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Amazon sets a high bar on wages

Its new $15 minimum wage and its lobbying for a higher federal minimum wage could inspire other companies to see a grander purpose of investing in the well-being of workers.

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Job applicants talk with Amazon workers at a job fair in Kent, Wash., in 2017.
  • By the Monitor's Editorial Board

Amazon wants to be more than Amazon the online retail giant. On Oct. 2, its chief executive, Jeff Bezos, announced that the company wants to lead other large employers toward a purpose beyond bottom-line profits. He said Amazon will be raising its minimum wage to $15 an hour for all employees on Nov. 1. And it would lobby Congress for an increase in the federal minimum wage, which has been $7.25 for nearly a decade.

As the country’s second-largest private employer after Walmart, Amazon’s actions could inspire other companies to follow suit and move the needle on income distribution in the United States and other countries where it operates. At the least, it sets an example of how companies can balance private gain with social good. Or, as the first dean of Harvard Business School, Edwin Francis Gay, put it, the purpose of business is to “make a decent profit, decently.”

One “decent” aspect of lifting wages is that it shows a company values its workers as investments rather than a cost to be minimized. A stable and loyal workforce is more willing to help a company boost its productivity and meet the needs of customers.

To be sure, Amazon needs to attract and retain workers in a tightening job market, especially before the rush of holiday shopping. Average hourly earnings in the US rose 2.9 percent in August from a year earlier, the biggest rise since mid-2009. And as employers compete more for workers, those who switch jobs are seeing even higher wage gains.

Companies are dealing with both a strong economy and more demands by states to set a floor in pay for workers. The unemployment rate is near a 50-year low. And in 18 states the minimum wage increased this year.

Amazon is not the first big employer to raise wages beyond what the job market dictates. Target, Disney, CVS, and Aetna have made a splash in recent years in announcing big pay hikes. Gap said a boost in pay for its workers was based on its founding purpose that the clothing company must “do more than sell clothes.”

For Amazon, its calling now seems to be in nudging both companies and government to set wages that show a higher respect for the well-being of workers. 

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