We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
On Tuesday, Amazon (AMZN - Free Report) announced that it would be raising the minimum wage paid to its employees to $15/hour. The new minimum would apply to all of Amazon’s 250,000 U.S. employees as well as seasonal workers hired for the upcoming holiday season which could total 100,000 more.
Similar increases will apply to Amazon employees outside the U.S in their local currency and workers who are currently making more than $15/hour will receive an as yet unspecified raise as well.
Amazon’s starting wage for employees is currently $11/hour. The Federal Minimum wage has been $7.25/hour for the past 9 years.
Political Pressure
The move is seen as a response to outside pressure to pay even entry-level workers a living wage. Senator Bernie Sanders of Vermont – who is seen as a likely Democratic challenger to President Trump in the 2020 elections – recently proposed legislation to tax corporations based on the value of public assistance paid to their employees.
Officially called the “Stop Bad Employers by Zeroing Out Subsidies” act, but also commonly referred to as the “Stop Bezos” act – in reference to Amazon founder and CEO Jeff Bezos who recently became the wealthiest individual in the world – the legislation also targeted fast-food corporations and airlines who pay so little that some employees qualify for federal assistance like food stamps, housing assistance and Medicare.
Senator Sanders publicly praised the Amazon pay hikes, congratulating Bezos for “doing exactly the right thing.”
Unionization Looming
Amazon was also facing challenges from labor unions and the “Fight for $15” movement which attempts to support collective bargaining with the aim of increasing pay and benefits in the retail and fast food industries. Reportedly, many employees at Amazon-owned Whole Foods Markets had been seeking to unionize, despite Amazon’s efforts to squash the effort.
Not Just a P.R Move
In addition to the favorable publicity for moving toward paying all employees a living wage – and alleviating political pressure – increasing wages is also a shrewd business move for Amazon that will allow the internet retailing giant to attract and retain high quality employees in a tight labor market.
Amazon has historically experienced high turnover rates, especially among its low-level warehouse workers. The savings in recruiting and training expense because of improved retention will at least partly offset the cost of increased wages.
Turning Up the Heat on Competitors
With Unemployment holding steady at historic lows under 4%, employers are finding it increasingly difficult to find qualified workers at current pay rates. Despite the low number of available employees, average hourly earnings for U.S. workers have remained stubbornly low, rising only a fraction of a percent over the past several employment reports from the Bureau of Labor Statistics.
This move by Amazon, the second largest employer in the U.S. -trailing only WalMart (WMT - Free Report) is likely to force competitors to increase their base wages as well. Target (TGT - Free Report) and Costco (COST - Free Report) , have already announced their own initiatives to raise minimum pay to $15 and $14 respectively over time. Amazon employs more workers than those two discount retailers combined.
Small businesses – who have in many cases already seen their operations decimated by Amazon and other online retailers are likely to have a difficult time matching Amazon’s new pay plans.
Boosting Sales
Though the exact effect is difficult to quantify, if retailers raise the minimum pay for entry level employees, those people will have more disposable income to spend at retail stores and online. Although a broad increase in wages would add additional employment expense to the income statement, there should theoretically also be an increase in top line revenues as well as all that extra money gets spent.
All in all, this seems to be another prescient move from the undisputed king of online retailers. Once again, Amazon has taken the lead and dared the competition to follow or be left behind. Thanks to political and social pressure that's been applied to Amazon and their innovative solution, the winner is likely to be the American worker.
Best Electric Car Stock? You'll Never Guess It. Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think! Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.See Zacks Best EV Stock Free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Amazon Raises its Minimum Wage to $15/hour
On Tuesday, Amazon (AMZN - Free Report) announced that it would be raising the minimum wage paid to its employees to $15/hour. The new minimum would apply to all of Amazon’s 250,000 U.S. employees as well as seasonal workers hired for the upcoming holiday season which could total 100,000 more.
Similar increases will apply to Amazon employees outside the U.S in their local currency and workers who are currently making more than $15/hour will receive an as yet unspecified raise as well.
Amazon’s starting wage for employees is currently $11/hour. The Federal Minimum wage has been $7.25/hour for the past 9 years.
Political Pressure
The move is seen as a response to outside pressure to pay even entry-level workers a living wage. Senator Bernie Sanders of Vermont – who is seen as a likely Democratic challenger to President Trump in the 2020 elections – recently proposed legislation to tax corporations based on the value of public assistance paid to their employees.
Officially called the “Stop Bad Employers by Zeroing Out Subsidies” act, but also commonly referred to as the “Stop Bezos” act – in reference to Amazon founder and CEO Jeff Bezos who recently became the wealthiest individual in the world – the legislation also targeted fast-food corporations and airlines who pay so little that some employees qualify for federal assistance like food stamps, housing assistance and Medicare.
Senator Sanders publicly praised the Amazon pay hikes, congratulating Bezos for “doing exactly the right thing.”
Unionization Looming
Amazon was also facing challenges from labor unions and the “Fight for $15” movement which attempts to support collective bargaining with the aim of increasing pay and benefits in the retail and fast food industries. Reportedly, many employees at Amazon-owned Whole Foods Markets had been seeking to unionize, despite Amazon’s efforts to squash the effort.
Not Just a P.R Move
In addition to the favorable publicity for moving toward paying all employees a living wage – and alleviating political pressure – increasing wages is also a shrewd business move for Amazon that will allow the internet retailing giant to attract and retain high quality employees in a tight labor market.
Amazon has historically experienced high turnover rates, especially among its low-level warehouse workers. The savings in recruiting and training expense because of improved retention will at least partly offset the cost of increased wages.
Turning Up the Heat on Competitors
With Unemployment holding steady at historic lows under 4%, employers are finding it increasingly difficult to find qualified workers at current pay rates. Despite the low number of available employees, average hourly earnings for U.S. workers have remained stubbornly low, rising only a fraction of a percent over the past several employment reports from the Bureau of Labor Statistics.
This move by Amazon, the second largest employer in the U.S. -trailing only WalMart (WMT - Free Report) is likely to force competitors to increase their base wages as well. Target (TGT - Free Report) and Costco (COST - Free Report) , have already announced their own initiatives to raise minimum pay to $15 and $14 respectively over time. Amazon employs more workers than those two discount retailers combined.
Small businesses – who have in many cases already seen their operations decimated by Amazon and other online retailers are likely to have a difficult time matching Amazon’s new pay plans.
Boosting Sales
Though the exact effect is difficult to quantify, if retailers raise the minimum pay for entry level employees, those people will have more disposable income to spend at retail stores and online. Although a broad increase in wages would add additional employment expense to the income statement, there should theoretically also be an increase in top line revenues as well as all that extra money gets spent.
All in all, this seems to be another prescient move from the undisputed king of online retailers. Once again, Amazon has taken the lead and dared the competition to follow or be left behind. Thanks to political and social pressure that's been applied to Amazon and their innovative solution, the winner is likely to be the American worker.
Best Electric Car Stock? You'll Never Guess It. Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think! Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022. See Zacks Best EV Stock Free >>