After New Food Economy investigation, Amazon raises its minimum wage

Amazon has long maintained that its full-time fulfillment center employees make an average  of $15 an hour, including bonuses and stock incentives. However, an advertisement for full-time associates in West Columbia, South Carolina accessed Tuesday afternoon displayed a $12-an-hour starting wage. In Arizona, where we reported that one in three Amazon employees relies on SNAP to buy groceries, the company was offering wages as low as $11.25 in the hours following its announcement.

For hourly employees affected by the pay increase, the difference between earning what the company has long said is average pay and actually earning it is likely to be substantial. At the same time, the move may help address the concerns of employees elsewhere in Amazon’s workforce—specifically, the Whole Foods workers spearheading a unionization effort at store locations nationwide.

With Tuesday’s announcement, Amazon joins a cadre of large corporations that have recently announced commitments to raising wages companywide. Target employees, for example, will make a base minimum wage of $15 by 2020, Walmart employees now earn a minimum of $11, up from the federal minimum of $7.25 an hour, and Costco pays all of its employees a minimum of $14 an hour, according to The New York Times.

“My sense of this decision is that there’s a market dynamic that has necessitated Amazon paying higher wages,” says Stacy Mitchell, director of the Community-Scaled Economy Initiative at the Institute for Local Self-Reliance, a community development advocacy group. She adds that Amazon is gearing up for the holidays, and according to its press release, will hire as many as 100,000 seasonal employees—at a time when the country’s unemployment rate hovers around 4 percent. Those economic dynamics, combined with recent political scrutiny, meant that Amazon was going to have to raise wages sooner or later—why not make a loud announcement and enjoy a day of fawning press?

Mitchell also points out that the political calculus at play may be influenced by an existential fear of antitrust enforcement. By raising wages, the company buys itself some goodwill with politicians and workers alike—and potentially staves off the threat of public intervention, at least for a while. “It’s an old playbook,” Mitchell adds. “Back in the early 1940s, when [A&P, a large grocery store chain] was under increased scrutiny for their market power, they cut a deal with the union and the farm groups that supplied them.”

In an apparent 180-degree turn, Amazon also announced on Tuesday that it will start lobbying for an increase in the $7.25 federal minimum wage. Given its history, Amazon is an unlikely advocate to join the likes of the Fight for $15. But when the company puts its full weight behind something, it will be hard for industry and government not to listen. We’ll see if major players are quick to follow Amazon’s lead, or whether federal regulators will eventually force them to.

When asked about whether stepping into the federal policy fray had long been part of the company’s strategic plans (it seems a significant development), Amazon’s PR manager for public policy told The New Food Economy in an email that “our public policy team will work with policymakers here in DC to advocate for a higher federal minimum wage. We believe $7.25 is too low, but we would look to Congress to decide the parameters of a new, higher federal minimum wage.”

All this underscores another point: As Amazon grows in size, influence, and ambition, it’s likely to begin a second career in Washington, D.C.—both as a business leader working to enshrine new national standards, and as a kind of uber-lobbyist looking out for its own interests in the corridors of power.

As an employer with a large domestic workforce, Amazon is now too big to fly under the radar on key issues like wages and benefits. Tuesday’s concession is the beginning of a new conversation that isn’t going away—one looks beyond Amazon’s technological advancements, and asks what it owes the communities it lives in.

At the same time, Amazon’s big plans for the future of supply chains, retail, and home delivery can only thrive within an amenable legal structure. It will need laws that support the next-generation business models it dreams up, whether it’s giant floating delivery warehouses, physical stores based on online reviews, or autonomous fulfillment center robots. Whether or not Amazon decides to plant its much-anticipated second headquarters in the nation’s capital, as signs suggest it will, one thing is for certain: This is a company increasingly fixated on, and working to shape, federal policy. The wage increase isn’t Amazon’s first bold move with political implications in Washington and beyond. It definitely won’t be the last.