January 14, 2019

Why Did Amazon Raise It’s Minimum Wage to $15?

Online e-commerce giant Amazon and CEO Jeff Bezos have been under criticism for pay disparity among its employees across different locations and this could be the reason for the raise of it’s minimum wage.

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Amazon just announced that it’s raising its minimum wage to $15 per hour for all its U.S. employees - including everyone at subsidiaries and seasonal or temporary help with effect from next month. This is a big move for Amazon which does have the money to afford it.

Amazon’s starting pay varies by location, for example; paying $10 per hour at a warehouse in Austin, Texas and $13.50 an hour in Robbinsville, New Jersey.

The new minimum wage will benefit more than 250,000 Amazon employees as well as the 100,000 seasonal employees of the company. Employees who already make $15 per hour will also see a raise in their pay.

The wages of Amazon’s British employees is also raised to a minimum of £10.50 ($13.61) for workers in London and £9.50 ($12.31) in the rest of the country.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead”, said CEO Jeff Bezos in a press release. “We’re excited about this change and encourage our competitor’s and other large employers to join us.”

The company’s key critic Sen. Bernie Sanders of Vermont who had in the past place the company under severe pressure with threats of sanctions and introduced a bill called Stop Bad Employers by Zeroing Out Subsidies also known as Stop BEZOS Act to the Senate applauded Amazon’s move.

“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.” Sanders tweeted in response to the announcement “I urge corporate leaders around the country to follow Mr. Bezos’ lead.”

The announcement of the increase of minimum wage for hourly employees by Amazon was received with mixed feelings by workers as it came at the expense of monthly bonuses and stock options. After the increase of the minimum wage, Amazon eliminated monthly bonuses and stock grants to workers and some employees claim they will be making less money by this action.

Several warehouse employees condemned the move, saying they would be losing thousands in incentive pay and that the percentage increase would not cover for the loss. Every warehouse worker is entitled to two shares of Amazon stock when they are hired and an additional stock option each year. After this change takes effect, the program will be phased out.

Some other workers received the news with excitement, stating they would rather have the money on their paycheck now than wait two years for the stock to vest.

It is however, highly unlikely that this increase will affect sellers on this trading platform in any way as this increase is regarded as Amazon simply bending to pressure from critics and securing their work force in the ever tightening labor market.