COVID-19

The changing labor market could affect hazard pay

Meghan McCarty Carino May 20, 2020
Heard on: Marketplace
Share Now on:
HTML EMBED:
COPY
An Amazon employee at the company's Staten Island distribution facility. The giant retailer is phasing out its hazard pay. Spencer Platt/Getty Images
COVID-19

The changing labor market could affect hazard pay

Meghan McCarty Carino May 20, 2020
An Amazon employee at the company's Staten Island distribution facility. The giant retailer is phasing out its hazard pay. Spencer Platt/Getty Images
Share Now on:
HTML EMBED:
COPY

Pay bumps for essential workers at companies like Amazon, Kroger and Rite Aid are getting rolled back this month, while Target is extending higher wages through July 4. The pay increases are often dubbed “hero pay” or hazard pay — a recognition that the work of grocery store clerks and warehouse pickers has taken on new dimensions of danger in the pandemic. Workers are fighting to keep their bonuses in place, saying that the danger hasn’t gone away. But the labor market could complicate demands for higher pay.

Before the pandemic, Camilo Gutierrez was a server at a Yard House restaurant in Miami. In late March, as lockdowns shut dining rooms, he had his hours cut to zero. He wasn’t really sure if he’d qualify for unemployment benefits.

“Rent was still due, my bills were still due,” he said. “So I tried looking online and saw that Amazon was hiring, and they just gave me the job.” He’s been working as a delivery driver for the past month. 

And there are millions more people in similar positions. Andrew Chamberlain, chief economist with the job site Glassdoor, said he’s seen a surge of interest in grocery, warehouse and delivery jobs from workers in hard-hit industries like hospitality.

“That weakens the pressure on employers to have to pay higher pay or hazard pay,” he said. “Definitely the more unemployed workers you see in the economy, the less bargaining power workers tend to have,” even though the jobs are considered risky.

Atif Siddiqi, CEO of the employee-benefit platform Branch, said a survey of hourly workers the company conducted in late March found most had lost hours or their jobs, but more than half were reluctant to apply for new work “because of fear of exposure and of safety concerns.”

According to the Branch survey, just 36% of hourly employees had applied or had plans to apply for a new job. But even a small share of the millions of unemployed is still a lot of willing people. 

Amazon and Walmart had no problem filling hundreds of thousands of new positions in just a matter of months.

But that was during the period those companies were offering more generous pay, said AnnElizabeth Konkel, an economist with job site Indeed, who’s been tracking searches for these essential jobs.

“There was an initial surge of job-seeker interest,” she said. “And then it really has dwindled off and is now lower than its pre-COVID-era rate.”

If lower wages bring a drop in applications or greater turnover for these jobs, she said there could be an opening to demand better pay despite high unemployment.

COVID-19 Economy FAQs

When does the expanded COVID-19 unemployment insurance run out?

The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.

Which states are reopening?

Many states have started to relax the restrictions put in place in order to slow the spread of COVID-19. Although social-distancing measures still hold virtually everywhere in the country, more than half of states have started to phase out stay-at-home orders and phase in business reopenings. Others, like New York, are on slower timelines.

Is it worth applying for a job right now?

It never hurts to look, but as unemployment reaches levels last seen during the Great Depression and most available jobs are in places that carry risks like the supermarket or warehouses, it isn’t a bad idea to sit tight either, if you can.

You can find answers to more questions here.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.