While it is hard to argue against raising the minimum wage at Amazon, there are a number of reasons why it is a bad move. For starters, Amazon’s operations are largely automated and online, meaning that its workforce is much smaller than other retail companies’. Secondly, raising the minimum wage would force its competitors to raise their wages as well, which will hurt their margins. Ultimately, this will hurt Amazon’s profits and the profits of its competitors.
Amazon Minimum Wage
Amazon minimum wage of $15 an hour is an effort to attract and keep workers. The company plans to hire about 100,000 people for the holiday season, including seasonal workers. The increase will apply to all employees, except contract workers. The new wages will take effect Nov. 1, 2018. The company has become a major political liability, as it has forced many retailers to lay off workers and increase the number of online sales. President Donald Trump has attacked the company for hurting traditional retailers, and some lawmakers are calling for it to be broken up.
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The company is also lobbying to increase the federal minimum wage to $15 an hour. This increase is not only good for Amazon, but also for the United States economy. Companies like Target and Walmart might be forced to raise their wages to compete. It will also affect many smaller retailers, such as mom-and-pop stores.
Employee turnover rate of 150%
Amazon’s employee turnover rate is staggering. At 150% a year, the average hourly associate will leave the company every eight months. The company’s high turnover rate is a source of concern. Many workers have complained about their back-breaking jobs, intrusive surveillance technologies, and fear of being fired for not hitting quotas. In Alabama, some employees have even attempted to start a union. The company has not responded to a request for comment on the issue.
Despite the high rate of turnover, Amazon has been hiring at an unprecedented rate. In July, the company hired 350,000 warehouse employees. However, many of them only lasted a few weeks. By October, Amazon lost 3% of its hourly employees each week. While this figure sounds alarming, it isn’t as high as some other large companies. The company is also worried about pandemic-induced restrictions in 2020, which will affect the number of workers it can hire.
Impact on corporate profits
The announcement of a new minimum wage by Amazon is likely to raise the cost of labor in the United States, and its implementation is likely to affect the profits of many companies. This wage increase may affect the traditional retail industry, forcing other retailers to match the Amazon wage. This could hurt retail sentiment in the coming year. Each extra dollar in hourly pay for an employee could reduce a company’s per-share profit by three to eight percent. Immediately following the announcement, Walmart, Target, and Amazon all saw stock prices tumble.
Amazon has been criticized by critics for not treating its workers well. Many left-leaning groups have called its labor policies unacceptable. One critic, Senator Bernie Sanders, has introduced the “Stop BEZOS Act,” which would tax companies with 500 or more employees. This bill would apply to Amazon and other companies like it. Despite the pressure, Amazon’s average annual income is still higher than the poverty level for a family of four.
Impact on community
In addition to the ethical and social implications of Amazon’s new minimum wage policy, the company also faces the ethical dilemma of being transparent and acting with purpose when setting new compensation levels. This way, the company can ensure that all workers are treated fairly and the pay increases do not lead to inequities or bias. This is especially critical since big increases in salaries can raise eyebrows and raise questions about internal equity.
Some say that Amazon’s move will open the door for other companies to increase their minimum wages as well. For example, Walmart currently pays an average of $11 an hour to its employees. However, it could have to increase that to $13 if it wants to attract low-wage employees. While this is a concern for some, others argue that it is necessary for the United States to increase its minimum wage.