“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead.”
With those words from Amazon CEO Jeff Bezos, the tech giant this morning announced that it will increase its minimum wage for all of its U.S. employees effective Nov. 1 to $15 per hour, and vowed to lobby Congress to increase the current federal minimum wage from its current rate of $7.25.
The surprise move follows a high-profile dispute between Amazon and U.S. Sen. Bernie Sanders over pay and working conditions for the company’s warehouse workers.
Sanders in September introduced legislation called the Stop BEZOS Act, which would force big companies to cover the costs of federal assistance their employees receive. Bezos has become the richest person in the world with a net worth of more than $160 billion, and recently announced a $2 billion philanthropic fund for homelessness and preschool education.
The move signals yet again that Bezos is becoming more active in the national scene and recognizing his role in the national political landscape.
“We’re excited about this change and encourage our competitors and other large employers to join us,” Bezos said in the announcement this morning.
The move impacts more than 250,000 of the company’s employees, including workers at Whole Foods Market, which Amazon acquired for $13.7 billion last year. Amazon said the new minimum wage also will apply to seasonal workers, expected to number more than 100,000 this holiday.
The company has more than 575,000 employees worldwide, including more than 40,000 at its Seattle headquarters, and is preparing to announce where it plans to locate its $5 billion “HQ2” second headquarters, where it will ultimately employ up to 50,000 people.
In an FAQ, Amazon said the additional expense will be reflected in its earnings guidance, signaling a hit to the bottom line, but so far, at least, the company’s stock price is up nearly 1 percent in pre-market trading, at more than 2,006 per share.
Seattle has been at the epicenter of the minimum wage discussion, with legislators in Amazon’s hometown enacting a bill to boost the minimum wage to $15 per hour in 2015, with some smaller businesses in the city not having to comply with the new initiative until 2024.
Public policy officials and economists have debated the impacts of boosting the minimum wage, with the University of Pennsylvania analyzing the issue in a report earlier this year, noting that two major studies came to opposite conclusions, “one concluding that it has had a positive effect on economic activity and employment and the other stating that it has made the labor market far too rigid.”
Seattle venture capitalist and early Amazon investor Nick Hanauer has been one of the most vocal proponents of boosting the minimum wage to $15 per hour. His advocacy work helped Seattle reach that goal.
“Jeff Bezos did an incredibly fine and important thing today,” Hanauer told GeekWire via email. “Obviously, it is great news for Amazon workers. But even more significantly, his pledge to engage in advocating for higher wage standards shows remarkable and rare leadership. I’m super proud of him.”
The move by Amazon is already prompting calls for another iconic Seattle company, Starbucks, to follow suit.
Seattle's #Amazon leads! #Starbucks, where are you?? – Amazon raises its minimum wage to $15/hour, vows to lead push for higher U.S. minimum wage https://t.co/PC7sxj0O8X via @GeekWire
— Ed Lazowska (@lazowska) October 2, 2018
“My message is that the counterclaim — which is that if wages go up, employment will go down —nis a scam. It’s a con job. It’s an intimidation tactic,” Hanauer noted three years ago. “There is absolutely no evidence anywhere that it’s true. On the contrary, where you find high wages you usually find low unemployment.”
Developing story, more to come.
