This raise will apply to more than 250,000 U.S. workers and begin November 1. Amazon’s minimum wage increase will also extend to 100,000 temporary workers and all future employees.
But it’s not all good news. The company is discontinuing stock awards and incentive pay as it increases wages. Some critics say those changes could cost employees more in the long run.
“We Listened to Our Critics”
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, CEO of Amazon, in a statement, according to CNBC. “We’re excited about this change and encourage our competitors and other large employers to join us.”
Amazon isn’t the largest employer in the country; that distinction goes to Walmart. However, they’re still a huge company, which means their pay policies have the potential to influence other employers.
An analysis from last year, done by Slice Intelligence and presented by Business Insider, found that 43 percent of all online retail sales in the U.S. were made through Amazon. That’s up from 25 percent just five years earlier, in 2012.
By some estimates, Amazon is more valuable than all brick and mortar retailers combined, and there are no signs that trends are reversing. Changes to Amazon’s minimum wage affect the bottom line of hundreds of thousands of workers.
Higher Wages Instead of Incentive Pay
However, some critics have noted that Amazon’s wage boost comes with a trade-off: warehouse workers will no longer be eligible for incentive pay and stock options.
“…some of Amazon’s warehouse employees say they will make less as a result of this change,” wrote Eugene Kim at CNBC. “The Guardian said warehouse workers currently receive one Amazon share (worth $1,959) at the end of every year, on top of another single share reward every five years. Yahoo News noted that warehouse workers can earn up to 8 percent of their monthly income every month, which could be as much as $3,000 a year for some workers.”
A source tells CNBC that workers will be able to “review the new pay structures” and share their concerns with Amazon. No word so far on whether the new policy will affect monthly bonuses as well as stock awards and other incentive pay.
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