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Amazon Bumps Minimum Wage To $15 Amid Scarce Labor

Secretary of Defense Ash Carter gives Jeff Bezos, Founder, Chairman & CEO of Amazon.com a tour of the Pentagon during a visit May 5 , 2016. (DoD photo by Senior Master Sgt. Adrian Cadiz)(Released)

Posted Tuesday, October 2, 2018 - 1:49 pm

Online retail giant Amazon announced Tuesday it would raise its starting wage for US workers to $15 an hour, amid long-standing criticism of low pay, and would advocate for a higher minimum wage nationwide.

The pay raise will apply to 250,000 employees starting November 1 and to the more than 100,000 seasonal workers the company expects to hire for the holiday shopping season, it said.

Amazon founder and CEO Jeff Bezos said the company — valued at nearly $1 trillion — was heeding complaints about its pay structure.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Bezos, the world’s richest man, said in a statement.

Amazon is encouraging other large US employers to follow its lead and said it would lobby lawmakers for an increase in the federal minimum wage, currently at only $7.25.

But the company did not say it would push for a US minimum wage of $15 per hour, a long-sought goal of worker advocates. Amazon’s pay varies by location, so the increase could be between $3 and $5 an hour, depending on the state.

The company — which offers online shoppers a combination of ease, speedy delivery and choice that few can match — has faced criticism of its labor practices, including grueling working conditions and lack of job security.

Senator Bernie Sanders, a fierce Amazon critic who has long campaigned for higher wages as the United States recovers from the Great Recession, hailed the decision, saying Bezos and Amazon were “now leading the way.”

“It could well be, and I think it will be, a shot heard round the world,” Sanders said in remarks at the US Capitol.

He called on other companies like Walmart and fast food retailers to follow suit.

“The bottom line is that in the richest country in the history of the world, we’re seeing massive levels of income and wealth inequality. In this country, our standard should be that if you work 40 hours a week you should not be living in poverty.” 

– Taxes cut, wages flat –

White House economic advisor Larry Kudlow said the move was “terrific.”

“Good for them. I’m in favor of higher wages,” he told reporters.

Though Amazon portrays the raise as a response to critics, with US unemployment near historic lows, employers are having difficulty finding qualified workers to fill open positions. 

Some firms have had to curtail or cancel planned investments and a higher wage may mean Amazon can outbid its competitors for the dwindling supply of available workers.

US department store chain Target announced in September it would raise wages to $15 an hour by 2020. The Walt Disney Company is to begin paying that wage to Disneyland workers in California next year and Disney World employees in Florida by 2021.

In addition to seasonal workers, the new minimum wage also will apply to all temporary and part-time employees, including those hired by agencies, and to workers at the high-end grocery store chain Whole Foods, which Amazon acquired last year, the company said.

“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,” Jay Carney, Amazon’s head of global corporate affairs, said in the statement.

Amazon employees currently receive support for job training and health coverage, as well as retirement benefits and paid parental leave, the company said.

By lobbying for a higher minimum wage, Amazon is also calling on lawmakers to increase its competitors’ costs.

The National Employment Law Project welcomed Amazon’s move, which it said showed “how outdated and inadequate the federal minimum wage is.”

“At $7.25 the federal minimum wage is a poverty wage. Having major, profitable employers like Amazon join the fight could help finally unstick it,” Executive Director Christine Owens said in a statement.

Yet, despite the tight US labor market and rising after-tax corporate profits, worker pay overall in the United States has so far risen only sluggishly, leaving it effectively flat when inflation is taken into account.

Furthermore, the boom at online retailers like Amazon has coincided with layoffs, bankruptcies and store closures for traditional retailers such as Sears, Macy’s, Toys R Us and Kmart. Consumers now increasingly opt for home delivery instead of shopping in person.

President Donald Trump promoted December’s sweeping tax cuts by saying they would boost worker pay and the White House has pointed to bonuses many employers have since offered as evidence of increased prosperity.

Bezos, a frequent target of Trump’s ire, has a net worth of $165 billion, comfortably dethroning Microsoft founder Bill Gates this year, according to Bloomberg.

Shares of Amazon closed down 1.7 percent at $1,970.00 in New York.

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