Amazon's new minimum wage policy may be welcome news to workers everywhere, but recruiters now have their work cut out for them.

The e-commerce giant's decision to raise its minimum wage for all U.S. employees to $15 per hour could have an immediate and long-term impact on the already tight labor market. The U.S. unemployment rate is at a historic low--it stood at 3.7 percent in September--and recruiters and business owners say that if large employers follow Amazon's lead with similar wage increases, any company that can't afford to raise its workers' pay will struggle to attract job candidates.

Businesses looking to hire short-term workers for the holidays will be among the first to feel the impact of Amazon's new policy, according to Stacy Zapar, founder of San Diego-based recruitment consultancy the Talent Agency. "It's going to make it that much harder for other retailers to fill their seasonal jobs, which is already a very tough thing to do in a tight labor market, because 96 percent of people are working," Zapar says. "[Amazon] is tightening that labor pool even further." Zapar has provided recruitment consulting services for Amazon in the past. 

The timing of Amazon's wage hike may even have been a strategic move to lure holiday season workers, Mark Price, labor economist for the Keystone Research Center, told Inc. this week. "These are not purely altruistic decisions on the part of Amazon," Price said. "They are in the run-up in terms of staffing right now, they are gearing up for the holiday season ...This is a very well-planned announcement."

In March, Target CEO Brian Cornell announced that raising the company's minimum wage from $11 per hour to $12 per hour led to a 60 percent increase in the number of job applicants the company received. Target also said it will raise its minimum wage to $15 per hour by 2020. Some companies have been anticipating such a challenging environment for hiring this holiday season that they began recruiting earlier than normal. Retailers JCPenney and Kohl's began hunting for seasonal employees in June.

Kevin Gelfand, co-founder of Encinitas, California-based smoothie company Shake Smart, said he expects companies across industries to increase wages in order to attract job candidates. "People will have to react and watch Amazon--we see that all the time," he said. Gelfand, who was featured on Inc.'s 30 Under 30 list this year, added that while he recognizes the need to respond to market developments like Amazon's pay raise, he says the economics of his business limit his ability to do so. "We are on college campuses and have pressure from students to offer affordable prices," he said. "Somewhere that has to give."

The Talent Agency's Zapar said she expects that, in the long run, Amazon's wage hike will only make in-store shopping even less desirable for consumers. "As they put this pressure and crunch on their competitors, there will be fewer salespeople on the floor, and that will increase wait times and lead to a more unpleasant shopping experience," she said. "Those people are going to be turned off to that big-box shopping experience and turn to online shopping, so putting pressure on their competitors from a wage perspective is a genius move." 

Published on: Oct 5, 2018