What Is Hazard Pay, And Why Are Amazon And Other Companies Ending It For Essential Workers?

As the shutdown orders went into effect two months ago, several American companies began offering hazard pay to essential employees, such as retail, grocery and health care workers.

Now, some of those companies, such as Amazon (AMZN), RiteAid (RAD) and Kroger (KR), are ending their hazard pay policies. Yet the risk to these workers remains the same, and the pandemic continues to rage, with tens of thousands of new coronavirus cases in the U.S. and over 1,000 deaths a day.

As a labor and employment law expert, I study how employers respond to economic incentives and how labor laws can ensure that workers get paid a living wage.

If the risk to essential workers has not gone down, why is their pay decreasing?

What is hazard pay?

Hazard pay is a wage supplement paid to workers who do dangerous jobs.

Prior to the pandemic, hazard pay was often paid to workers who handled dangerous materials or who worked in war zones. Some workers receive hazard pay all of the time because their jobs are routinely dangerous; other workers only receive it when taking particular assignments or completing certain tasks.

But the coronavirus crisis has caused many jobs – such as grocery and retail store jobs – to be considered dangerous for the first time.

While there are some requirements regarding government workers that vary by state, in the private sector, hazard pay is not mandated by law – though it is occasionally provided for in union contracts.

The size of the pay premium varies by job and industry. The most common raise workers received during the pandemic has been an extra US$2 an hour.

Why do companies offer it?

To understand why some companies are getting rid of hazard pay before the crisis is over, we have to examine why they awarded it in the first place.

When hazard pay is not mandated by law or a union contract, an employer that chooses to pay a premium to workers is doing so for one reason: to entice workers to take and keep a job. A worker faced with a choice between two jobs, one dangerous and one not, will rationally choose the less dangerous job. Hazard pay incentivizes workers to take the dangerous job instead.

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Disclaimer: This article is republished from The Conversation under a Creative Commons license.

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