Amazon’s $15 Minimum Wage Could Shake Up the Economy

Second, there is the economic-fundamentals theory. That is, Amazon is raising wages not because of political pressure, but because of wage pressure. In a tightening labor market, with unemployment at less than 4 percent, it’s becoming more difficult for companies to hire and retain low-income workers. This is particularly true in warehousing, where work can be grueling and wages are rising twice as fast as the national average. A strong piece of evidence for the economic-fundamentals theory is that Amazon isn’t the only company to raise its minimum wage since the unemployment rate has been hovering around 4 percent. Reached for comment, an Amazon spokesperson said simply: “We wanted to be leaders on this issue.” Fair enough. But in the past few years, Walmart, Target, and Gap have also raised wages, although none has gone as far as Amazon in announcing an immediate $15-an-hour floor for even part-time and temporary workers.

Some conservative analysts, particularly within shouting distance of the Capitol, might claim that the Republican corporate tax cut is equally responsible for giving Amazon extra cash to pay its workers. This is a harder case to make. National wage growth has actually declined slightly since President Donald Trump signed the tax cut into law.

Third, there is the Bezos-galaxy-brain theory. Besieged by both liberal senators and the president, Amazon’s chief executive wants to burnish his populist bona fides as the company nears the long-awaited announcement of its second headquarters location. The most popular prediction for HQ2 remains the Washington, D.C., area, which would place Amazon among its loudest critics, many of whom are calling for stronger antitrust regulation or even the tripartite division of the company. Perhaps Bezos is staging a positive news cycle as a prelude to his company’s inevitable move to the capital.

There might be yet another layer to this final theory. Amazon’s announcement that the company will lobby the federal government for a $15 minimum wage sounds like a pure concession to the Sanders-Warren flank of the Democratic Party. But what if it’s also a clever corporate strategy to price out competitors that can’t afford to pay their cheapest workers $15 an hour? As the industry leader in robotic technology, Amazon could also “afford” a higher labor price by shifting more warehousing and retail labor from humans to machines.

So what is this move all about: profits, pressure, or master plan? Probably a bit of all three. But that’s not unusual. Historically, labor’s gains have often required both profits and political pressure. The modern minimum-wage movement, which swept Europe and the British Commonwealth at the turn of the 20th century, was a compromise between manufacturers, who had been made obscenely rich by the industrial revolution, and trade unions in Great Britain and Australia that revolted against sweatshop conditions. In other words, the original minimum wage was a co-production of profits and pressure.