Amazon (NASDAQ: AMZN) has announced it is raising its minimum wage to $15 an hour for its employees. With the move, Amazon will now be paying its lowest paid employees more than double the federal minimum wage. The federal minimum wage is currently $7.25 an hour.
The move affects nearly 250,000 US employees and 100,000 seasonal workers. All US employees are eligible, including part-time and temporary workers. The minimum wage increase becomes effective Nov. 1.
Amazon is facing pressure from employees and society for better conditions and better pay. Sen. Bernie Sanders, I-Vt., has been loudly criticizing the company for not paying some of its employees enough money for them to avoid having to use taxpayer-subsidized social programs. Amazon now says it will “work with policymakers in Washington, DC, to advocate for a higher federal minimum wage.”
Sanders praised Amazon’s CEO Jeff Bezos at a press conference after the announcement. Sanders said, “Today, I want to give credit where credit is due. And I want to congratulate Mr. Bezos for doing exactly the right thing,”
Some are concerned that a $15 minimum federal minimum wage would actually hurt unskilled and young jobseekers. The higher wages workers earn, the fewer employees a company can afford to pay. That actually means fewer jobs and more people out of work.
An analysis released by the University of Washington last year found that entry-level employees could make less money if the minimum wage was increased to $15 an hour. Results showed that increasing the minimum wage significantly reduced the number of jobs and hours worked by entry-level employees. That translated into an average $1,500 decline in annual earnings for these employees.
Restaurants employ about half the nation’s minimum wage workforce. Doubling the federal minimum wage would double their entry-level labor costs. Other major minimum wage employers, such as retailers, dry-cleaners, and car washes, will face similar issues.