What Amazon’s Decision To Boost Pay For Frontline Workers Means For Halifax
HALIFAX — Earlier this week, tech giant Amazon announced it will hire 15,000 new employees in Canada and bump wages for its frontline workers as high as $21.65 an hour.
Amazon plans to open a Delivery Centre in Halifax at the start of October and hire approximately 100 people to staff it.
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So what does it mean for Halifax to have a major employer like Amazon in the city paying surprisingly high wages for entry-level jobs?
Dr. Mutlu Yuksel is a professor with the Department of Economics at Dalhousie University.
He says that, in theory, Amazon’s entry into the Halifax market could put upward pressure on wages in the city.
But, as things stand, it probably won’t.
Yuksel says Amazon will probably draw people back into the labour market who haven’t been working. That means other employers shouldn’t feel significant pressure to raise their wages.
Amazon wants to hire about 100 people. Right now, there are more than enough unemployed people in Halifax to fill those roles.
Statistics Canada says unemployment in the city was 7.5 percent in August, with more than 19,000 out of work.
A chunk of those people will be ready to work but holding out for the right opportunity. For some, an entry-level job paying around $20 an hour could be exactly that.
Yuksel says the only way Amazon’s entry into the Halifax labour market will really move wages is if the city’s unemployment rate drops significantly.
Then, the company would be poaching employees from other businesses. Those businesses would probably have to raise their own wages to attract new hires.
Robert Kavcic, a senior economist with BMO Capital Markets, agrees.
He says Amazon is creating a “relatively small” number of jobs in Halifax and that it’s not enough to tilt the balance of the job market.
But he does think Amazon’s $20 an hour entry wages are a signal of just how hard it is to find people to work.
He pointed out Amazon’s wages are “higher than you might expect for entry-level work” because the company knows it needs to pay that much to lure in workers.
“Amazon probably has pretty good visibility on what it’s going to take to get the quality of labour they want, and get it quickly,” Kavcic says. “Even if the numbers are small, it’s symbolic that the job market is moving in the right direction.”
Yuksel agrees with Kavcic, but thinks Amazon might have another motivation for paying so much.
He points out the company has recently faced a lot of heat for its employment practices. Stories about gruelling working conditions and the company’s aggressive union-busting efforts have contributed to the idea that Amazon is a bad employer.
Along with paying a higher salary, Amazon trumpets its employee benefits like health coverage and covering tuition.
Yuksel says all this is part of Amazon trying to create a new narrative.
“I think Amazon is trying to erase their bad image,” Yuksel says. “Now they can announce to people that they are one of the good employers that are paying a higher salary.”
Amazon did not agree to be interviewed for this story.
Whatever Amazon’s motivation is, both Yuksel and Kavcic say it’s a great sign for Halifax that Amazon is opening an operation in the city.
“It’s always positive for the local economy when big businesses and in various industries do take up ground in the local economy, and it tends to have effects that are positive over time. It’s certainly better than companies packing up and leaving,” Kavcic says.
Yuksel says big companies like Amazon devote a lot of resources to market research and when they make moves other firms notice.
Just like Amazon’s decision to raise wages will act as a signal to other companies that they should consider doing the same, the company’s decision to come to Halifax will probably act as a billboard to other firms the city is a good place to do business.
Trevor Nichols is a staff writer with Huddle in Halifax. Send him feedback at: [email protected]. To read more stories like this, sign up to receive Huddle’s free daily newsletter.