October 22, 2021

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Study: Higher employer minimum wages forcing raises for all workers | Business

Minimum wages set by Amazon and several national retailers are pushing pay higher in cities where the companies operate, according to a new study by three economics and social science researchers.

Amazon set a $15-an-hour wage for all employees in 2018 and was joined last year by Walmart, Target, Best Buy and Wells Fargo at that level with Costco setting a $16-an-hour minimum wage in February and Hobby Lobby raising its minimum to $17-an-hour in October 2020. Amazon is hiring more than 2,500 people starting Monday at a starting wage of $15.80 an hour for a new fulfillment center opening next month near the Colorado Springs Airport, while Best Buy, Costco, Hobby Lobby, Target, Walmart and Wells Fargo all operate multiple locations in the Colorado Springs area and combined employ thousands of people.



Colorado’s voter-approved minimum wage is $12.32 an hour for all employees except those who receive tips. Employees who receive tips must be paid at least $9.30 an hour.

The study published in February by Ellora Derenoncourt, an assistant professor of economic history and labor economics at University of California Berkeley; Clemens Noelke, a research scientist specializing in social science at Brandeis University, and David Weil, an economics professor and dean of the Heller School for Social Policy and Management at Brandeis, found the higher wages set by major employers had an almost immediate impact in cities where they operated.



Amazon hiring 2,500 for Colorado Springs distribution center

Amazon’s increase triggered a 4.7% increase in average hourly wages within a month among other employers in the same cities where it operates, when comparing jobs in similar occupations, the study showed. That’s because employers risk losing current employees or those they are recruiting to Amazon or a major retail chain offering higher wages and better benefits if they fail to raise their starting pay.

“My conversations with those working on this issue indicate this (wage escalation) will get a lot worse, especially in the hospitality industry that is already hurting in hiring employees. Amazon will exacerbate that trend,” said Tatiana Bailey, director of the University of Colorado at Colorado Springs Economic Forum. “You could argue that in a place like this where the cost of living is increasing and average wages are lower that upward pressure on wages is not necessarily a bad thing.”



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The study also found the higher minimum wages didn’t result in significant or widespread job losses and the probability of employment declined by less than 1 percentage point. The authors said that workers can easily change jobs and industries in the service and retail sectors due to the nation’s highly competitive labor market where many employers say they are unable to fill job openings.

The wage data for the study came from the U.S. Bureau of Labor Statistics as well as job review site Glassdoor and labor market research firm Burning Glass Technologies.

Amazon, which has been lobbying to raise the $7.25-an-hour federal minimum wage, said in a March statement that the study reflects “what we’ve heard from our own employees, their families, and the communities they live in: Our starting-wage increase helped boost local economies across the country by benefiting not only our own employees, but also other workers in the same community.”

Becca Tonn, a spokeswoman for the Pikes Peak Workforce Center, said recent minimum wage increases by major retailers and other employers have prompted “quite a few businesses to increase wages by $1- to $2-an-hour. Those corporate entities have put pressure on local small businesses and their ability to attract and retain employees. Amazon’s hiring (push for the fulfillment center) would accelerate that trend.”



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The average weekly wage in El Paso County last year jumped a record 7.5% to $1,088, or $56,576 a year, according to data from the Colorado Department of Labor and Employment. That increase likely resulted from thousands of low-wage workers losing their jobs during the COVID-19 pandemic, and is likely to be largely reversed as those workers get their jobs back this year, said Ryan Gedney, the department’s senior economist.