Study: Amazon pay increase also upped pay for non-Amazon workers

A new study suggests that when a big company increases wages, it causes companies in the same market to follow suit —and with no notable loss in jobs.

Amazon’s pay increase in 2018 resulted in a 4.7% increase in the average hourly wage among other employers in the same labor market, according to a recent paper by economists at the University of California-Berkeley and Brandeis University.

The researchers looked at whether wage increases by Amazon and other large employers had spillover effects for other people working in the same geographical area. Using data from job posting sites and the Current Population Survey, the researchers observed significant changes in entry-level salaries after Amazon’s decision.

Here are their main findings:

• Non-Amazon employees also benefited from Amazon’s wage increase. Researchers found that Amazon’s decision to hike its starting wage to $15 an hour in October 2018 had a positive impact on other wages in local labor markets where Amazon operates. The company’s pay raise resulted in a 4.7% increase in the average hourly wage among other employers in the same labor market.
• Increasing starting wages to $15 an hour did not result in widespread job loss. The research showed no significant job losses after Amazon and other local employers raised their starting wages. The authors found that the probability of employment decreased only 0.8 percentage points following the salary increases.
• Wage increases were significant and real. The authors confirmed that changes in advertised wages–the salaries that employers post in their job offers–reflected true changes in wage policies by employers. To check, researchers used data on worker-reported wages from the job review platform Glassdoor and compared it with data reported by Burning Glass, an analytics firm that tracks job data. The study concluded that employees were self-reporting wages that matched the salaries employers were advertising.

“The results reflect 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,” Amazon stated in a blog on its site.