The retail giant follows the lead of companies like Target, Costco and The Gap increasing their minimum wage for workers
Amazon employees are getting a raise.
The ecommerce giant announced Tuesday that it’s raising its minimum wage to $15 an hour for all U.S. employees, which includes its 250,000 permanent workers, as well as 100,000 seasonal employees. That pay hike is more than double the federal minimum wage of $7.25, and will go into effect on Nov. 1, the company said.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Amazon’s founder and CEO Jeff Bezos said in a statement on Amazon’s blog. “We’re excited about this change and encourage our competitors and other large employers to join us.”
Bezos — the richest man in the world whose company’s market value hit $1 trillion last month (it’s only the second American company, after Apple, to do so) — was under fire after Amazon revealed workers on average made $34,123 last year and a median pay of $28,446. Bezos, meanwhile, has a total net worth of $165 billion, according to Bloomberg. Now, the e-commerce giant says its public policy team will start advocating for an increase in the federal minimum wage.
“We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago,” said Jay Carney, Senior Vice President of Amazon Global Corporate Affairs. “We intend to advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.”
Amazon’s minimum hourly pay starts at around $11 currently. In addition to the increase wages, all full-time Amazon employees who work more than 20 hours per week will continue to receive benefits like 401(k) matching, healthcare and up to 20 weeks of paid parental leave along with career training opportunities.
Amazon is the latest company to give workers a pay bump. Last year, Target announced it would raise its minimum wage to $11 an hour in October at all U.S. stores, and up to $15 by 2020. The pay hike applied to the 100,000 seasonal employees it hired for the holidays in 2017.
“It puts a little more pressure on its rivals,” Peter Cappelli, an economist at the Wharton School of Business at University of Pennsylvania, tells Moneyish. “You can get a real benefit by paying [employees] a little bit more than others are paying.
Walmart increased its minimum wage to $10 per hour in 2016. And chains like Lowe’s Home Improvement has also upped wages to around $12 an hour, while states like Massachusetts have set the minimum wage at $11 an hour and Washington pays a starting salary of $11.50 for all workers.
The federal minimum wage of $7.25 hasn’t changed since 2009 and Cappelli says he suspects that “a lot of the retail competitors and fast food chains are not going to follow because they’re not after the same level of customer service.”
Over the last several years, many city and county governments have voted to raise their local minimum wage and so far, dozens of states including California ($10.50), Connecticut ($10.10), Massachusetts ($11), New York City ($13.50), and Vermont ($10) have been passing laws requiring cities to abide by the statewide minimums. About 20.6 million Americans are “near minimum wage workers,” according to Pew Research Center.
Though some of the entry level jobs paying above minimum wage may be temporary, they provide a vital source of skills and income for workers who are looking for full-time employment.
“One of the big differences now is that a lot of people are trying to live on these jobs as opposed to a generation ago when we thought it was mainly students or part-time people in retail,” notes Cappelli.
Increasing the minimum wage at retailers like Amazon and Target could mean a slight price hike on products for customers. “It’s more likely to get passed on on to consumers. Say you’re raising their wages 10%, you might see a 1% increase in the cost of the things you’re buying,” he says. “I think that’s not such a bad thing that we have to pay slightly more for retail products. Higher wages means more consumption, that’s good for the economy,” he adds.
Here are six other companies that pay above minimum wage for entry-level jobs:
Ben & Jerry’s: $17.26 per hour
The Gap: $11.86 per hour
The Home Depot: $11.09 per hour
Nordstrom: $14.96 per hour
Costco Wholesale: $13.14 per hour
Lowe’s Home Improvement: $12.95 per hour
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