Amazon To Hire 125,000 Additional Employees — Are Pay Incentives Enough During Labor Shortage?

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Amazon announced yesterday that it would hire 125,000 employees throughout the U.S., with an average starting pay of more than $18 per hour and sign-on bonuses up to $3,000 in select locations. The announcement comes amid a tight labor market and an employee shortage in the country.

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Just last week, Amazon announced another perk to attract employees, saying it would fund full college tuition for its 750,000 operations employees across the U.S. through its Career Choice program, with a total investment of $1.2 billion by 2025. Amazon joined rivals Walmart and Target, as the companies announced similar efforts earlier this year.

“We are proud to offer opportunities for people from a range of backgrounds, from furloughed workers to former military personnel,” Dave Clark, CEO of Worldwide Consumer at Amazon, said in a statement. “We take our responsibility as an employer seriously and want our employees to succeed and thrive. That’s why we offer an average starting wage of over $18 per hour, provide a great range of comprehensive benefits — including healthcare coverage, parental leave, career training, and ways to save for the future — and have a team of thousands working to build a safe and inclusive work environment. Whether you’re looking for a short-term job to make money for the holidays or a long-term career, you’re welcome here, and we look forward to having you on our team.”

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Related: Amazon Plans To Hire 55,000 Workers for Tech and Corporate Jobs

In 2021, Amazon opened 250 new fulfillment centers, sortation centers, regional air hubs and delivery stations in the U.S., and will open more than 100 more buildings in September alone, according to the statement. In addition, since the beginning of the pandemic, Amazon has hired more than 450,000 people in the U.S.

Alexander Oettl, an economist at the Georgia Institute of Technology, told The Wall Street Journal: “There are a host of businesses where if labor doesn’t show up, you can have the owner backstop — like a hair salon or restaurant. That doesn’t happen with Amazon, or its competitors. Not having labor is acutely expensive for Amazon, and as a result, their willingness to pay for labor is higher than other businesses.”

Brian Olsavsky, Amazon’s CFO told CNN in July that “it’s a very competitive labor market out there. And certainly, the biggest contributor to inflationary pressures that we’re seeing in the business. We’re spending a lot of money on signing and incentives.”

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August’s jobs report was extremely disappointing, as the U.S. only added 235,000 jobs, despite the Dow Jones expectation of 720,000 new hires.

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Last updated: September 15, 2021