Updated at 10:03AM EST
Amazon (AMZN) Shares tumbled Thursday, along with declines for several other big tech names, after the world’s largest online retailer unveiled salary increases for warehouse and transportation workers.
Amazon said employees will make between $16 and $26 an hour, with average starting salaries rising $1, to $19 an hour, as it gears up for the holiday retail season. Earlier this week, the group said it would add another “mini Prime Day” event in October to attract demand from value-focused consumers and focus on its Prime members.
Amazon, one of the largest private sector employers in the United States, said the wage increase would cost about $1 billion over the next year.
“Continuing to invest in wages, providing easy access to wages earned at any time during the month, and offering great benefits and opportunities for career advancement are all part of our long-term effort to be the best employer in the world,” said John Felton. , Senior Vice President of Worldwide Operations at Amazon.
Amazon shares were down 2.8% in early trading Thursday to $114.65 per share, extending their six-month decline to about 32.2%.
Earlier this month, the goal (TGT) It said it would hire about 100,000 employees to support its holiday sales efforts, with wages starting between $15 and $24 an hour. Walmart (WMT) The largest US recruitment firm is looking to add about 40,000 seasonal additions in early September.
Amazon’s wage increases, as well as advanced hiring plans for its major retail rivals, could add upward pressure on the main lever of US inflation over the coming months.
The Labor Department reported earlier this month that average hourly wages in the United States rose 5.2% in August, to $32.36 an hour. Meanwhile, job vacancies are estimated at more than 11.2 million, nearly double the total of 5.67 million available workers, according to the Job Opportunity and Employment Turnover Survey.
Federal Reserve Chairman Jerome Powell has consistently cited the labor market’s “tightness” in his justification for the high interest rates needed to tame the fastest inflation in four decades, which he said will cause “some pain” for the broader economy, and the continued rise in average hourly wages remains a critical component of his concern.
Powell told reporters in Washington last week after the Fed’s third consecutive rate hike of 75 basis points, which raised the Fed’s fund rate between 3% and 3.25%.
“We don’t know, nobody knows if this process will lead to a recession or if so, how important this recession will be,” he added. “It will depend on how quickly wage and price inflation pressures come down, whether the outlook holds, and whether we also get more labor supply, which will also help.”