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Amazon raising minimum wage to $15 per hour starting next month

03 October 2018

Retailers including Target and Walmart have been increasing wages in recent years as a tight labor market in the US and pressure from labor advocates make it prudent to increase pay to attract better pool of job applicants, keep workers happy, and dissuade them from leaving for better-paying work.

Amazon also is encouraging other large U.S. employers to follow its lead and said it would lobby USA legislators for an increase in the federal minimum wage, now at only $7.25. Its starting pay is $10 an hour at a warehouse in Austin, Texas, and $13.50 an hour in Robbinsville, New Jersey.

Amazon said 17,000 British employees would benefit from the rises, as well as 250,000 USA workers. Afterward, Amazon in 2012 spent $52 million installing air conditioners at its warehouses around the country.

U.S. Senator Bernie Sanders, a self-described Democratic socialist, has been vocal about the pay disparity at U.S. corporations and has proposed a bill aimed at making large corporations pay workers more.

CEO Jeff Bezos said the company had "listened to our critics". With a healthy USA economy, Americans looking for work have an increaseng number of job options, so Amazon has to find ways to entice people to join its company.

"Today I want to give credit where credit is due and I want to congratulate Mr. Bezos on doing exactly the right thing", Sanders said in a press release Tuesday.

Amazon's current minimum hourly wage starts at around $11 and analysts said the raise would cost it $1 billion or less annually and be offset by a recent $20 increase in the cost of Prime memberships. The online giant is the country's second-largest private employer, behind Walmart.

"At $7.25 the federal minimum wage is a poverty wage".

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Amazon's senior vice president says they will be working to gain Congressional support to raise the federal minimum wage, which has been $7.25 for almost a decade.

Whatever the economic impact, minimum wage increases are popular with Americans.

The Obama administration had called for raising the minimum wage to $10.10, but the proposal went nowhere during an era of divided government.

It's worth pointing out that the $15 hourly wage is not an arbitrary number.

Amazon, which became the second company after Apple to cross $1 trillion in market value last month, paid its USA employees on average $34,123 a year ago. The proposed law says companies that don't pay a living wage should have to reimburse the tax authorities for the federal benefits paid out to their low-wage workers.

Yet, despite the tight U.S. 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. Labor activists have been pushing for a $15 minimum wage for some time, and for instance, picketed fast food chains to pressure them to raise wages.

Amazon has raised the pay of thousands of workers in the United Kingdom and USA, after coming under increasing fire from campaigners over its low wages.

Amazon raising minimum wage to $15 per hour starting next month