Levi's CEO says Amazon's '$20 an hour' wages are forcing the jeans maker to rethink worker pay amid the tight labor market

dreuter@insider.com (Dominick Reuter) 

Chip Bergh, President and CEO of Levi Strauss. Thomson Reuters

Levi's CEO Chip Bergh said Amazon is adding to his challenges in the labor market in 2021.
Bergh told the AP that he's "considering right now what we have to do with our wage rates."
Amazon hired more than 500,000 people in 2020, and the majority of workers earn over $16 per hour.

Levi Strauss and Co. has been selling jeans for 168 years, but 2021 is proving particularly difficult for the company to find workers, thanks in large part to Amazon.

"There's no question that labor is challenging right now," said CEO Chip Berg in an interview with the Associated Press.

Even as Berg calls the Levi's "aspirational company for a lot of people to work for," he says the company is starting to face some headwinds when it comes to staffing its retail stores and distribution centers in the current labor market.

"We are considering right now what we have to do with our wage rates going forward," he said. "Candidly, we have folks that are right around the corner from Amazon distribution centers and Amazon is not afraid to pay $20 an hour."

A spokesperson said the company has been successful in recruiting and retaining workers at distribution centers based on the total value the company offers, including working for "an iconic brand with strong values," health care and retirement benefits, a bonus program and more.

"We believe this package of compensation and benefits will continue to make us an employer of choice," the spokesperson said.

Berg's comments are the latest evidence that Amazon is establishing a new minimum wage in America.

Indeed, the Amazon effect on local labor markets has been measurable.

"One study showed that our pay raise resulted in a 4.7% increase in the average hourly wage among other employers in the same labor market," CEO Jeff Bezos said in Amazon's latest shareholders meeting, citing research from economists at UC Berkeley and Brandeis.

The actual federal minimum wage was last raised in 2009 and is still $7.25 per hour, while Amazon has had a $15 starting wage since 2018.

"When we set a $15 minimum wage we did so because we wanted to lead on wages and not just run with the pack," Bezos said.

The decision certainly helped propel Amazon's expansion, but the disruption from the pandemic kicked off an even more dramatic reshuffling of the labor market across industries from retail to food service.

Like Levi's, apparel-maker Under Armour specifically cited Amazon as a catalyst for the company's recent wage hike.

"The reality is from a competitive standpoint of hiring, we know that we compete not just within our industry for talent but also outside of the industry to places like Amazon," Stephanie Pugliese, the president of the Americas region at Under Armour, told Bloomberg.

In 2020 alone, Amazon reported hiring more than a half million workers, the majority of whom earn more than $16 per hour, in addition to an extremely competitive benefits package.

And in May, the company announced it is hiring another 75,000 workers in fulfillment and logistics network across the US and Canada with a starting wage of $17 per hour and hiring bonus of up to $1,000.

As Miami chef Phil Bryant told The Washington Post, "If I can make $17 per hour at an Amazon warehouse but only $14 per hour as a line cook, a notoriously hot, stressful, intense job, why would I do that?"
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