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Amazon’s triumphant pay raise is also a political play

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The move holds heavy significance for employees and the company’s own political agenda

Amazon Opens New Fulfillment Center In Aurora, Colorado Photo by Rick T. Wilking/Getty Images

After months of mounting political pressure, Amazon announced on Tuesday that it would set a new company minimum wage of $15 per hour, more than doubling the federal minimum wage. It was an unexpected move from a company that has traditionally been more concerned with cutting costs. In a statement, Amazon founder and CEO Jeff Bezos described it as a moral choice. “We listened to our critics,” Bezos said, “thought hard about what we wanted to do, and decided we want to lead.”

But Bezos’ moral awakening is also a canny political move. The wage increase comes amid unprecedented political scrutiny of tech giants — scrutiny that, so far, has focused on Facebook, Google, and Twitter rather than Amazon. At the same time, former employees and labor advocates have spent years calling out Amazon for poor wages and inhumane working conditions, criticism that is becoming increasingly influential in Washington. The tech backlash has put Amazon in an uncomfortable political spotlight, and raising wages lets the company and Bezos win back crucial support.

The decision was met with support from some of Amazon’s harshest critics. Sen. Bernie Sanders (I-VT) and Rep. Ro Khanna (D-CA) have spent the past few months advocating for wage increases, a campaign that included the introduction of Sanders’ Stop BEZOS Act. That bill, if approved, would work to punish large companies like Amazon by requiring them to pay a steep 100 percent tax on any aid its employees receive from the federal government.

Despite Sanders’ months of criticism and back-and-forth with the company over working conditions, the senator celebrated Amazon’s decision to raise its employees’ wages. “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 said in a statement. “Mr. Bezos and Amazon are helping to lead the way.”

Working conditions in Amazon’s fulfillment centers have long been a concern for labor activists. Employees reportedly receive very little break time and are often forced to urinate in trash cans because of a lack of bathroom breaks. Others apply for federal aid to make ends meet, a point that has drawn particular criticism. Employees have staged strikes on some of Amazon’s most important shopping dates to protest working conditions.

Stacy Mitchell, co-director at the Institute for Local Self-Reliance, says those criticisms may have been what forced Amazon to act. “Their customers are a lot of blue voters and a lot of urban liberals. I think they understand that when Sen. Sanders talks about something he has an audience of millions of people who are listening very closely. That was a big factor,” Mitchell says.

Amazon has also drawn criticism from President Trump. In March, the president fired off a series of tweets critiquing the company and its CEO for using the US Postal Service as its “Delivery Boy” and paying “little or no” state and local taxes. Yesterday’s move seems to have blunted at least some of that criticism, too. The White House’s economic adviser Larry Kudlow had a chance to respond to the company’s announcement in an interview with CNBC on Tuesday. The president’s counsel agreed with the company’s decision. “Good for them,” Kudlow said. “I’m in favor of higher wages.”

Just last month, a group of Whole Foods employees who were concerned for their jobs penned a letter to workers across nearly 500 separate grocers encouraging each one to unionize. Those seeking unionization cited worsening conditions and job losses following Amazon’s acquisition of the grocery chain last year. In a training video first reported by Gizmodo, the company has been actively silencing employee attempts to unionize by teaching new managers the “warning sign[s]” of labor organizing and instructing them on the reasons why Amazon believes it would hurt the company as a whole.

The timing of Tuesday’s announcement came as the political criticism grew louder and the labor market shrunk. Matt Stoller, a fellow at the Open Markets Institute, said the choice to raise employee wages could simply be the result of “super tight labor market.” According to the Bureau of Labor Statistics, the US unemployment rate sits at 3.9 percent as of August 2018. Amazon’s decision to raise wages could entice people to work for the company; especially as the holiday shopping seasons looms. The increase will begin on November 1st, only weeks before Black Friday.

More importantly, the e-commerce behemoth could be setting itself up for some good press to stave off any threats of an antitrust suit. Earlier last month, Sen. Elizabeth Warren (D-MA), who has floated the idea of a 2020 presidential run, suggested that Amazon should be split into its two constituent parts — a retailer and a platform — to fend off any anti-competitive concerns. Only days after Warren’s interview, the European Union launched its own antitrust probe into the company’s business tactics. The wage increase announcement helps to position Bezos as the sympathetic billionaire, and the antitrust probes may not seem as urgent to critics if the second largest employer in the country appears to prioritize its employees’ conditions and wages.

“Everything that the government does ultimately hinges on public support,” Mitchell says. “To the extent that you can try to maintain a good public opinion and distract people who have fundamental problems with your power, then the better chances you stand to stave off a congressional inquiry, a federal lawsuit, a lawsuit by a group of states.”