Thousands of essential workers to get pay cuts: Bloomberg

Essential workers received pay increases when the coronavirus pandemic initially started, but some corporations are walking that back. Workers at places including Kroger, Target, and Amazon are losing their pay increases.

Video Transcript

MYLES UDLAND: Well, we all remember back in March when we learned the category of essential worker, and many companies stepped up very quickly to increase the pay that their essential employees-- grocery workers, the folks at McDonalds, folks at Starbucks-- would receive in order to keep coming to work in a dangerous situation. Well, now things have started to normalize. And Melody, companies are increasingly discussing rolling back some of these pay increases.

You know, folks had gone from, let's say, $9.50 to $11.50 an hour, $11 to $13. These are large percentage changes for a lot of people. I think I saw it at the time as probably a step to permanently raise, and I think we all agree that a lot of these folks probably deserve to make more money than they've been getting paid. But companies are now looking at this period of time to begin pulling back on these.

And I think it's gonna be probably a rocky period for labor and for the companies that try to do this perhaps too quickly.

MELODY HAHM: Yeah, and it's an opportunity for a lot of really interesting soundbites. One phrase that I've been hearing a lot is from hero to zero, how can it happen so quickly? This weekend, in particular, Kroger is actually rescinding that $2 raise it gave to store employees, warehouse workers. Target and Amazon will be following suit later this month. Of course, Amazon had first set earlier in May as the deadline and then extended it to May 31. So starting June 1, wages will go back to normal.

I do think that there is something to be said about this idea that we've discussed so often about what it means to be essential. And of course, during times when lines are out the door and it feels like the pressure is on, and now we can go to a store without that sort of feeling of claustrophobia, it's just so crazy how within a couple of days or perhaps a week, this sentiment has completely shifted.

And now, it's almost like business as normal, or it's almost like an amnesia effect, where oh, yeah, that was a pretty big deal, and now we kind of have to look at our healthy balance sheet. I think overall, I've been hearing a lot of labor unions, labor advocates, of course, reeling at this because to your point, they thought that this was momentum to potentially fight for that $15 floor.

As we know, the minimum wage federally is still $7.25. And as I understand it, the median salary for a retail worker right now is still $11.20. So to your point, Myles, I don't really understand how that can be a sustainable system as we move forward.

DAN ROBERTS: You know, as Melody said, sentiment has shifted. I think that's the real key here. And it's a shame. I mean, at the peak of things, companies were eager to get out there, and get their message out, and look very magnanimous, and oh, here's the extra pay we're offering. It was like the various food chains that still had certain locations open, whether it was drive-throughs, whatever, Starbucks, Dunkin Donuts that were coming out and saying, oh, we've got a special deal for our hospital workers. We need them so much, we're giving you a free coffee for the week.

And a lot of those have faded by now. And part of that, I mean, realistically, it's because it's gone on long enough that companies feel they can't continue to take the financial hit. But I also think part of it is the optics. You know, the time to get the credit for doing the nice things has faded now, and they don't think the backlash will be big enough to really be an issue. But look, if labor representatives get involved, maybe we can actually effect change.

JEN ROGERS: Yeah. I think that having those conversations are really important. Companies-- Disney is trying to figure that out. There's issues here from how much you're paying people to also how you're protecting people, and protection costs money, as well. We've heard that from Amazon, how much they're spending on it.

But to go back to the Tesla story, I mean, if you think a V-shaped recovery is coming, then we're going back to a tight labor market. You actually, as a company, can benefit by valuing your employees in this time because if you think we're getting to the other side of this and we're gonna be back to full employment, having people on your side is gonna be important. So this could be really short-term here.

I do think, though, we could also see labor make some moves here, and also people with their pocketbooks. And we'll maybe see more strikes if these get rolled back, and people not ordering from Amazon for a day, not ordering from InstaCart, getting more people involved in this case.

MELODY HAHM: And then, Jen, it's interesting. Precisely because a lot of these corporations are aware of the PR potential flubs that we're already discussing, they are offering one-time bonuses. Still, I think Kroger is offering $300 extra bonuses. And this reminds me so much of those corporate tax cuts and those one-time bonuses, and I kept a running list of all those companies that were trying to offer those and how short-lived those really were.

And that was the same thing when Amazon first made that announcement raising their minimum wage to $15, but then we saw the overall compensation for the average employee actually went down because of less incentives, less equity. So just thinking about the calculus that these companies are making, to your point, they're not actually serving the employees, even if a lot of the time, the stand-off or the out-of-context quote can make it seem like that.

MYLES UDLAND: Yeah. I just think it's gonna be interesting to see which companies realize that if you run your business more like Costco, you get Costco-like results. I mean, I actually think Walmart's made a lot of strides in the last couple years. Target has raised wages over the last couple of years. And I'd be surprised if those were companies that swiftly rolled some of these things back.

Amazon and its relationship with labor-- long story there, not a surprise. But I think being more Costco-like is probably a good principle for a lot of businesses across industries.