Should retail rivals see Amazon’s $15 minimum wage and raise it $1?
In Amazon founder and CEO Jeff Bezos’ annual letter to shareholders, he discussed the “explorer” and “listening” mindset that has led the e-tail giant to find new solutions to old problems (fixing the checkout issue in stores with Amazon Go) and venture into totally unrelated businesses (AWS) without there being a clear call to do so.
Of all the topics he touched on in the annual missive, there doesn’t appear to be any that has gained as much attention as Mr. Bezos’ call for retail rivals to raise the stakes on employee recruitment and retention by offering a higher minimum wage than the $15 an hour that Amazon began paying its entry-level warehouse workers and store associates last year.
“This wage hike benefitted more than 250,000 Amazon employees, as well as over 100,000 seasonal employees who worked at Amazon sites across the country last holiday,” wrote Mr. Bezos. “We strongly believe that this will benefit our business as we invest in our employees. But that is not what drove the decision. We had always offered competitive wages. But we decided it was time to lead — to offer wages that went beyond competitive. We did it because it seemed like the right thing to do.”
While Mr. Bezos may posit that Amazon took the high and righteous road in looking after its workers, some would counter that it took a combination of political pressure, negative press reporting on working conditions and employee morale at the e-tailer’s warehouses and a tightening job market to get the company to do “the right thing.”
Regardless of the motivation, it seems clear that Mr. Bezos and company now see its $15 an hour minimum wage as a differentiator and competitive advantage over many, if not most, of its retail rivals.
In his letter, Mr. Bezos wrote, “I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.”
Some large retailers have already matched Amazon. Costco raised its minimum to $15 an hour, bringing the average hourly wage paid its warehouse club workers up to $23. Costco frequently uses the good relations it has with workers as both a recruiting tool and in public relations messaging that appeals to many of its members.
Target has been phasing in pay increases with plans to bring its minimum up to $15 an hour next year.
Walmart, which apparently knows who it is, didn’t take kindly to being called out by Mr. Bezos. CNBC reports that Walmart’s executive vice president of corporate affairs, Dan Bartlett, shared an article on Twitter that points out that Amazon is not paying anything in federal taxes after posting profits on more than $11 billion. Mr. Bartlett tweeted, “Hey retail competitors out there (you know who you are) how about paying your taxes?”
- 2018 Letter to Shareholders – Amazon.com
- Will Costco’s new $15 minimum wage hurt or benefit the chain? – RetailWire
- ‘How about paying your taxes?’—Walmart responds to Amazon’s challenge over pay – CNBC
DISCUSSION QUESTIONS: What do you think Jeff Bezos was looking to gain by challenging retail rivals to offer a higher minimum wage than Amazon? Do you expect many of Amazon’s rivals to respond?