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11 of America’s most ‘influential’ companies have raised average wages during the pandemic — but historically high inflation has eaten away at those gains

Fast food workers and activists demonstrate outside McDonald’s downtown flagship restaurant on July 31, 2014 in Chicago, Illinois.

Scott Olson/Getty Images

  • Wages have been on the rise as companies struggle to hire enough workers.
  • An analysis of some of the US’ most “iconic” companies finds that inflation “wiped out” most of those gains.
  • This limited real wage growth could in turn be contributing to ongoing labor shortages.

Ever since the number of workers quitting hit record highs and businesses began reporting labor shortages, wages have been rising.

But a recent analysis suggests that rising consumer prices have “wiped out” much of these gains.

Inflation is at its highest year-over-year rate since 1982. An analysis from Brookings looked at wage growth at 13 major companies. While most of these companies raised pay for their workers, “inflation has erased at least half of the average wage gains for frontline workers.”

Molly Kinder, a fellow at Brookings Metro and one of the authors of this analysis, told Insider that while earnings are higher now than at the start of the pandemic for millions of hourly workers, most can’t cover basic expenses, and “the sacrifices and the stress of the job have made those jobs worse jobs.”

Amazon raised real wages 10%, factoring in inflation

Kinder said Brookings chose 13 “iconic” companies to study — Amazon, Walmart, Starbucks, Macy’s, Chipotle, McDonald’s, Target, CVS, Walgreens, Kroger, Best Buy, Gap, and Lowe’s  — “because they’re the biggest, the most famous, the most profitable and they are very influential.” 

The overall findings, which are part of a bigger report coming out in 2022, say that after nearly two years of a pandemic and looking at pay from January 2020 through October 2021, “the average wage increase, in real terms, at the average company we assessed was only 3% through October.”

Kinder and her co-authors compared pay at the big companies by using data from the MIT Living Wage Calculator. With a living wage of $17.70 per hour, they found that Amazon is the only company of the group that pays an average wage at or above that level — although Best Buy’s average wage doesn’t fall too far behind this amount.

But when it comes to the lowest workers on the totem pole at any of these companies, “not one of the companies pays a minimum wage that meets the living wage standard and ensures all employees can afford basic necessities,” the authors added.

Kinder told Insider that Amazon has a high turnover rate, and has had to increase pay to keep bringing in new workers. In January 2020, Amazon’s average hourly wage was $15.75, and in October 2021 it was $18.50. Taking into account inflation, that’s a 10% real change.

Amazon did not respond to Insider’s request for comment.

Employees at other major retailers got few, if any, meaningful raises

Walmart also had a high real average wage increase compared to other companies in the analysis.

However, the report notes the increase is actually only 2% when taking into account the end of Walmart’s quarterly bonuses, which will end on January 31, 2022, when they will then be rolled into employees’ base pay, according to The Wall Street Journal.

Walmart did not respond to Insider’s request for comment. 

Real wage change actually dipped into the negative for some employers. That was the case for Best Buy, Gap, and Lowe’s.

“Lowe’s has done phenomenally well during the pandemic as a business,” Kinder said, citing soaring sales, profits, and stock prices. While the company did provide temporary hazard pay during the first year of the pandemic, she said, they haven’t implemented any company-wide raises since then.

“For the last seven quarters, 100 percent of our stores also earned a Winning Together profit-sharing bonus, resulting in additional payouts totaling more than $750 million to our frontline associates reflecting our appreciation for the hard work of our hourly workforce,” a Lowe’s spokesperson said in a statement to Insider. “In addition to a highly competitive package of wages and benefits for our frontline associates, we continue to invest in training and development to promote a more rewarding work experience and drive retention.”

As for Gap, which did not institute a company-wide pay increase, Kinder said the company’s minimum wage of $10 per hour “has lost 7% of its value, because they haven’t raised wages to keep pace with inflation.” 

“The Brookings report does not include Gap Inc. data on the wages, bonuses or pay increases we have given our frontline employees since the start of the pandemic,” a spokesperson for Gap Inc. said. “We are proud to offer competitive wages and benefits in each market where we operate, as well as ongoing training and career development.” 

Kinder said that most companies, like CVS, Walgreens, Kroger, Target, are likely in the middle. In a statement to Insider, CVS pointed to CEO and president Karen Lynch’s comments that its upcoming minimum wage increase to $15 an hour is a first step, but likely not the last. Starbucks and Macy’s both emphasized raises in their minimum and average pay, and expanded benefits.

The paltry real gains that workers saw might be why there’s a labor shortage

There’s a whole host of reasons employers are struggling to keep workers or find new employees. One is simply that people want good jobs — something not necessarily true of all available positions right now.  

“I think COVID exposed that even before the pandemic, millions of hourly frontline workers were in jobs of very low quality,” Kinder said, which includes poor benefits or lack of respect.

These challenges have gotten worse in the pandemic,” Kinder said. “Pay is up a little bit, but a lot of the other aspects that make someone happy in their job have gotten worse.”

As Kinder said: “While I think there’s a lot of headlines about there’s not enough workers, there’s a shortage of workers, I think the reality is that these employers would have an easier time filling these jobs if they were better quality jobs.”

Are you a worker whose pay is being impacted by inflation? Reach out to jkaplan@insider.com and mhoff@insider.com to share your story.

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