Amazon wage increase is about its reputation

The minimum wage increase applies to all of Amazon’s workers, including in fulfillment centers.Getty/Rick T. Wilking

• Amazon announced on Tuesday that it would raise the minimum wage for all of its workers to $15 an hour effective November 1.
• “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” CEO Jeff Bezos said in a statement. 
• The move comes after Amazon has repeatedly been attacked for its business practices by politicians and activist groups.
• Amazon’s change likely means the company is taking a hard look at what people are thinking and saying about it.

Amazon is raising wages.

The company announced on Tuesday it would raise wages for all employees to $15 an hour, including in its fulfillment centers. Some employees that are already making $15 or more will also see a pay increase.

Amazon raised some wages for warehouse workers in September as part of an annual evaluation, but the new announcement reaches throughout the company nationally and includes all subsidiaries.

The company’s leadership hailed the move as a moral win.

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

Amazon said it will also start lobbying for a federal minimum wage increase to $15 an hour from the current $7.25 an hour.

The e-commerce giant has long described its pay as competitive with other retailers. It often touts its stock options and other benefits as part of its pay practices.

But Amazon has taken numerous hits on its reputation over the past several months. 

For example, Sen. Bernie Sanders frequently makes an example of Amazon, pointing to high-profile news stories describing strenuous working conditions and low pay. Tweets from Sanders’ account frequently portray Amazon as the biggest villain of capitalism, and they often mention Bezos, who is the richest man in the world. A theme of Sanders’ tweets is Bezos’ extreme wealth compared with what Amazon’s lowest-paid workers make.

On September 5, Sanders even introduced legislation to the US Senate that would impose a 100% tax on government assistance received by workers at companies with more than 500 employees. For example, if an employee draws $100 from food stamps, that person’s employer would be taxed the same amount.

Amazon fought back against Sanders’ claims, calling them “inaccurate and misleading” in a rare blog post response.

“Amazon is proud to have created over 130,000 new jobs last year alone. In the U.S., the average hourly wage for a full-time associate in our fulfillment centers, including cash, stock, and incentive bonuses, is over $15/hour before overtime,” an Amazon blog post from August reads. “We encourage anyone to compare our pay and benefits to other retailers.”

But now Amazon is trying a different approach: change. Bezos’ admission that Amazon took a look at itself and decided it would change is a major win for Amazon’s critics and employees, but it’s also a win for Amazon itself.

It’s hard to see the wage increase as anything else than a response to critics. Amazon likely already anticipates a federal minimum wage increase to coincide with the minimum wage increases already happening in some blue states. The labor market is also tightening as the US heads into the holiday season, which could naturally inflate wages.

But to make a splashy announcement at all means that Amazon wants customers to know about it, and maybe even feel a bit better about shopping at the retailer instead of at its competitors.