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CNN Business
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Amazon is set to increase its minimum wage to $15 per hour for all US employees.
This adjustment will take effect on November 1 and will apply to full-time, part-time, and temporary employees. According to Amazon (AMZN), the new $15 minimum wage will positively impact over 250,000 employees, along with 100,000 seasonal workers.
“We listened to our critics and thoughtfully considered our approach. We’ve chosen to lead,” said Jeff Bezos, the founder and CEO of Amazon. “We’re enthusiastic about this development and urge our competitors and other significant employers to follow suit.”
This change will also apply to employees at Whole Foods and other subsidiaries.
Additionally, Amazon announced that its public policy team will advocate for an increase in the federal minimum wage, which has remained at $7.25 per hour since 2009.
“We’ll defer to Congress and experts to determine the appropriate figure,” said Dave Clark, Amazon’s senior vice president of global operations, in an interview with CNN’s Christine Romans. “For us, that figure is $15.”
The magnitude and rapid expansion of Amazon give this decision ramifications that extend well beyond the hundreds of thousands who will directly benefit.
Amazon ranks among the largest employers in the United States and has created more jobs in America over the last decade than any other company.
This decision also heightens the stakes for potential employees at Amazon’s upcoming headquarters, known as HQ2, where the company plans to create up to 50,000 jobs. Amazon has shortlisted 20 cities, including Atlanta, Chicago, and Washington, D.C.
Critics of Amazon, such as independent Senator Bernie Sanders of Vermont, have argued that the company’s wages are insufficient. They often contrast this with Bezos’ immense wealth, which is estimated at around $165 billion, making him the richest person in the world.
“I want to acknowledge the positive step taken here,” Sanders said on Tuesday. “I commend Mr. Bezos for making the right choice.” He expressed his desire to collaborate with Bezos to advocate for a $15 federal minimum wage.
Bezos responded by thanking Senator Sanders. “We’re thrilled about this, and we hope others will get on board,” he tweeted.
Across the nation, workers have advocated for a $15 minimum wage, most notably as part of the Fight for $15 movement.
Supporters argue that it addresses growing wage inequality and will enhance consumer spending, while critics warn that it could limit job opportunities, particularly for teenagers and those seeking entry-level or low-skilled positions.
Some businesses have reacted to public pressure regarding wage issues.
Target increased its minimum wage for new employees to $12 per hour in September and aims to raise it to $15 by the end of 2020. Disney reached an agreement with its unions to implement a minimum wage of $15 per hour at Disneyland in California by 2019 and at Disney World in Florida by 2021.
Walmart, the largest private employer in the country, which employs over 1 million workers in the US, raised its minimum wage to $11 in February.
Clark stated that Amazon is eager to implement this change sooner rather than later.
“We thought, why wait? We should take action now,” he told Romans.
Paul Sonn, director of the state policy program at the National Employment Law Project, mentioned that Amazon’s announcement would create pressure on other businesses to increase wages and on Congress to raise the federal minimum wage, noting that 29 states have their own minimum wages above the federal standard of $7.25.
Neil Saunders, managing director of GlobalData Retail, suggested that higher minimum wages could also assist Amazon in attracting new talent.
“Without increasing wages, Amazon risks falling behind in the job market,” Saunders stated, highlighting the company’s rapid expansion and the challenges associated with recruitment, especially during the holiday season.
He further indicated that this decision is “politically astute.”
Last month, Amazon revealed that the average hourly wage for full-time associates in its fulfillment centers already exceeds $15 per hour.
According to a company filing, Amazon’s median pay last year was $28,446, translating to approximately $13.68 per hour. This figure encompasses international and part-time employees.
Furthermore, the company announced an increase in the minimum wage for UK employees, effective November 1. The new minimum will be £10.50 ($13.60) for those in the London area and £9.50 ($12.30) for the rest of the UK, affecting over 37,000 employees, including those in temporary positions.
The current minimum wage for adults over 25 in the UK stands at £7.83 ($10.15).
Amazon has announced a significant increase in its minimum wage, raising it to $15 per hour for all U.S. employees starting November 1. This decision impacts not only full-time employees but also part-time and temporary workers, benefiting over 250,000 individuals and 100,000 seasonal employees. Jeff Bezos, Amazon’s founder and CEO, emphasized the company’s intent to lead by example and encouraged competitors to follow suit. The wage increase will also apply to employees of Whole Foods and all Amazon subsidiaries.
In addition to raising its wages, Amazon plans to lobby for an increase in the federal minimum wage, which has stagnated at $7.25 an hour since 2009. Dave Clark, the senior vice president of worldwide operations, stated that while the company acknowledges the decision is ultimately in Congress’s hands, they advocate for a minimum wage of $15.
Amazon’s stature as one of the largest employers in the U.S. gives this wage change considerable significance that extends beyond the immediate workforce. With plans for a new headquarters, HQ2, located in one of 20 finalist cities, potentially creating 50,000 jobs, this new wage policy may influence the recruitment of talent as the company faces a competitive labor market.
Critics, including Senator Bernie Sanders, have long pointed out the disparity between Amazon’s low wages and Bezos’s immense wealth, currently valued at around $165 billion. Sanders applauded Bezos for the wage increase, expressing hope to collaborate on raising the federal minimum wage.
The movement for a $15 minimum wage is gaining traction across the nation, spearheaded by advocacy groups like Fight for $15, which argue that such increases help address income inequality and stimulate consumer spending. Conversely, opponents express concerns that raising the minimum wage may inadvertently decrease job opportunities, particularly for those seeking entry-level positions.
Other companies have also felt the pressure to raise wages; for instance, Target recently raised its minimum for new hires to $12 an hour with plans to reach $15 by 2020. Disney has struck agreements to ensure $15 an hour pay for its workers by 2021, and Walmart increased its minimum wage to $11 an hour earlier this year. In this competitive labor market, making a wage increase sooner rather than later became a priority for Amazon, according to Clark.
Experts believe Amazon’s decision will not only compel other companies to follow suit but also lend momentum to the push for a federal minimum wage increase. Currently, 29 states have set their minimum wages above the federal limit, showcasing a growing disparity in wages across the nation.
Neil Saunders, managing director at GlobalData Retail, remarked that the raised minimum wage is a strategic move by Amazon to attract and retain employees as it continues to expand. With the holiday season approaching, the need for recruitment in a shrinking labor market is critical.
In tandem with its U.S. wage increase, Amazon also announced a minimum wage hike for its employees in the UK effective November 1, lifting it to £10.50 for the London area and £9.50 for the rest of the country. Approximately 37,000 UK employees, including seasonal staff, will see benefits from this change. The current minimum wage in the UK for adults over 25 is £7.83.
Amazon’s actions reflect changing dynamics in employment practices and the increasing pressure on large corporations to address wage inequality while navigating a competitive landscape for workforce talent amid ongoing public discourse surrounding pay equity and treatment of workers.
