In a previous post, we discussed Amazon’s recent announcement to raise the minimum wage of all U.S. employees to $15 per hour on November 1, 2018. The move was lauded by the likes of 2018 Democratic presidential hopeful and Vermont Senator Bernie Sanders.
But just a couple of days after the online retail giant made its wage increase announcement, it made a follow-up announcement that sheds some light on how it hopes to pay for that wage increase.
Bait and Switch?
“Amazon.com Inc. is eliminating monthly bonuses and stock awards for warehouse workers and other hourly employees after the company pledged this week to raise pay to at least $15 an hour,” Spenser Soper wrote in an October 3, 2018, article for Bloomberg. “Warehouse workers for the e-commerce giant in the U.S. were eligible in the past for monthly bonuses that could total hundreds of dollars per month as well as stock awards, said two people familiar with Amazon’s pay policies. The company informed those employees Wednesday that it’s eliminating both of those compensation categories to help pay for the raises, the people said.”
Still, Amazon said in a statement that even with the elimination of the bonus and stock perks, employees in the hourly operations and customer-service areas of its business will still see their overall total compensation increase, although it’s unclear by how much.
Impact on Recruitment and Retention
In our previous post, we mentioned how Amazon’s minimum wage increase is likely to be a boon to its recruiting efforts. But how, if at all, will this be offset by the subsequent announcement regarding the loss of bonuses and stock awards?
Soper, citing comments from San Diego State University Professor David DeBoskey, indicates that a higher hourly wage that new workers immediately receive is a better recruiting tool in a tight labor market than stock options that take years to materialize.
He says this is especially true for those in the warehousing industry, where there is relatively high turnover.
Pay Practices Deserve Careful Consideration
A company of Amazon’s size and financial strength could be assumed to carefully consider the short- and longer-term impacts of any pay decisions. Still, pay practices are complex—as are the people impacted by those practices. How this situation plays out for Amazon and their current and potential future staff will be interesting to watch.