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Why Amazon Raised Wages to $15 per Hour

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Amazon raises its minimum wage

On October 2, Amazon (AMZN) announced a minimum wage hike to $15 for all US employees, to be implemented next month. The hike is set to come ahead of the holiday season and benefit Amazon’s ~250,000 part-time and temporary employees and ~100,000 seasonal employees. Also, employees who are already paid $15 per hour will get a pay raise.

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Sanders’s pressure on Amazon

The wage hike came after prolonged criticism of Amazon’s low wages and reported treatment of hourly employees at warehouses, resulting in strikes by employees. Much of the criticism has target Amazon’s CEO, Jeff Bezos, the wealthiest person in the world on the Bloomberg Billionaires Index. As of October 4, Bezos had a net worth of $161 billion, while Microsoft’s (MSFT) Bill Gates and Berkshire Hathaway’s (BRK.B) Warren Buffett were worth $99.4 billion and $88.8 billion, respectively.

Last month, Senator Bernie Sanders introduced a bill, the Stop BEZOS[1. Stop Bad Employers by Zeroing Out Subsidies] Act, to pressure large corporations with at least 500 employees to pay the government what their low-wage workers receive for food stamps, public housing, and other government healthcare benefits. Amazon has defended itself against Sanders’s criticism, stating his claims about the company were incorrect and misleading.

Effects of raised wages

Amazon’s move to raise its minimum wage, appreciated by Sanders and the White House, is expected to boost employees’ morale ahead of the holiday season. However, it could also increase the company’s expenses and hurt profits.

The wage hike could also pressure rival retail companies such as Target (TGT) and Walmart (WMT) to raise their minimum wage. Walmart increased its minimum wage to $11 per hour in early January. Target, which raised its minimum wage to $11 per hour last September, is set to raise it to $15 by 2020.

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