With growing income inequality and fears of losing low-skilled jobs to automation and new technologies like artificial intelligence, there have been increasing calls throughout the country for a “living wage.”
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2016 Democratic presidential candidate Bernie Sanders made the concept a pillar of his run for the Democratic nomination during the last national election.
Headed by the world’s richest person—Jeff Bezos with a net worth of $112 billion—Amazon, in particular, has faced criticism for what is perceived as poor pay for its low-skilled workers.
But on October 2, 2018, the company took a major step in the living wage direction when it announced that it would be raising the minimum wage for its United States employees to $15 per hour.
That raise will apply to more than 250,000 workers, including employees of recently acquired Whole Foods and 100,000 seasonal workers, according to a New York Times article by Karen Weise. The pay raise went into effect on November 1, 2018.
Weise writes that politics may have a lot to do with Amazon’s move. “Employment has become one of Amazon’s most potent political vulnerabilities as well as its most important political message,” she writes. “The shift to online shopping, led by Amazon, has forced many retailers like Toys R Us and Sears to shut down or lay off workers across the country. President Trump has criticized the company for hurting traditional retailers, and some lawmakers have called for the company to be broken up.”
At the same time that Amazon’s impact on the retail world has cost jobs in some sectors, the company itself employs roughly 575,000 worldwide, an increase of more than 50% from last year. Not to mention the seasonal boost in hiring many retailers experience during the end-of-the-year holiday season.
As a huge employer—and competitor for workers as well as market share—Amazon’s move could have interesting implications for other retail employers looking to keep pace as much as they can with the online retail giant.
Of course, it’s not just the bottom rung of a company’s pay scale that will be impacted by such a move. Ripples will be felt across the organization as all salaries will need to be adjusted to maintain equity for all.
In considering such a move, companies must look at both internal and external equity and, in the tight market many employers now face, consider how raising wages will provide a more competitive edge and the ability to attract and retain top talent.