Amazon has decided to set the minimum wage for its US employees at $15 per hour while offering employees making more than that amount a $1 raise. Given that $15 per hour rate is generally regarded to be the approximate wage needed by an American working forty hours per week to maintain a minimal modern standard of living, Amazon’s leadership has essentially decided to guarantee its full-time workers an actual living wage. Recognizing warehouse workers, who will be the main class of Amazon workers impacted by this policy shift, typically make around $15 per hour, Amazon’s leadership has chosen to align the online retailer’s payroll with market expectations. The impact on Whole Foods retail employees may put pressure on other retailers to raise wages as well. In an usually move, Amazon's leadership has also called for US lawmakers to raise the US minimum wage to $15 per hour. Not only has this revitalized the ailing labor campaign for a $15 minimum wage, it has renewed the need to discuss the issues surrounding a minimum living wage.
What makes it so unusual for Amazon to push a national $15 per hour wage is that a higher starting wage offers Amazon a competitive advantage when it comes to recruiting new workers. Should the US adopt a minimum wage of $15 per hour, new hires at Amazon would be making minimum wage. Amazon would have to further increase its starting wage as well as offer far more generous raises, fringe benefits, and/or better working conditions to retain existing employees. That said, there are downsides to a high minimum wage that Amazon might hope to capitalize on. Low-revenue, low-profit businesses, as well as those suffering from economic inequality, cannot afford to employ a large workforce when they must pay their workers a high minimum wage. This can make it more difficult for businesses to grow. Many might even have to shrink to survive. As a retailer, Amazon is in competition with every retail business across the United States. Recognizing the influence of geographic inequality on physical retailers, Amazon can use a $15 per hour minimum wage to drive local competitors out of business and prevent chain retailers from challenging it.
Furthermore, Amazon has agreed to pay a minimum living wage, but that does not mean all of Amazon’s workers will see a living income. At the moment, Amazon is eliminating stock options and bonuses for warehouse workers to help pay for increased wages, but Amazon may decide to displace the cost of increased wages onto workers in others ways instead of trimming profits. This could mean increased reliance on automation, fewer hours for workers, and/or fewer workers. Amazon is, of course, particularly fond of technology solutions while increased reliance on machines generally translates into a decreased reliance on human workers. If Amazon takes this route, the best cause scenario would involve the creation of fewer future jobs. Amazon is a fast growing company that serves the global market, so it is possible for Amazon to absorb higher wages, maintain the size of its workforce, and continue to create new jobs. Amazon is, after all, not just a retailer. It is a highly innovative technology company and global conglomerate, so it has the wiggle room in its finances to shift the burden of higher labor costs. As such, it is in a better position to further labor interests than most other large employers and competitors like Walmart.
With all that in mind, $15 per hour is approximately the wage needed to work full-time and survive inside the United States, so it is about the true minimum cost of labor. When employers do not pay this amount, they are displacing the true cost of labor onto others. Ultimately, however, a business must be able to earn the cost of its employees’ wages, raw goods, and other expenses to pay employees any given amount. There is a reason automation has continually been used to eliminate jobs. There is a reason outsourcing has been used to cut and blunt growing costs. There is a reason that real wage growth has not kept pace with the actual modern cost of living or productivity increases. It is that business expenses have continued to rise while market forces have continually favored uses for business capital other than increased wages, i.e. growth, increased profits, suppressed consumer prices, and increased shareholder earnings. Although the productivity of US workers has continually risen, workers have had to show that they are the best investment in order to achieve any gains, which is something high-skilled workers can do a lot easier than lower-skilled workers.
Legislating a high minimum wage is one way to guarantee American workers can earn a living wage. If not done properly, it can result in fewer jobs and fewer hours for workers, particularly the low-skilled workers who most rely on a minimum wage to help them earn enough to survive. It can also force businesses to curtail wage growth potential, which can make it impossible for high-quality employees to improve their living standards, support families, and achieve financial security. Consequently, a $15 per hour minimum wage is not enough. Increased wages must, fundamentally, be the product of market solutions. Whether or not such solutions capitalize on a legislated minimum living wage to achieve greater opportunity growth, the capacity of workers to earn a living wage and more requires policymakers and sympathetic business leaders to find the value in workers. The economy must be reengineered to appropriately value labor capital based on worker as well as business needs. Business leaders must also try harder to capitalize on the potential of workers. Instead of growing wages, businesses have spent decades displacing labor costs to the detriment of worker-consumers, which has helped hollow out the local economies of low-wage labor forces. Undoing suppressed wages requires more than just a new minimum wage. It requires a fundamental shift in the way business is done in the US and around the world.
Read old posts