Amazon Will Raise Its Minimum Wage To $15 For All 350,000 US Workers (recode.net)

Amazon said Tuesday it's raising the minimum wage for all 350,000 of its U.S. employees to $15, effective next month. From a report: The new pay threshold will go into effect Nov. 1 and impact all full-time, temporary and seasonal workers across the company's U.S. warehouse and customer service teams as well as Whole Foods, the company said in a blog post. It did not disclose what its current minimum pay wage is for U.S. workers, perhaps in part because there is not one set rate. "We listened to our critics, thought hard about what we wanted to do, and decided we want to lead," Amazon founder and CEO Jeff Bezos said in a statement. "We're excited about this change and encourage our competitors and other large employers to join us." Alongside the cash compensation bump, Amazon said it will eventually eliminate its practice of granting stock to these workers and will instead institute a program that allows them to purchase Amazon stock through the company. The announcement comes as Amazon faces increased criticism over its pay and treatment of warehouse workers. Senator Bernie Sanders, in particular, has been relentless in his criticism of Amazon over the last few months, proposing a bill that would tax the company as a penalty for having workers who need food stamps and other public assistance to make ends meet.

Comments

2nd 18th century

[Errol backfiring]

... for having workers who need food stamps and other public assistance to make ends meet.

So, in effect, nothing has changed in 300 years. This is work ethics from the steam age.

This is not helpful

[JackieBrown]

Doing something like this across the board makes no sense since so many locations have completely different costs of living.

Some areas, this will be so over paid that it will cause prices to rise as other companies start having to match the wages.

In other areas, 15 is not even close to meeting a living wage that it will do nothing to help.

Re:This is not helpful

[hispeedzintarwebz]

I think the issue that would arise is that (in a vacuum) the cost of that bread is dependent on paying bakery workers $7.50 an hour, and if the minimum wage was determined to be $15, then the labor cost increases the cost of that bread, which has to be adjusted for either in terms of quality/quantity of materials, or in an increased overall price. Suddenly the $15 bread-adjusted minimum wage has to be increased, and so on. Bread is cheap, so it's sort of an abstract example - but it's still a matter of labor value compared to the value of what the labor creates. They are certainly tied to each other, but not at parity. At least that's the economic argument - I'm sure there are plenty who would dispute it. And I'm sure it doesn't always hold true, and it doesn't account for government subsidies, etc. You're right, it's not a single shot solution, but it's an interesting thought. I wonder how something like that could happen but also not result in price increases when the market determines that the value of someone making bread is less than the value of the bread itself. I would argue that if companies weren't subsidized both in tax breaks and in not having to pay higher wages (due to knowing that their employees can get benefits to fund the gap) that they would be forced to compete more on wages and benefits, but that too is in a vacuum. I would be curious to see what an Amazon with no tax incentives or minimum wage, competing with other companies with neither, would fare and at what level their wages would end up.

Re:This is not helpful

[jellomizer]

So people who live in a populated area, with a lot of job opportunity (high price areas) will move from living in abject poverty to just poverty.
The people who live in a less populated area, with little other job opportunities (low price areas) can now have a comfortable life style.

Perhaps there should be more effort in finding way to lower cost of living in Cities, vs. finding ways to improve property costs (AKA raising the cost of living)

Re:This is not helpful

[AmiMoJo]

Wages tend to be a small part of the cost of most goods though. When you look at he volume of bread coming out of factories and the number of people working there, wages don't contribute much to the sale price.

Re:This is not helpful

[jeff4747]

In most of those examples, there is still an underlying labor cost.

And no one is disputing that. What we are disputing is your attempt to make that labor cost a large part of the overall cost. And it simply isn't.

In the end, the vast majority of the cost of any goods are labor.

[Citation Required]

Let's look at some numbers instead. Raising the minimum wage from $7.25 to $15 is a more than 100% increase. So what affect would that ~100% increase have on prices? Well, let's look at the worst-case scenario: Fast food. Because unlike all your examples, a significant percentage of the costs in a fast food restaurant is wages.

