Amazon’s $15 Minimum Wage: What’s behind it? PART I

Amazon Warehouse Image
Amazon workers make $15 per hour

On November 1, 2018, the retail giant Amazon voluntarily raised its minimum wage for US employees to $15 per hour. No one made them do it. What prompted the raise?

A raise looks good.

A company that pays well for entry-level work is projecting an image to the world. They are forward thinking, employee-centric. A voluntary pay raise makes a company look good politically. And who doesn’t want to look good?

Amazon’s raise was voluntary and immediate, and they are now offering better pay than their closest competitors. By comparison, Walmart’s $11 wage hike last year looks paltry. Last year Target announced it would ramp up minimum pay to $15 an hour by 2020,1 and Costco raised its minimum to $14 an hour. 1  No one else went after $15 per hour in one shot.  “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, owner and CEO of Amazon.  Sen. Bernie Sanders (I-Vt) has tweeted praise of Amazon’s decision: “What Mr. Bezos has done today is not only enormously important for Amazon’s hundreds of thousands of employees, it could well be a shot heard around the world. I urge corporate leaders around the country to follow Mr. Bezos’ lead.” The raise which took effect immediately rather than in stages, was called “a bold move” by Sanders. 2

Amazon has even promised to lobby the federal government to raise federal minimum wage to $15 per hour for all workers. Besides making Amazon appear very magnanimous and focused on workers, forcing its competitors to raise minimum wage will actually level the playing field for Amazon, increasing employment costs for its competition. If competitors have the same base employee costs as Amazon, they will have a harder time undercutting Amazon’s prices, a good thing for Amazon. But Amazon will have done it first.

Looking good as an employer also gives Amazon an important competitive edge in this period of low unemployment. Large corporations are competing for low level workers, enticing workers with wages and perks. With its new minimum wage, Amazon may look good enough to lure workers from other companies.

CONTINUED IN PART II

REFERENCES

  1. https://www.washingtonpost.com/business/2018/09/24/it-feels-like-damage-control-amazon-warehouse-workers-say-company-is-quietly-doling-out-small-raises/?utm_term=.4654c56c705c
  2. https://www.washingtonpost.com/business/2018/10/02/amazon-announces-it-will-boost-minimum-wage-all-workers-after-facing-criticism/?noredirect=on&utm_term=.57ce513b13b9
  3. https://www.washingtonpost.com/business/2018/09/05/bernie-sanders-introduces-stop-bezos-act-senate/?noredirect=on&utm_term=.86e253b8d07e
  4. https://www.nytimes.com/2018/10/02/business/amazon-minimum-wage.html
  5. https://www.forbes.com/sites/petercarbonara/2018/06/06/worlds-largest-retail-companies-2018/#67e0fa2713e6
  6. https://www.cnbc.com/2018/07/16/jeff-bezos-is-now-the-richest-man-in-modern-history.html
  7. http://time.com/money/5262923/amazon-employee-median-salary-jeff-bezos/
  8. https://www.theguardian.com/technology/2013/dec/01/week-amazon-insider-feature-treatment-employees-work
  9. https://www.newsweek.com/amazon-drivers-warehouse-conditions-workers-complains-jeff-bezos-bernie-1118849
  10. https://www.theverge.com/2018/4/16/17243026/amazon-warehouse-jobs-worker-conditions-bathroom-breaks
  11. https://www.fastcompany.com/90280259/amazon-warehouse-workers-in-new-york-want-a-union
  12. https://news.slashdot.org/story/18/04/18/2026220/amazon-employee-explains-the-poor-working-conditions-of-an-amazon-warehouse
  13. http://knowledge.wharton.upenn.edu/article/will-other-companies-follow-amazon-in-raising-the-minimum-wage/

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