The Second Punch of Amazon’s Minimum Wage Boost


The response from various conservatives that I’ve seen to this news from Amazon is the correct first reaction:

Amazon is boosting its minimum wage for all U.S. workers to $15 per hour starting next month.

The company said Tuesday that the wage hike will benefit more than 350,000 workers, which includes full-time, part-time, temporary and seasonal positions. It includes Whole Foods employees. Amazon’s hourly operations and customer service employees, some who already make $15 per hour, will also see a wage increase, the Seattle-based company said.

To this, many conservatives might say, sarcastically:  Wait… what?  Doesn’t this sort of thing require politicians to go out and fight the greedy corporations, forcing them to dig up the money they’ve buried in the corporate courtyard?  No, of course not.  This is how it ought to happen, with companies competing for employees and making such decisions in light of their own, very specific, circumstances.

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The second response, though, should be to question whether this is part of a bare-knuckle attempt to knock out competition.  Step 1 is to raise the company’s pay beyond what competitors can afford.  Step 2:

Amazon said its public policy team will start pushing for an increase in the federal minimum wage of $7.25 per hour.

Amazon isn’t just saying that it is willing to do this for employees, but that everybody should have to.  The company may not be content to compete for workers, because after all, there are plenty of people out there willing to work for less if a job otherwise fits their skill sets and particular needs and interests.  Rather, this may be an attempt to put competitors out of business altogether, or at least hinder their ability to sneak up on the retail giant.

While Amazon puts on a pro-worker face, it is working to ensure that workers have fewer employment options.

  • guest

    Why the cynicism, Justin? You either believe in the free market or you don’t.

    By the way, do you boycott Amazon for political reasons?

  • Joe Smith

    Isn’t that what smart businesses do? Labor supply is tight so wages should go up. Additionally, Amazon has been reported as having a very high turnover rate – it’s costly especially in a company like Amazon – the company may save in the long run by reducing turnover.

    Finally, Amazon 2 HQ is probably being located in a Democrat run city so why not save the battle by just going with the rallying $15 wage now. If it puts cost pressure on the Wal-Mart and other competitors, well, that’s another plus. Even in free markets, producers seek to gain monopoly rents if they can.

  • Christopher C. Reed

    Has Amazon the clout to shift the labor/cost curve nationwide? Not incidentally throwing their marginal competitors and their workers out of work…
    Clever gurlll…

    • Rhett Hardwick

      I suspect there is more to this than is obvious. Similar to Henry Ford raising his wages to $5.00 per day (if you went to church). That put a lot of pressure on smaller competitors, preventing them from becoming large competitors.

      • Joe Smith

        The literature indicates most of the “premium” in that wage was conditioned not only on church, but other factors (learning English, “clean living”) – as well as reducing the 300% turnover rate as Ford introduced the assembly line system (and culture) over the old production method.

        According to the Foundation for Economic Education, Ford had already cut prices significantly leading up to 1913, putting way more pressure on competitors.

        “Ford found himself spending $100 to train each new worker, though many stayed only for a month or two and then quit. Ford’s reaction to this problem was dramatic: in 1914 he doubled his minimum wage to five dollars a day and cut daily working hours from nine to eight. The
        experiment caught the industrial world by surprise. His competitors were startled; his workers were energized. Ford himself was ecstatic. Some of the most talented workers in Detroit lined up by the thousands to apply for jobs with Ford. He couldn’t hire as many as he would have
        liked because turnover and absenteeism almost disappeared overnight. No one wanted to lose his job. As a result, production surged and profits skyrocketed.”

        “All he wanted was the freedom to operate as he thought best—to decide whom to hire, what to pay, what kinds of cars to make, and how much to charge. He expected to rise or fall on the basis of his decisions.” Kind of refreshing (and Ford provided opportunities for minorities and disabled without government intervention).