Amazon raises minimum wage to $15 per hour as CEO Jeff Bezos admits critics of its pay scale were right

Amazon.com Inc (NASDAQ:AMZN) announced on Tuesday it is increasing its minimum wage to $15 for all full-time, part-time, temporary workers that include those hired by agencies, and seasonal employees across the United States effective November 1.

The new Amazon $15 minimum wage will benefit more than 250,000 Amazon employees, as well as over 100,000 seasonal employees who will be hired at Amazon sites across the country during the Christmas holiday season. 

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon Founder and CEO. “We’re excited about this change and encourage our competitors and other large employers to join us.”

The company had come under fire from critics, including those in the US Congress, particularly US Senator Bernie Sanders (I-VT), who wanted to impose a tax on Amazon because some of its employees were reportedly using food stamps and other forms of public assistance to make ends meet.

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Amazon’s public policy team said they will also begin advocating for an increase in the federal minimum wage.

“We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago,” said Jay Carney, Senior Vice President of Amazon Global Corporate Affairs. “We intend to advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.”

Amazon’s wage hike should have a minimal impact on profitability, said Loop Capital. Analyst Anthony Chukumba views the Amazon.com‘s announcement of a minimum wage hike to $15 per hour as a “savvy move” that should result in lower fulfillment center employee turnover.

The news is a “public relations victory” for Amazon, Chukumba told investors in a research note. He believes the wage increase will have a “fairly limited” on the company’s overall profitability. The analyst keeps a Buy rating on Amazon with a $2,200 price target. 

Amazon shares were trading 0.21% up at $2,008.66.

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Amazon said employees will continue to receive the following benefits: comprehensive health care, including medical, dental, and vision coverage, company-paid life and disability insurance, up to 20 weeks of paid parental leave, matching contributions to their 401k pension fund, Career Choice, which pre-pays 95% of associates’ tuition for courses in high-demand fields, whether those jobs are at Amazon or another company.

The other benefits are Career Skills, which trains hourly associates in critical job skills like resume writing, how to communicate effectively, and computer basics.

Amazon has more than 575,000 employees worldwide. 

Story by ProactiveInvestors