That 100% increase in wages translates to....a 4% increase in the cost of the food. Or about 17 cents for a Big Mac.

If a 100% increase in wages only yields a 4% increase in one of the most wage-intensive industries in the country, we probably shouldn't be worried much about the effect on the price of milling wheat into flour.

Re:This is not helpful

[squiggleslash]

I'm not sure what you're saying is 100% true, but that said, the difference between the lowest and highest paid in most companies means that the wages of the bottom 50-80% of the company's employees are rarely a significant part of the sale price.

To put it another way, if you want to reduce costs in most modern corporations, you'd achieve more by firing half the top executives than half the people who do the work.

Re:This is not helpful

[jeff4747]

That will increase the costs throughout the entire supply chain.

Here's what you're desperately skipping over:

It will increase the costs throughout the entire supply chain by a trivial amount because wages are a tiny fraction of the costs in the supply chain.

You keep insisting that the increase will be large because you keep mistakenly thinking wages are a large expense. They aren't. That 4% increase on a 106% increase in wages is one of the worst-case scenarios.

When you sum all of the costs down the supply chain, labor is the dominant force.

Once again [Citation Required].

Re:A living wage for workers?

[Oswald McWeany]

but that's SOCALISM!!

In this case it is capitalism because Amazon is doing it to keep hold of it's workforce and probably to have a better public image so it will sell more crap. The government isn't forcing Amazon's hand so it is capitalism.

as a last-resort

[nimbius]

https://boingboing.net/2018/09... this was done to short-circuit the high likelyhood of unionization at Amazon factories, which could then risk spreading to the corporation as a whole (unionized developers, SRE's, managers.)

Re:as a last-resort

[squiggleslash]

...which is fine. Anti-union campaigns that involve smearing unions and firing unionization advocates suck. Anti-union campaigns that involve improving conditions for workers so they don't need to unionize are a good thing. Even the unions will tell you that.

How come...

[Comboman]

How come no one worries about inflation due to the constantly rising wages of CEOs and Wall Street douche-bags? How come no one worries about inflation due to tax breaks for the wealthy? It's a specious argument anyway, since the employees will have minimal extra spending money to drive inflation. The difference will be that all their money is coming from their employer instead of their wages being subsidized by government programs like foodstamps.

Re:A living wage for workers?

[AuMatar]

No, its the threat of government intervention like the tax mentioned that would likely cost it more in the end. Don't get me wrong, I'm happy with this result. But don't pretend they would have done this absent the likelihood of higher penalties.

Re:A living wage for workers?

[Riceballsan]

I don't think it's even to keep the workforce. If they were losing workers they'd have done it a while ago. I think they are doing it to prevent laws from forcing them to do it, as if a law passes forcing them to do it, and the law turns out good for the economy and the common people, the laws might adjust for inflation. Meanwhile if they do it on their own they can say "see we didn't need a law, we did it on our own", then the law fails, and they can hope nobody draws attention when they don't re-adjust for inflation when 15/hr becomes starvation wage.

Re:This will spur inflation

[jellomizer]

Historically minimum wage changes has small effect on inflation.
First there is a factor is someone gets paid more, they tend to work harder. So a business doesn't need to hire more employees to expand. As employees who are getting paid more, are in less stress of their finances. So a lot of the costs are balanced by efficiency.
Second being minimum wage, you do not have a lot of buying power. For the most part the extra wages goes into things that you should have, but have been putting off. Oil change to your car (if they have one), Paying Rent on time, healthier food, medicine and healthcare. A lot of this is currently being paid by government services, which would change to them buying it themselves.
Third Most people do not stay at minimum wage for too long. My first job in High School paid minimum wage, I got a raise after a month. Because I wasn't a slacker. Most companies if they find an employee they don't want to leave will pay more them minimum wage.
Forth, there is limit on the Trickle effect both trickle up and trickle down. Minimum wage increase is a trickle up. Which the lowest may get a 50% increase, then 25% increase for the next level (as to not have them at back down at minimum wage) then 12%, 6%, 3%, 1% then they stop. So Minimum wage will only increase anyone who is getting paid under $20 per hour.

