has a starting wage of $15 an hour plus benefits, he said he feels more secure earning a steady paycheck at a rate higher than the federal minimum wage — especially with benefits. "The consistent pay is amazing," he said. "Instead of just wondering 'Am I going to make rent this month?' I'm like, 'Yeah, I got the bills this month. I can even go on a trip.'" Thanks to his job, he's finally been able to get new glasses and contacts and take his daughter skiing and fishing, all while saving for a house he's planning to buy with his siblings — two of whom work with him at Amazon.
Earlier this month, the push for a federal minimum wage increase to $15 per hour failed to make it into the $1.9 trillion COVID-19 relief bill. But the battle isn't over. Multiple lawmakers have sponsored bills that seek to raise the federal minimum wage, including the Raise the Wage Act of 2021, which aims for an incremental increase to $15 an hour over the next five years, and would give 32 million Americans an increase in pay. A growing body of research supports raising the minimum wage.
The ripple effect of increased pay
At $7.25, the federal minimum wage hasn't been raised in more than a decade. According to the Economic Policy Institute, a person who is working full-time today at the federal minimum wage earns 18% less than what they would have earned 10 years ago, if adjusted for the increased cost of living; in fact, they're also making less than their minimum-wage counterparts were making more than 50 years ago.
The EPI goes on to say that with an increase to $15 per hour, nearly one in three Black workers, one in four Hispanic workers and one in five white workers would see their wages rise.
All told, increasing the federal minimum wage to $15 by 2025 would result in $107 billion in higher wages for workers, which would trickle into economies across the country, fueling business growth and job growth.
According to the National Employment Law Project, the increase would be especially impactful to women, and it would boost the income of 59% of workers whose total family income is below the poverty line.
A new study conducted by Amazon/Ipsos found that most Americans support raising the minimum wage. Results from the study, which involved interviews with more than 6,000 adults, revealed that two out of three support increasing the minimum wage to $15 an hour. Those polled believe that the higher pay would have a positive impact on workers, their community, the country and the economy. Further, those making more than $15 an hour were more likely to say they were earning more than they spend and they could come up with $500 in an emergency; while those making less than $15 an hour were more likely to say they can't afford basic household expenses, such as groceries, prescription drugs and doctor visits. Respondents largely agreed that they look to large businesses for leadership in pushing earnings higher, both when it comes to raising the federal minimum wage and raising the company's own minimum wage.
Across the country, legislators and business leaders have long learned to take matters into their own hands. To date, the minimum wage has increased in 29 states, plus Washington, D.C., and 45 localities have adopted minimum wages above the federal minimum wage. Businesses such as Amazon have also taken the lead on raising pay.
In 2018, Amazon was the first major retailer to raise its starting pay to $15 an hour. The impact of that raise has reverberated well beyond the walls of the online marketplace. Other major retailers, such as Best Buy, Walmart, Target and Costco followed suit in increasing employees' starting pay. A recent report studying voluntary increases to wages by businesses found that when Amazon raised its pay to $15 in 2018, it led to a 4.7% increase in wages for employees at other companies in the same market. While critics frequently point to the risk of widespread job losses if the minimum wage increases, the researchers in this study found that that the probability of employment decreased just 0.8% following the boost.
Amazon's increase to $15 an hour has also proved an asset to the business itself, said Jay Carney, the senior vice president of Amazon Global Corporate Affairs. "Once we increased our starting wage to $15 an hour, the positive impact on employee morale and retention — and the surge in job applicants — was immediate. In fact, the month after we raised our starting wage, applications for hourly positions more than doubled. Employees who saw their paychecks increase told us that they had an easier time providing for their families and were able to spend on things like car repairs and home improvement projects. In short, the investments we made in our hourly employees were quickly transferred to local businesses and economies," he said.
The faces of a living wage
Luv Luv*, who works in an Amazon fulfillment center in Shakopee, Minnesota, said her job has helped her live the life she wants. A former hairstylist, she said she was drawn to the company for its generous health insurance policy, and the above-average wages, she added, are a bonus. "The pay at Amazon gave me the means to be able to afford the apartment I have. I get to live a comfortable life on my own terms. It's been a phenomenal journey for me," she said.
Chatonn*, who also lives in Shakopee, was drawn to Amazon for the income. She left her job in retail and hasn't looked back since she accepted a role at a fulfillment center. "The difference on my paycheck was huge. I'm earning $15 an hour instead of 10-something," she said. The increase in pay, she added, gives her more expendable income, so she can support her children's hobbies and endeavors. "It allows me to take better care of my family. My daughter is into art, I can pay for her art supplies. My son's in karate, I can afford karate now," she said. "Amazon allows me to be the parent that I want to be. That is everything to me."
So often, the argument around wages is based on facts and figures, and the facts and figures show that a $15 federal minimum wage would generate more than $107 billion in higher wages and help reverse decades of pay inequality. But those numbers don't have faces or stories attached to them. In the cases of Remington, Luv Luv and Chatonn, an increase in pay has made an immeasurable impact, and it's one that's already flowing down to the next generation.
*Last names were withheld for privacy purposes.