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Amazon Wage Hike Aims to Secure Holiday Help in Tight Job Market

https://www.bloomberg.com/news/articles/2018-10-02/amazon-wage-hike-aims-to-secure-holiday-help-in-tight-job-market

The article, Amazon Wage Hike Aims to Secure Holiday Help in Tight Job Market, provides insight on the fact that Amazon has recently decided to increase their minimum pay to $15 an hour to all US workers starting November 1st and to add “100 000 temporary warehouse workers”. It also explains why they have done this. The article starts off by analyzing the situation of needing more workers in warehouses during the holiday season due to a higher demand for their products. It also mentions that during the holiday season lots of workers quit after because of the number of hours they had agreed to work and then realize that they come to regret it. By increasing the minimum pay, the people that they hire are happier to work and they are less likely to quit after because they have been compensated for working longer hours. This also decreases the cost of having to employ a new worker which “typically costs 25% of that person’s annual pay” states the article. Furthermore, Amazon can then be more efficient because they have more workers during the holiday season and other popular product purchasing times where they are then more likely to complete all their orders on time and maximize profits.

This situation is a perfect representation of market matching. The first of two elements that is being matched is the high demand during the holiday season which represents the clients and their orders. The second of the two elements that represent this matching is Amazon’s ability to deliver on these orders which is mostly made up of the employees. Therefore the two components of the job market that are being matched when Amazon increases their minimum pay is to attract more workers to match the increase of demand that they are facing. This is therefore a perfect matching as these workers will automatically increase in numbers when they see that the same job is paying more. That is simple economics. The point of increasing the pay is to attract a higher demand for the job which will make job-seekers more likely to work for Amazon than other big companies such as Walmart or Target.

There is also a matching that is made between different companies. Due to Amazon increasing their minimum pay, other companies are also more likely to raise their minimum pay. This is because people searching for work have more options and if other companies don’t decide to raise then the prospective employees will not want to work at those other companies. They will most likely prioritize the company that pays more for the same warehouse job. Therefore there is another matching between companies that compete to attract a higher supply of workers as these large companies become even more powerful.

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