- Amazon‘s lobbying for a $15 federal minimum wage is a strategic business decision.
- Amazon already pays workers at least $15, so a higher minimum wage won’t hurt its bottom line.
- However, it would hurt rivals like Walmart. And, lobbying could help improve Amazon‘s reputation.
- Visit the Business section of Insider for more stories.
As Amazon lobbies for a higher minimum wage, experts say that the company is not making its decisions solely out of the goodness of CEO Jeff Bezos’ heart.
“Anyone who says Amazon is supporting the federal $15 minimum wage out of their good will toward workers has to somehow explain the fact that Amazon is dragging its feet every way it can on allowing unions to organize their workers,” Michael Farren, an economist at the right-leaning think tank The Mercatus Center, told Insider.
“Amazon is acting like a rational economic agent and trying to promote something that is relatively cost-less to it, but gives it social street cred, so to speak,” Farren added.
As a business, Amazon is pushing for a $15 federal minimum wage for a number of strategic reasons. Here are three of the most critical factors that Amazon likely considered before lobbying for a higher minimum wage.
Paying workers more is good for business
Amazon has said that it pays workers $15 per hour because it is good for the company’s bottom line.
“We believe $15 an hour is the minimum anyone in the U.S. should be paid for an hour of labor,” Jay Carney, Amazon‘s senior vice president of global corporate affairs, wrote in a blog post in late January. “We also believe it’s good for business.”
According to Carney, Amazon raising minimum pay to $15 per hour had an immediate positive impact on morale and retention. Applications to hourly positions more than doubled, Carney wrote in the post.
“Paying a $15 minimum helps the company to recruit and retain staff, which is important for a growing business,” GlobalData managing director Neil Saunders told Insider. “This is probably not so much of an issue right now, but before the pandemic hit there was very full employment and hiring staff was sometimes tough.”
However, Amazon‘s success with paying workers more does not fully explain why the company is pushing for regulation that would require other companies to do the same. (Amazon did not respond to Insider’s request for comment.)
A higher minimum wage won’t hurt Amazon, but it will impact the company’s competitors.
“Amazon has already implemented a $15 minimum wage so it has little to fear from this becoming a federal minimum,” Saunders said. “In fact, it is to Amazon‘s commercial advantage if rival retailers also have to pay more – particularly Walmart.”
Farren said that, consciously or unconsciously, it makes sense that Amazon would push for regulation that would hurt competitors.
“It may sound a little cynical, but it’s probably pretty accurate that Amazon sees this as a tool to help it essentially drive a wedge against competitors — specifically against smaller competitors, but also against Walmart itself, who arguably is Amazon‘s largest competitor,” Farren said.
Amazon‘s reputation could use the boost
“Amazon is keen to show that it is treating workers fairly and well,” Saunders said. The company is often criticized for its working conditions, and “not all of that criticism is justified,” he added. “So where it has a worker-friendly policy it is keen to showcase it.”
Farren said he believes that Amazon‘s aggressive advertising around raising the minimum wage and its anti-union campaign are closely linked.
“I’m sure Amazon is trying to make as much Amazon news in the press be about their support for the federal minimum wage rather than their reluctance to have unions start organizing their workforce,” Farren said.