Dive Brief:
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The current trend to boost the minimum wage gives Amazon a competitive edge, according to financial blogger Jeremy Bowman. Writing in the Motley Fool, Bowman says that Amazon is at an advantage because its warehouse operations include jobs that already meet or receive close to the $15-per-hour minimum wage that many groups and municipalities are lobbying for.
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Late last month, the two most populous states on each coast — California and New York— approved measures that institute a $15-per-hour minimum wage. Seattle, San Francisco, Chicago, Los Angeles, Portland, and Washington, D.C. have also passed minimum wage hikes, which incrementally increase minimum pay.
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Several retailers have unilaterally raised their starting pay as well in response to the political appetite for higher minimum wages, plus the apolitical rise of pay in a better economy.
Dive Insight:
Bowman singles out Amazon as a winner in the minimum wage fight because its warehouse workers earn an average of $12.50/hour, according to Glassdoor, and it uses its labor more efficiently than its competitors.
That efficiency has its price, though; working at Amazon’s warehouses has been described as brutal and even Big Brother-ish. Last month, Bloomberg unveiled that the company has been using screens to broadcast the silhouettes of workers that have been fired for theft, with the word "terminated" marked across the image. It's just the latest installment of negative press Amazon has garnered about its working conditions, both in its warehouses and corporate offices. Once other retailers provide comparable wages, Amazon could actually become a loser in the labor fight, unless it improves those working conditions.
Amazon is hardly the only retailer providing a living wage, too. Costco is famous for it, and Ikea’s minimum is based on a living wage calculator developed by the Massachusetts Institute of Technology that determines what a person needs to earn in order to avoid poverty.
The Container Store’s CEO Kip Tindell literally wrote the book on this issue. In it, Tindell argues that an “employees first” approach — where even part-time workers make decent wages and receive benefits — is ultimately good for business. It’s a notion with which many economists and retail experts agree, but which can be a tough sell to investors. That sell is made much easier when the minimum wage is prescribed by law.
Using Bowman’s reasoning, the real story may be Wal-Mart Stores, which recently said it would spend $1 billion to raise its infamously low hourly wages. But that big spend, which is part of what is eating into the retail giant’s revenue these days, is not likely to catch it up much if the minimum wage hike trend spreads throughout the country.