It’s quite the announcement: Amazon is dramatically increasing its salaries. But Jeff Bezos’ shopping giant didn’t suddenly mutate into a charity giant. A labor market expert explains what this is all about and whether German Amazon employees will also benefit.
It’s a wage increase that’s immediately apparent: Amazon wants its employees going forward up to $350,000 salary pay and thus more than twice as much as before. The online giant announced this a few days ago. In recent years, the upper limit was “only” $160,000.
Unfortunately, Enzo Weber sees no improvements for Amazon employees who are currently hoping for an early wage increase. The announcement does not necessarily apply to people who pack packages in Amazon’s warehouses or bring them to customers in delivery vans, but for management staff and especially in IT, says the economist from the Institute for Labor Market and Occupational Research (IAB). And the announcement does not apply to Germany either, only to the USA.
“There are certain areas, such as the region around San Francisco, in which numerous global corporations cluster, i.e. gather,” explains Weber in the ntv podcast “Learned again”. These are high-wage areas with extremely high rents, where wages are different than elsewhere in the United States and the world. “Accordingly, $350,000 as the maximum salary sounds like a lot, but it’s at least a little more moderate than it appears.”
competition of global corporations
The global corporations that the economist describes are well known. Apple, Google’s mother Alphabet, Meta better known as Facebook and Netflix are all based around San Francisco Bay in the famous Silicon Valley. Just like less prominent but similarly financially strong companies such as the software manufacturer Oracle, credit card service provider Visa or the major US bank Wells Fargo. In addition, companies based further north, such as Microsoft or Amazon, have larger offices in the region, which Americans like to call the Bay Area for short. Because of the high technology density, the most talented software developers, IT engineers or other highly talented employees from the tech industry often live there.
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“Digital business models have received a significant boost from the Corona crisis,” explains IAB expert Weber. In order to be able to expand them, the large corporations mentioned, but also financially strong start-ups are desperately looking for the right personnel from the technology industry to be able to expand them. This is a competition that is very intense, says the economist. “The people who meet this requirement are in extremely high demand and compete in the range of a few hundred thousand dollars a year. That drives up wages but also the cost of living.”
High wages for high rents
Meta, i.e. Facebook, in particular has driven wage development in the Bay Area in recent years. Due to numerous scandals, Mark Zuckerberg’s company found it difficult to create new ones employees and employees to find. In order to still get the right staff for the desired corporate restructuring, they have been lured with particularly high wages for some time – unlike Amazon, where the maximum remuneration apart from share packages was comparatively low at $ 160,000 a year. And that in a region where even a 70 square meter apartment often costs more than $3000 rent a month become due.
For this reason alone, a similar development in Germany is unlikely, says Enzo Weber. In addition, there are the strong trade unions, which usually conclude collective agreements for entire sectors. That’s why you often earn more at the lower levels in Germany than in the USA, and a little less at the top levels. The famous scissors don’t gape that far apart.
Nevertheless, experts from the IT sector can also earn several hundred thousand euros a year in this country. That is conceivable, especially in high-wage regions like Munich and in future-oriented industries like the tech sector, says the IAB expert. “The development will continue,” he predicts. That companies like Amazon are more than doubling their salary caps? Unfortunately not.
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