Amazon’s wage hike could be a “let them eat cake” solution

(October 05, 2018), Amazon announced a big and heartening change. The company–including its recently acquired Whole Foods—is raising its minimum wage to $15 per hour. The change will begin on November 1 of this year, and will impact hundreds of thousands of employees. An Amazon spokesperson confirmed to me that all employees making more than $15/hour will receive a $1/hour increase as well. Though many may be applauding the company for this move, we may want to hold off to see exactly how this change plays out.

Amazon has faced considerable external pressure by pro-labor advocates who say the wildly successful company should better provide for its lower-wage workers. Politicians like Senator Bernie Sanders of Vermont have introduced legislation aimed directly at Amazon and its founder Jeff Bezos, with the intention of forcing the company to improve conditions. Workers at Whole Foods, worried about their future under Amazon, want to unionize, and Amazon has responded by distributing materials to managers, asking them to be on the lookout for telltale signs of organizing.

Amazon is known for rarely responding to criticism, thus this minimum wage hike should absolutely be considered a victory. Even Bezos himself thanked Sanders for the push:

Thank you @SenSanders. We’re excited about this, and also hope others will join in. https://t.co/kasWkkOhWo

— Jeff Bezos (@JeffBezos) October 2, 2018

But labor experts say it remains to be seen how this change will play out for workers. Marc Perrone, president of the United Food and Commercial Workers International Union, is cautious. “Any time a company raises wages for workers,” he tells me, “I’m happy about it,” adding that Amazon is “better positioned than other companies to push an increase.”

But, there is a caveat: One thing Amazon has been working very hard to do is to reduce its reliance on human labor. Both in its warehouses and at Whole Foods, the company has been investing in technology to better automate its processes. While some may see these advances as an inevitability, they also present future opportunities to reduce human costs.

What this means is that even though the wage is going up, it’s likely that Amazon will figure out how to cut costs elsewhere, even at the expense of human labor. “You don’t want elasticity on hours,” says Perrone, “you don’t want elasticity on scheduling.”

Which is to say, there’s no guarantee that hours won’t go down even if wages go up. “I don’t want to be a cynic, but I would wait and see over the next six months what this really looks like,” he says. “There’s no guarantee their hours are going to stay the same.”

And, indeed, only a few hours after I spoke with Perrone this morning, news broke that Amazon will no longer offer bonuses or stock awards to the workers receiving the wage bump. Workers have even been quoted in multiple outlets saying they will likely earn less as a result of these changes, something Amazon disputes.

Reached for comment, Amazon provided the following statement:

“The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and RSUs. We can confirm that all hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.”

But as Perrone put it to me, agreeing to a $15/hour wage hike provides no real guarantees for Amazon workers and their livelihood. What’s more, he says he believes the decision was likely a way for Amazon to try and fight against any further effort by workers to organize. By agreeing to a hike, the company probably hopes the organizing efforts will be quelled–at least for the time being.

So what should Amazon workers do? Perrone recommends that the employees push hard for even better workplace conditions, codifying them so that they are able to live comfortably as Amazon employees. “I do think they ought to go a little bit further,” he says. This includes guaranteed hours and scheduling better–or at least consistent–benefits, etc. The workers should “try to get these commitments in writing.”

Ultimately, this is an example of a company responding to criticism, yet not fully grasping it. It’s clear that Amazon is feeling the pressure from both organizing workers and politicians like Sanders. But its critics shouldn’t stop until real change comes to the company.