Amazon.com announced Tuesday that it will raise its minimum wage to $15 an hour for all employees, a move that comes after the tech giant faced harsh criticism for how much it pays its workers and raises the stakes for retailers struggling to attract workers in a tight labor market.
The pay increase will affect 250,000 Amazon employees and 100,000 seasonal employees hired at Amazon sites during the holiday season. It will impact full-time and part-time workers, as well as Whole Foods Market employees, and will take effect Nov. 1.
“We listened to our critics, thought hard about what we wanted to do and decided we want to lead,” Amazon chief executive Jeffrey P. Bezos said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
The median Amazon worker was paid $28,446 last year, according to company filings, which translates to about $13.68 an hour.
Amazon has faced criticism over the years for what some say are poor working conditions in its warehouses, the hubs the company has set up nationwide for rapid delivery of online purchases. (Bezos also owns The Washington Post.)
Sen. Bernie Sanders (I-Vt.) has lashed out at Amazon recently, saying the company does not pay a “living wage” and leaves some dependent on safety-net programs such as food stamps and Medicaid. He attacked Bezos, the world’s richest person, and introduced introduced a bill last month called the “Stop BEZOS Act” that would require Amazon and other large employers to cover the costs of food stamps, public housing, Medicaid and other federal assistance received by employees.
"Today I want to give credit where credit is due, and that is that Mr. Bezos and Amazon have done the right thing,” Sanders said in an interview Tuesday. “This is a significant step forward for many thousands of Amazon employees.”
Sanders said Amazon’s efforts were likely to have “a ripple effect all over the economy” by putting pressure on competitors like Walmart, where the starting hourly wage is $11, to follow suit.
“Not only does this make a difference in the lives of hundreds of thousands of Amazon employees, it also sends a message to the fast food industry, the airline industry and the retail industry in general that the time is now to begin paying workers a living wage,” he said.
In its announcement Tuesday, Amazon said it would lobby for an increase in the federal minimum wage, which has been $7.25 for a decade. The online giant is the country’s second-largest private employer, behind Walmart. Last month it became the country’s second publicly traded company to be valued at more than $1 trillion.
“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 global corporate affairs for the company. “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.”
The Obama administration had called for raising the minimum wage to $10.10, but the proposal went nowhere during an era of divided government. Many business groups and conservatives argue that $15 an hour is too high, especially in places outside urban centers that have a lower cost of living.
But given the tight labor market -- job openings have outpaced hirings for several months -- economists said it makes both economic and political sense of Amazon to raise wages now, as it prepares to hire 100,000 temporary workers for the holiday season.
“We have a tight labor market, and these are tough jobs with high turnover rates,” said Sylvia Allegretto, a labor economist at the University of California at Berkeley. “You add in that Amazon is competing for workers, and it makes sense that it is raising wages.”
Other companies also have moved to raise wages as the unemployment rate, currently 3.9 percent, falls to historic lows. Target announced earlier this year that it would raise its starting wage to $12 an hour with a plan to increase it to $15 by 2020. Facebook also boosted its minimum wage for its contracted workforce — janitorial staff, food-service workers and other similar staff — to $15 an hour, while Costco now pays $14 an hour.
In exchange for higher pay, Amazon said it would stop giving workers shares of company stock as part of their compensation package. “We’ve heard from our...employees that they prefer the predictability and immediacy of cash" to restricted stock units, the company said in a statement on Tuesday.
Amazon said on Tuesday that all employees, including those who already make $15 an hour, will receive pay increases as a result of its new policy. The Post reported last week that Amazon had begun giving raises of 25 cents to 55 cents an hour to workers at its fulfillment centers nationwide.
Taylor Telford contributed to this report.