Even amid a roaring economy, record employment and rising income for Americans, Amazon’s minimum wage gambit will roil everything from US labor markets to the fate of bricks-and-mortar retailers.
The e-commerce giant said it is raising the minimum wage it pays all US employees to $15 an hour beginning next month, covering more than 250,000 current employees, or more than 40% of its global workforce. The higher pay will also apply to the more than 100,000 seasonal employees Amazon plans to add this fall as it competes more fiercely for scarce new workers during the holiday shopping season.
Right now, starting hourly pay varies across Amazon warehouses around the country, but most workers get a few dollars less than $15 an hour. Amazon also will give raises to workers who already are over $15 an hour.
Amazon expects to eliminate some of the contingent compensation for warehouse workers that has become fodder for critics, partially offsetting the new costs of the higher wages.
But make no mistake: Such a bold move over the highly symbolic $15-an-hour threshold by the new champion of American retailing will have massive ripple effects in an economy where there’s already upward pressure on wages because of labor shortages. Amazon’s wage increases are likely to pressure competitors by soaking up job candidates, also creating lots of spillover effects.
Among other things, for instance, the move will encourage the rank-and-file fast food workers who have been calling for $15-an-hour wages at McDonald’s to continue their struggle.
What Walmart arguably began a few years ago by boosting its starting wage has come to fruition in the biggest starting-wage gambit in recent US history.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Amazon founder and chief executive officer Jeff Bezos said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
— Amazon News (@amazonnews) September 26, 2018
Meanwhile, Amazon keeps putting pressure on traditional retailing formats with more experiments in its own bricks-and-mortar, such as a new concept store, Amazon 4-Star, that opened its doors last week in New York City,
Its’s similar to Amazon Books but with a range of products besides books stocked on its shelves—all of which are rated at least 4 stars by Amazon customers, including kitchen appliances, home gadgets, electronics, devices and games. So it’s got the items most people are likely to buy.