Amazon finds high-wage religion and now wants to convert everyone else

Workers at wish fulfillment center are about to get a raise.
Workers at wish fulfillment center are about to get a raise.
Image: Reuters
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Amazon, the company associated with grueling work and low wages (all to make our wish fulfillment possible), is now paying all of its workers at least $15 an hour. It claims after paying benefits, full time employees were already earning $15 or more. The announcement mainly impacts part-time and contract workers. Amazon is also lobbying Washington to increase the national minimum wage. It seems the corporation has found high-wage religion. But there are reasons to doubt they are true believers.

Amazon has good business reasons to increase their wage. Employees are threatening to unionize. The labor market is tight and it may need to offer more money to attract workers. In that case $15 an hour for temporary workers is not so impressive. The minimum wage is increasing anyway, including in Washington state, where many Amazon workers are located.  If the economy worsens, it is comparatively easier to cut temporary workers’ pay or find cheaper replacements, like machines or other temp workers. Increasing the wage of a permanent employee is more meaningful. Some studies also show that higher minimum wages tend to come with cuts to other kinds of compensation, like benefits or free parking.

Others are skeptical of Amazon’s call to increase the federal minimum wage. Economist David Neumark questions if this is a new found social conscience, or a ploy to increase the costs their competitors face. Smaller businesses, or any retail businesses, struggling to make a small profit and serves economically depressed areas may not be able to afford a $15 wage. Independent retail already is barely surviving in many communities. Burdening them with the higher labor costs, which a profitable company like Amazon can afford, could be another tactic to destroy them completely.

The good news is higher pay is coming for many Amazon workers. What it will means for everyone else is still uncertain.