Unpacking Amazon’s Minimum-Wage Increase

Amazon announced it is increasing its minimum wage to $15 for all full-time, part-time, temporary (including those hired by agencies) and seasonal employees across the U.S.–effective Nov. 1. The move will affect more than 250,000 Amazon employees, as well as over 100,000 seasonal employees.

“We listened to our critics, thought hard about what we wanted to do and decided we want to lead,” said Jeff Bezos, Amazon founder and CEO. “We’re excited about this change and encourage our competitors and other large employers to join us.”

In addition to the wage increase, Amazon’s public policy team will also begin advocating for an increase in the federal minimum wage, according to the company.

“We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago,” said Jay Carney, senior vice president of Amazon’s global corporate affairs. “We intend to advocate for a minimum-wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.”

Rick Guzzo, a partner at Mercer Workforce Sciences Institute, says the announced pay raise to $15 is not surprising because many other employers of large hourly workforces have already committed to that or something close to it.

Indeed, according to the New York Times, Target announced last year that it would raise minimum pay to $15 an hour by 2020, and Costco has raised its starting pay to at least $14 per hour. In January, Walmart said it was raising starting wages for employees to $11 after the new tax law passed, though critics noted that it was laying off workers as it tried to quietly close 63 Sam’s Club stores.

“What is surprising,” he says, “is the announcement to lobby Washington to raise the federal minimum wage, which right now sits at less than half of $15. The intent to lobby sets them apart from others.”

Guzzo adds that there’s “little doubt that [Amazon’s] action will influence others, especially in the distribution sector.”

While experts agree that raising minimum wages is obviously good for workers, others point to the payoff on the company side.

“At the moment in the United States, unemployment is pretty low, and Amazon may be struggling to recruit and retain employees,” Alan Manning, an economics professor at London School of Economics who has studied minimum-wage policies, told the New York Times. “It’s also a bit of good publicity.”

Indeed, the NYT reported, less than an hour after the announcement on Tuesday, Dave Clark, Amazon’s senior vice president in charge of operations, posted a video on Twitter of employees at a fulfillment center in Southern California cheering as he broke the news to them.

Michael J. O'Brienhttp://
Michael J. O’Brien is former web editor with Human Resource Executive®.