Re:A living wage for workers?

[Alain Williams]

A living wage is not the same as minimum wage, it is an idea that has been around in the UK for some time. What is the living wage depends on all sorts of things, one of which is where you live. London is the most expensive place in England at £10.20 (== $13.30), so Amazon's $15 is OK (which I found surprising).

Why would Amazon want to "lead" to $15?

[GregMmm]

Why lead and suggest other companies go to $15 for their minimum pay? At this time they will be paying a premium for workers. This is just good business. They will retain workers better, and attract better workers. Turns out if you pay more you get to pick from more applicants with better skills.

So why would you want your competition to meet the same pay? I suppose this is simply a political move. Looks good if you go first. Unfortunately, in the business world this will be forgotten by next Monday.

Not sure what the impact will be about the stock grants their losing. Maybe they will give a discounted stock purchase plan, which might compensate the lost income. Also, you don't need to hold the stock grants till they mature, usually like 4 years for all of the grant.

Re:A living wage for workers?

[ShanghaiBill]

No, its the threat of government intervention like the tax mentioned

There is little chance of government intervention, and ZERO chance of Bernie's idiotic tax on hiring poor people.

Ford and the Fed

[harvey the nerd]

The $15 wage floor is slightly reminescent of Henry Ford's "$5 day" policy, which bought Ford labor peace and productivity for a few years. Soon enough, others were able to match or exceed Ford's labor rates. Some of it was fueled by productivity and sales, but a lot of it represented more rapid expansion of M2 by banks and the Fed in the 1910s. Forbes on Ford's $5 day NPR

The frightening aspect is price inflation that has already occurred and will accompany a broader application like a $15 minimum wage. Such a tremendous rising wage is a symptom of expansion of credit and money.printing, courtesy of the Federal Reserve since 2008.

Re:Ford and the Fed

[bkmoore]

$5 for an eight hour shift in 1914 dollars would be $123.26 in 2018. $15 times 8 hours is $120. Ford in 1914 paid better than Amazon in 2018.

Re:Ford and the Fed

[gtall]

Not only the Fed, Congress and our alleged Presidents went along with massive reductions in tax receipts and massive increases in spending. Inflation will really bite because to tame it will require the Fed raise interest rates. In a year or so, the U.S. will spend more every year on servicing its debt than it spends on the military.

Now, let us all bow our heads in remembrance of those solemn vows Republicans gave us that the tax cut will pay for itself in the hopes we fail to notice the deficit going to over a Trillion dollars every year. Remember also that Trump once claimed he was the kind of debt. Also remember that he destroys all that he touches.

Re:Ford and the Fed

[bkmoore]

They had 10-11 hour shifts back then.

The standard shift was nine hours in 1914 and probably included a break at some point. Originally the daily wage was $2.50 for a nine hour shift. Ford had to hire 52,000 men (there were no women back then) to maintain a staffing level of 14,000 in the production plant. The high rate of turnover was causing very serious production problems and costing Ford a lot more money than doubling the wages would. Ford doubled the wage to $5, reduced turnover and saved a lot of money.

Re:Ford and the Fed

[Muros]

A different way to calculate the value of $5 in 1915 would be to compare it to house prices. A 48 week year of 5 days a week at $5 would net you $1200, and house prices were ~$3200. So Ford paid around 37.5% the median house price per year. Current median US house price is roughly $200k, so if Bezos wants to deserve a comparison to Ford he needs to up wages to about $39 an hour.

Re:Ford and the Fed

[ShanghaiBill]

The median house in America today is more than twice the size it was in 1914. If you calculate by square foot of housing, wages today are about the same.

But housing prices have climbed faster than general inflation for most of the last century, so it is not a good benchmark for comparing wages.

