Amazon boosting wages and hiring incentives to keep up in competitive labor market

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Amazon is finding it necessary to boost wages and increase its use of incentives to fill some of its open positions, resulting in higher costs in its fulfillment network.

“We certainly see stronger demand for workers,” said Brian Olsavsky, Amazon’s chief financial officer, on a conference call with reporters. “So far, we’ve had good success in hiring them with our wage and benefit package that’s pretty competitive. So we’re watching it carefully. But it’s probably one of the bigger elements of inflation in our business right now.”

Later, on a conference call with analysts and investors, Olsavsky cited the issue when answering question about fulfillment costs.

“We’re spending a lot of money on signing and incentives, and while we have very good staffing levels, it’s not without a cost,” he said.

“It’s a very competitive labor market out there,” he added, saying that “wage pressure” is “certainly the biggest contributor to inflationary pressures” across Amazon’s business.

Amazon added 64,000 employees in the June quarter, reaching a new high of 1.335 million worldwide full- and part-time employees, according to its earnings report on Thursday afternoon.

The company, which offers a $15/hour minimum wage nationally, has rapidly expanded its fulfillment and delivery network, doubling its size in the last 18 months, Olsavsky said.

The competitive labor market is one reason Amazon moved up the timeline for its annual wage increases to May rather than waiting until October, he said.

A New York Times investigation published in June described problems with Amazon’s HR systems in keeping up with the company’s growth, as well as a strategy by the company’s leaders to encourage turnover and limit upward mobility among hourly warehouse workers.

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