Amazon announces $15 minimum wage for all US employees

New York
CNN Business
 — 

Amazon is raising its minimum wage to $15 an hour for all US employees.

The change takes effect November 1 and applies to full-time, part-time and temporary workers. Amazon (AMZN) says the $15 minimum wage will benefit more than 250,000 Amazon employees, plus 100,000 seasonal workers.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon’s founder and CEO. “We’re excited about this change and encourage our competitors and other large employers to join us.”

The change applies to Whole Foods and all other subsidiary employees.

Amazon also said its public policy team will begin lobbying for an increase in the federal minimum wage, which has been $7.25 an hour since 2009.

“We’ll leave it to Congress and professionals to decide what the right number is,” Dave Clark, the company’s senior vice president of worldwide operations, told CNN’s Christine Romans. “But for us, that number is $15.”

The size and explosive growth of Amazon give the decision importance far beyond the hundreds of thousands of people who will benefit directly.

Amazon is among the largest employers in the United States, and it has added more American jobs in the past decade than any other company.

The decision also raises the stakes for potential workers at Amazon’s next headquarters. The company is planning to create a second headquarters, known as HQ2, with as many as 50,000 jobs. Amazon has named 20 cities as finalists, including Atlanta, Chicago and Washington, D.C.

Critics, including independent Senator Bernie Sanders of Vermont, have said that Amazon does not pay workers enough. They have drawn a contrast with Bezos’ spectacular wealth: He is the richest person alive, worth an estimated $165 billion.

“I want to give credit where credit is due,” Sanders said on Tuesday. “I want to congratulate Mr. Bezos for doing exactly the right thing.” He said he looked forward to working with Bezos to push for a $15 federal minimum.

Bezos responded by thanking the senator. “We’re excited about this, and also hope others will join in,” he wrote in a tweet.

Workers across the country have pushed for a $15 minimum wage, most notably as part of the movement known as Fight for $15.

Supporters say it’s a remedy for widening wage inequality and will boost consumer spending, while opponents counter that it could reduce opportunities for employment, particularly for teenagers and others looking for entry level or low-skilled jobs.

Some companies have responded to the public pressure.

Target raised its minimum wage for new hires to $12 an hour in September and plans to raise its minimum to $15 by the end of 2020. Disney reached a deal with its unions to pay a minimum of $15 an hour at Disneyland in California in 2019 and at Disney World in Florida by 2021.

And Walmart, the country’s largest private-sector employer, which has more than 1 million US workers, raised its minimum wage to $11 in February.

Clark said that Amazon wanted to make its change sooner.

“We decided, why wait? We should really do this now,” he told Romans.

Paul Sonn, state policy program director for the National Employment Law Project, said Amazon’s announcement would put pressure on other companies to raise pay, and on Congress to lift the national minimum. Twenty-nine states have their own minimum wages higher than the federal $7.25.

Neil Saunders, managing director of the consultancy GlobalData Retail, said that higher minimum pay could also help Amazon recruit workers.

“Without a rise in wages, Amazon would be placing itself at a disadvantage in the labor market,” Saunders said. The company’s rapid growth requires “a lot of recruitment which is becoming increasingly difficult in a tight labor market,” he said. “This is especially so over the holiday season.”

Saunders added that the decision was “politically savvy.”

Last month, Amazon said that the average hourly wage for a full-time associate in its fulfillment centers was already more than $15 per hour.

Amazon median pay last year was $28,446, according to a company filing. That comes to $13.68 an hour. The company noted that the figure includes international and part-time employees.

The company also announced that it is increasing the minimum wage for UK employees starting November 1. The new minimum wage is £10.50 ($13.60) for the London area and £9.50 ($12.30) for the rest of the country. More than 37,000 employees, including seasonal workers, will be affected by the change.

The current UK minimum wage for adults over 25 is £7.83 ($10.15).