Re:Ford and the Fed

[Lost Race]

Current median US house price is roughly $200k, so if Bezos wants to deserve a comparison to Ford he needs to up wages to about $39 an hour.

In 1915, $5 would buy a quarter ounce of gold. To keep up with Ford, Bezos would have to pay ... 1/32 oz/hour ... $1200/oz ... $37.50 an hour. I'd say your math checks out!

Re:Ford and the Fed

[hackertourist]

House prices these days are based on two incomes per household, in 1915 that would have been 1 income/household. House prices have been climbing faster than inflation for a long time.

Prices only really rise

[rsilvergun]

in response to wage gains if there aren't matching productivity gains. We've doubled productivity in the last 20 years while wages remained the same or went down. There is a _lot_ of room for wage growth and better standards of living in America.

If I may rant a bit here, I do wish we could get rid of this pernicious lie that raising wages is pointless because it just means prices will go up. It's so obviously wrong on the face of it. If such a thing were true we'd never have gotten out of the gilded age.

Re:Prices only really rise

[TheSync]

"We've doubled productivity in the last 20 years while wages remained the same or went down. "

Average non-farm real output of workers per hour has risen by 50% over the least 20 years.

Average non-farm real total compensation of workers per hour has risen by 20% over the last 20 years.

The question, though, is what is the distribution of those two items. Has the rise in average productivity been driven by the productivity of a few, high-earning non-average workers, or has productivity risen for all workers? Also, what portion of productivity increase has come from capital investment in equipment as opposed to improved labor skills?

These are US numbers as well. It is possible that US productivity increases may be due to improvements in labor and capital in countries like China (where labor has seen tremendous wage increases) which provide inputs into US companies.

That's the trouble with the American economy

[rsilvergun]

it's workers can't afford the goods they're making. An entry level 4 door sedan that's not a death mobile like the Sentra retails for $17k. I've got a 4 year old one and they're kind of junky on the inside but they do well in crashes (which the Versa does not). That's $300/mo (after taxes and the like) + $100 for insurance (more if you've had an accident recently). Plus at $15/hr you need to come up with 1.75 month's pay for a downpayment.

Yeah, you can buy used, but the price of used cars keeps going up since nobody can afford new.

Re:A living wage for workers?

[ShanghaiBill]

How much money you need also depends on how many kids you have, and if you are a sole breadwinner for your household.

Should employers be required to pay more to people with more kids?

What if an employee breaks up with his girlfriend, and she moves out, taking her income with her? Now he needs more money to pay rent. Should he get an automatic raise?

Re:A living wage for workers?

[mpercy]

WSJ reported today that "Amazon, which has faced criticism about pay and benefits, said it would raise the minimum wage for all U.S. workers. The company will also start lobbying Congress for an increase in the federal minimum wage, which is currently $7.25 an hour"

Might not be mentioned in the original summary or article.

Re:This will spur inflation

[MrKaos]

trickle up and trickle down

Any additional income paid to people will simply be spent. I think this was researched in Texas where they found pay rises generate a lot of economic activity.

Paying people more money is a way to get more money into circulation instead of it sitting inside a bank account doing nothing.

As long as productivity is going up

[rsilvergun]

price inflation isn't an issue. And productivity has doubled in the last 20 years and continues to climb (thanks to computers, better software and automation).

If anything we need shorter work weeks and higher pay to absorb job losses due to increased productivity. At my job it's been the same 3 man team for 15 years (with folks coming and going here and there) and our user base continues to increase. We haven't had to hire more because the software keeps improving so there's less to break, keeping the amount of work pretty consistent even as the number of users we support climbs.

Re:As long as productivity is going up

[ShanghaiBill]

And productivity has doubled in the last 20 years

In America, productivity has gone up about 30% in the last 20 years.

... and continues to climb

In America, productivity growth has been mostly stagnant since 2004.

If anything we need shorter work weeks and higher pay to absorb job losses due to increased productivity.

