In his annual letter to shareholders, Amazon CEO and founder Jeff Bezos throws in a message to his company’s retail competitors, urging them to start a price war on the minimum wage they pay their employees. Amazon moved to a $15 minimum wage in the United States at the end of last year — though it did so with cuts to benefits and stock grants that meant some employees would end up being paid less, which then led Amazon to announce a further boost in pay to rectify the situation. Still, in a country with a federal minimum hourly pay of $7.25, Amazon’s actions can be considered progressive.
“Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage,” Bezos writes. “Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.”
In June of this year, Target plans to bump its minimum hourly wage to $13 per hour (from the current $12 per hour), ahead of a move to $15 per hour by the end of 2020. Walmart’s minimum wage is $11 per hour. Costco, citing a boost in sales, announced a move to $15 per hour in March. All of these moves are driven, in larger or smaller part, by a highly competitive jobs market, with US unemployment currently measured at 3.8 percent.
With workers harder to find and keep, all retailers are having to spend more on staff, and Walmart is especially sensitive to that, given its massive overhead related to retail locations, and that it employs more than 1.5 million people in the US and more than 2.2 million worldwide. Amazon’s wage increase last year, by contrast, benefited 350,000 employees. The difference in workforce size and overhead costs is part of the reason why Amazon can be more aggressive with its pay increases.
The genius of Bezos’ challenge today is that he wins no matter what. If others go to $15 per hour, he can claim Amazon pushed them to it; if they go beyond that number, that means Amazon’s employees are suddenly cheaper than the competition’s; and if no one else budges, Amazon claims the moral high ground inherent in having a higher minimum pay than its rivals. Never mind what working conditions at Amazon warehouses might be like.