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The Broader Implications of Amazon’s Wage Hike

By / 10.2.2018

In my view, Amazon’s wage hike has blown a gaping hole in the low-wage, low-productivity equilibrium that has bedeviled the US for the past 3 decades. Ecommerce fulfillment centers are using technology and big data to boost productivity in the distribution sector, while creating hundreds of thousands of paid jobs by drawing hours out of the unpaid household sector.

The big debate was over how much those jobs were being paid. Now Amazon has put those disputes to rest.   $15/hour is within 10% of  the median wage for production occupations in many states. For example, the median hourly wage for production occupations in Illinois is $16.19, according to the BLS, and $14.73 in Georgia.

This success story is going to be copied in other physical industries. Companies are going to be forced to invest in their workers and in new technology, or be squeezed by rising wages.

 

Production Occupations
Median Hourly Wage, May 2017
Arkansas 14.30
Florida 14.53
Mississippi 14.57
Alabama 14.67
Delaware 14.70
Georgia 14.73
North Carolina 14.88
South Dakota 15.18
California 15.33
Nevada 15.45
Idaho 15.46
Tennessee 15.58
Utah 15.69
New Mexico 15.75
Arizona 15.82
Texas 16.00
Illinois 16.19
Oklahoma 16.27
Missouri 16.28
Virginia 16.28
Indiana 16.49
West Virginia 16.49
New Jersey 16.50
Montana 16.60
Iowa 16.65
Kentucky 16.67
Michigan 16.69
South Carolina 16.71
New York 16.76
Colorado 16.84
Rhode Island 16.84
Nebraska 16.89
Vermont 16.90
Maryland 16.93
Oregon 16.96
Alaska 17.04
Ohio 17.08
Wisconsin 17.21
Kansas 17.22
New Hampshire 17.38
Hawaii 17.54
Maine 17.54
Pennsylvania 17.54
Minnesota 17.63
Massachusetts 18.01
North Dakota 18.11
Connecticut 18.94
Louisiana 19.07
Washington 19.18
Wyoming 23.83
District of Columbia 25.03