There is little historical evidence that increased productivity causes job losses. There is much more evidence for the opposite, and productivity improvements are more often than not correlated with rising labor force participation rates.

As workers become more productive, it is more profitable to employ them, so demand for labor goes UP, not down.

Countries with low productivity growth tend to have higher unemployment.

Predictions of job losses from productivity improvements are usually based on the zero-sum Lump of Labor Fallacy.

Um, it's $16/hour in Seattle

[WillAffleckUW]

Talk about being behind the curve, Amazon.

Re:A living wage for workers?

[sjames]

You mean at an age where we don't believe they are mature enough to vote, make decisions about cigarettes and alcohol, or enter into binding contracts?

What's next from you? Making people carry through with what they said they wanted to be when they were four years old?

What of people who were doing everything "right" who got derailed by circumstances beyond their control? Or does that not exist in your odd little world?

Re:A living wage for workers?

[sjames]

Yes, so outrageously expensive that Amazon is voluntarily increasing wages to match the goal.

But since you seem content to use your tax dollars to supplement inadequate pay, why not just finish the job and implement the basic income?

Re: A living wage for workers?

[datavirtue]

This is going to clobber thier retail competition during the holidays. This is enough to put a lot of them out of business. They are fucked.

Re:A living wage for workers?

[ShanghaiBill]

What of people who were doing everything "right" who got derailed by circumstances beyond their control?

An obvious way to help these people is to make it EASIER for employers to hire them and give them a chance to turn their lives around. For instance, the EITC is an effective program that has helped millions of people earn enough to support their families.

But Bernie's poverty tax does the exact opposite. It penalizes companies for hiring the people most in need of a job. It is an insanely stupid proposal, and I can't believe that anyone takes it seriously.

It is a myth that "low pay" is a significant cause of poverty. The real problem is NO PAY. Only 9 percent of adults living below the poverty line work full time.

If Amazon hires a poor single mother, it is idiotic to say that somehow Amazon "caused" her to be poor. The truth is, that by giving her a job, they are helping her take the first step out of poverty. Punishing them for doing so makes no sense.

Poverty is a difficult societal problem, and we should all bear the cost of alleviating it. Dumping the cost onto the companies that are providing much needed entry level jobs, and thus disincentivizing them from doing so, is counter-productive.

Re:A living wage for workers?

[sjames]

So basic income it is. Easier to administer and actually closes the gap. It also avoids rewarding employers for paying less than the work is worth and expecting the rest of society to pay enough to keep their workers from dropping dead.

Or were you thinking of lowering the minimum wage to a penny because surely working 80 hours a week for a cheeseburger will help get people out of poverty.

In days of yore

[Hognoxious]

You supposed to have learned something useful while still a kid.

Like the difference between "you" and "you're"?

If your hiring on the cheap

Or the difference between "you're" and "your"?

Re:A living wage for workers?

[sjames]

So your main upset is that they don't hurry up and die?

You might find that they are willing to violently oppose your nice plan for them.

If you measure by manufacturing output

[rsilvergun]

you'll see the doubling. If you look at overall stats the service economy makes it hard to measure, leading to lower figures.

And we most certainly have had technology unemployment in the past. The Luddites weren't just overly conservative, they were losing their livelihoods. We produce twice as much with 2/3rds the workforce.

When there are new jobs they're low paying service sector jobs. But the trouble there is there's less money in the economy, so less money floating around and an overall slowdown in the economy. That's exactly what we're seeing if you take Wallstreet out of the picture. It's part of a broader trend taking us back to the gilded age of income inequality and aristocracy. Folks see it happening but don't know what to do...

Re:Propped up by AWS?

[Actually, I do RTFA]

It's not "other retailers" as a vague threat. WalMart is stepping up their game online, and is starting to appear as a real threat (I've started comparison shopping between the two, for instance.) Raising the minimum wage to $15/hr affects 17,000 full time Amazon employees, but more than 100x for WalMart, at least 1,700,000