retail news in context, analysis with attitude

We had a piece the other day about Amazon underwriting a survey saying that a majority of Americans support an increase in the federal minimum wage to $15 an hour;  eight in ten Americans (80%) said the federal minimum wage is too low. This consensus was seen across all genders, generations, education levels, races, income levels, and regions of the country.

I commented:

Commissioning this survey is a little self-serving, since not only is Amazon already doing it, but it can afford to do it.  Forcing much smaller competitors with far fewer resources to do the same could have the effect of putting them in a very difficult, potentially untenable position.

I do think that $7.25 an hour is absurd anywhere in America, but I'm more intrigued by an increase that might go to $11 or $12 an hour, and then maybe index future increases to things like consume prices and maybe other relevant statistics.

One MNB reader responded:

I think that this is self-serving of Amazon.  Somewhere in a back room they say, “Hey, let’s do a survey showing how American’s support $15per hr mw.”  Then publish the vast majority favorability.  Then let’s push that agenda politically and all of a sudden, Amazon is more competitive and has forced out some competition in the interim. 

To be fair, this hardly makes Amazon unique in the business community.

Another MNB reader wrote:

What we have known since 1776 and Smith’s writing of Wealth of Nations is that at the end of the day, market forces prevail.

And to your point, market forces vary by industry, size of company, geography, etc.  That is why centralized economic policies generally fail.  The downfall of the USSR is the classic case study and proved that blanket dictates were not going to work long term.  That is the Achilles heel of the Democratic Party.  Well intentioned promises that eventually fall flat.

A centralized economic policy like minimum wages, you mean?  A federal minimum was established in 1938 … and the country seems to have survived to this point.

And from MNB reader Carla Dieffenbach:

My view is that raising the minimum wage for all states would be like saying all gas prices, rent, housing etc. should be the same in each state. You really can’t say someone living in Oklahoma should have to pay the same wages as someone in California. It’s a great way to put small businesses out of business.

From MNB reader Terry Marshall:

Definitely agree with you.  $7.25 is way to low and we all want people to earn more and have a better life.  I think some people don’t realize is to what cost will this be at?  Do we expect corporations to just absorb these higher wages, especially since their tax rates are going to go up?  That is a false reality if we think that is going to happen.  A knee jerk or “popular” reaction, is not going to solve the issue.  Developing people to the skills to get those jobs that are paying $15.00 and up, seems to me to be something we should be including in the conversation.  If we don’t, the outcome might cause greater issues to resolve.  Everyone has to work together for a solution.  Just my two cents worth.

From MNB reader Mark A. Boyer

It would be illustrative to see how the same respondents might answer the following question:

What impact do you think raising the minimum wage from $7.25 to $15.00 would have on the prices you pay for goods?

There is no free lunch.

For our company $12.00/hour is where we like to start new team members, but we are having difficulty finding anyone at that wage. Plus, the recently passed stimulus bill does not seem ideally suited to get people back to work. The extended benefits only make it more attractive to collect unemployment for an extended period. We will be closer to $15/hour, with or without legislation, just to find people willing to work.


Also got a number of emails about Amazon's anti-union efforts in Alabama and elsewhere.

MNB reader Bob D’Amato wrote:

Ratifying a union in Alabama will only accelerate the installation and implementation of completely mechanized and automated warehouses by Amazon.  I guess the workers can unionize if they want to but the benefits will be short-lived. And unfortunately, I don’t have a good answer for union management and workers in supply chain or manufacturing industries. Most unions will become (are becoming?) dinosaurs-the management and members just can’t see it yet. Artificial Intelligence systems, robots, and autonomous vehicles and warehouse systems, are coming sooner rather than later.

I don’t have inside information, but you would have to think that Amazon already has a tech group designing a fully autonomous DC. No 6000 workers, their management, associated benefits, sick days, slowdowns, strikes, hiring, training, firing. It all comes down to cost per case…    

And from another reader:

I am not a union fan.  I find it interesting that the Times only reports on the push back that Amazon has done over the years.  It is typical of stories like this, that only show one side.  The flip on this is, and what is never reported, is how the unions provide false information, lie about what they can and can not do and basically, in my opinion, deceive workers into thinking that the “Union will provide”.  All while the employer has little to no recourse to dispute their claims because THAT is unlawful.  Unions are losing their power. 

Government push, for which the unions have poured tons of support to, are now pushing the wages up which reduces the effectiveness of union organizations.  I feel competition is far more beneficial … and provides far greater benefits than any union can.  It is time to stop trying to resurrect Jimmy Hoffa.