retail news in context, analysis with attitude

The New York Times has a follow up on yesterday’s announcement by Amazon that beginning next month, its minimum wage for all US employees will be $15 an hour, with people already making that much getting a raise.

The increase will affect part-time, contract, and hourly employees, as well as seasonal workers brought on for the holidays and US Whole Foods employees. Amazon estimates that the increase will impact 250,000 people.

The Times writes that “the move may buy the company valuable political capital, at a time when large technology companies are under pressure from Washington and beyond for practices that some lawmakers believe could be anti-competitive. It could also help Amazon recruit staff in a tight labor market.”

At the same time, Sen. Bernie Sanders (I-Vermont) - who introduced legislation that would require large employers, including Walmart and McDonald’s, but apparently mostly aimed at Amazon, to fully cover the cost of food stamps and other federal assistance received by their employees - sung Amazon’s praises yesterday.

NBC News quotes Sanders as saying, “Today, I want to give credit where credit is due and I want to congratulate Mr. Bezos for doing exactly the right thing. I urge corporate leaders around the country to follow Mr. Bezos' lead, and I congratulate him for what he has done.”

Amazon, in making its announcement, also called for a federal minimum wage of $15/hour.

The Times notes that it is “unclear how investors will feel about the additional expense. Amazon hasn’t yet said how much the policy will cost — it plans to provide details in its next quarterly earnings report, scheduled for later this month — but it will not be cheap.”
KC's View:
The assumption here seems to be that Amazon is going to pay for the wage increases out of current funds and not find ways to charge back manufacturers in various ways to cover the new expenses. I wouldn’t take that bet …and in fact, I’d bet the other way, that the screws on suppliers got a little tighter yesterday. And there’s very little that anybody can do about it … at least, anybody who wants to do business with and through Amazon.