17 Oct

Amazon Edits Wage Hike Plan

WRITTEN BY Ruchi Gupta

Long-time workers’ wage climbing by $1.25 an hour

Amazon (AMZN) has revised its pay plan a bit to enhance compensation for long-time workers after controversy resulted from its initial wage hike announcement. The company will still pay a starting wage of $15 an hour to its hourly US workforce as it had announced. But with an eye on its veteran workers, Amazon has decided to increase wages for employees who already make $15 an hour. Under the revised pay plan, the hourly wage for employees who already earn $15 an hour is going up by $1.25 an hour. Those long-time workers had been promised a wage increase of $1.00 an hour in the initial plan, according to Bloomberg.

Amazon Edits Wage Hike Plan

$3,000 tenure milestone bonus

Amazon’s enhanced pay plan for hourly workers, which is scheduled to take effect on November 1, has eliminated bonuses and stock awards. But that triggered backlash, particularly from Amazon’s longtime employees who feared they would lose money if the company removed the benefits. So the revised pay plan addresses this issue, and Amazon says workers would earn more under the new plan. For example, workers with good attendance in the typically busy month of December can also walk away with a $100 bonus. Additionally, workers can unlock up to $3,000 in cash bonuses for staying with Amazon for 20 years. Amazon also plans to introduce a stock purchase program next year for employees who want to invest in its stock.

Amazon’s costs in the spotlight

However, the wage hike has put Amazon’s costs in the spotlight, as they could go up as the company is set to pay more in hourly wages. Amazon’s expenses, including cost of sales, rose 33.8% YoY (year-over-year) to $49.9 billion in the second quarter.

In that period, expenses increased 122.9% YoY for Alibaba (BABA), 31.7% YoY for JD.com (JD), and 1.7% YoY for Groupon (GRPN). Etsy’s (ETSY) expenses increased 5.5% YoY in the second quarter.

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