Amazon May Set the Minimum Wage, But Employees Stay for More Than Pay

Amazon May Set the Minimum Wage, But Employees Stay for More Than Pay

Have you ever heard a story that your emotional brain just could not believe, even though your rational brain had strong reason to assume it was true? Like the original “butterfly effect” finding that Brazilian butterflies have a cause-and-effect impact on Texas tornadoes?

Here’s one for me. An HR executive just told me his company raised their starting pay for all jobs because their main plant was surrounded by Amazon sites. That sentence is pretty standard. The shocker is he told me there were 12 Amazon locations within 3.5 miles of their main plant. 

I just can’t picture that on a map. But I do know those Amazon trucks are buzzing around my neighborhood all the time…and I know how many Amazon locations are near my neighborhood. And I also know that HR exec happens to be smart, knowledgeable, and trustworthy. So my rational brain accepts there are that many local Amazon sites for him. Besides, how else can they get us so many packages on a day’s notice?

As a side note, Amazon should next get into the storage business because their cumulative impact is our garages are full of stuff.

Amazon claims to have 110 “fulfillment centers” in the US and announced last month they will raise pay from a range of $.50 to $3 per hour for their 500,000 employees, an investment of $1 billion. Starting pay ranges from $15 and up.[i] More importantly for you is this finding from a few years ago:

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.[ii]

And Amazon is coming to a location near you. Peeking back, Amazon hired 500,000 workers in 2020 due to the pandemic’s impact on shopping from home. That pushed their total global employment number to 1.3 million.[iii] And they are now hiring 75,000 more who will receive a $1,000 hiring bonus…plus an additional $100 with proof of vaccination.[iv]

Let’s pause for a moment and give Amazon its due. Over a million employees fills a lot of football stadiums.

Raising pay to keep up with Amazon, though, is like a dog chasing its tail. Yes, savvy employees know when Amazon is coming to town and yes, we all must pay competitively. But the Amazon/pay discussion blows by the number one reason employees quit jobs which is because they don’t trust their boss.

I perform this simple exercise when speaking at the SHRM annual conference each year:

“Raise your hand high if you’ve ever quit a job purely because of pay”…and 10% raise their hands.

“Raise your hand high if you’ve ever quit a job because you didn’t trust your boss”…and more than half raise their hands.

Pay is tangible, trust is not. Allow me for a moment to speak as the therapist I was trained to be. Supervisory training lumps together a list of essential supervisory skills such as communication, recognition, performance feedback, trust, availability…you get the picture. Yet social science research tells us that trust is by far the most important variable in relationships. Or to move that finding into the workplace, what good is a supervisor who tells you that your performance yesterday was good if you don’t trust what he tells you?

This is where you might say to yourself, “OK, trusting my boss is important to me but that’s not the way young people are”. Except that IS the way young people are. That’s the way we all are, the way our brains are built. Trust was based on survival for our original ancestors and it’s our brains still operate that same way today.

So the race for retention is not just about money. Above all else, employees don’t want to feel ripped off about their pay. They know a $2 per-hour raise won’t increase their standard of living, won’t buy them a better car or house.

Pay them fairly, but more importantly give them a boss they trust. And as you would expect me to tell you next, I invented Stay Interviews specifically to provide supervisors with a tool that builds trust, that focuses directly on their 1-1 relationships with each of their employees. Raising pay alone will never be enough.

Dick Finnegan is SHRM’s top-selling author and top-rated webcast presenter. Please email your comments to DFinnegan@C-SuiteAnalytics.com.  Contact Dick to discuss how we can help you retain your valuable employees.  You are also welcome to forward this blog to anyone you believe would find it helpful.

[i] https://www.businessinsider.com/amazon-raise-pay-3-an-hour-for-500000-workers-2021-4

[ii] https://www.aboutamazon.com/news/job-creation-and-investment/study-shows-amazons-wage-increase-to-15-an-hour-also-upped-pay-for-non-amazon-workers

[iii] https://www.geekwire.com/2021/amazon-now-employs-nearly-1-3-million-people-worldwide-adding-500000-workers-2020/

[iv] https://www.aboutamazon.com/news/operations/amazon-hiring-75-000-employees-across-fulfillment-and-transportation

Related Posts

4 ways to cut new hire turnover
Four Proven Ways to Stop New-Hire Turnover

It is possible that many companies think early turnover is just “the cost of doing business.” My recent work with the U.S. Census Bureau makes clear that there are fewer new workers coming our way, so I think it is time that we get a lot smarter about who we hire and how we retain them. Here are four ideas that I promise will work because if you don’t address it now, turnover may just cost you your business.

The Blatant Unfairness of Retaining Poor Supervisors
The Blatant Unfairness of Retaining Poor Supervisors

When I speak at HR conferences, I often ask the group to raise their hands if they know who their worst five managers for turnover and engagement are. The great majority immediately raise a hand. So your worst performing managers are well-identified and are known to those who rank both above and below them.

Referral program employees fist pump
Looking to Increase Employee Referrals? Try This Radical Approach

Employee referrals are 4Xs more likely to be hired, save companies over $7,500 per hire, perform their jobs better than their peer employees…and most importantly for our purposes, stay longer. The fact is that gaining employee referrals matters especially in industries where good candidates can be rare.

Back To Top