Amazon raised minimum wage... then cut bonuses and stock awards

[disneysteve]

http://time.com/money/5414709/amazon-raised-its-minimum-wage-to-15-then-it-cut-monthly-bonuses-and-stock-awards/

Amazon is raising their minimum wage to $15. To pay for it, they are eliminating monthly bonuses and stock incentives. Hopefully, they won't also be raising prices.

All the folks pushing for the $15 minimum just don't seem to grasp that the money to do that needs to come from somewhere. It could be through layoffs, higher prices, cutting services, eliminating bonuses, etc. In the end, higher wages won't necessarily mean that people are better off if their cost of living rises as a result.

[Budget Kitty]

I'm sure Amazon did an analysis and determined what they'd have to cut to support the increase in wages. I'd bet for them it ended up being a wash, and the last line of the article is telling:

“They probably realized people weren’t applying for warehouse jobs for the stock options.”

[disneysteve]

I'd bet for them it ended up being a wash

Probably. That's my point. It's a zero sum game. Companies can't just raise wages without cutting back somewhere else or raising income (prices). The money for the higher pay doesn't just come out of thin air.

[Jluke]

$8 x 40 x 52= 16.6k per year more, gross.

Wonder what the bonus used to be?

Amazon stock options, now that seems like a huge loss to the workers. Despite that last line but maybe there was a catch.

[kork13]

$8 x 40 x 52= 16.6k per year more, gross.

Wonder what the bonus used to be?

That was actually my thought as well. I expect that for most hourly employees (my understanding is that only hourly employees lost the stock/bonus benefits), their bonuses amounted to well less than that. So I expect that for most, this is probably a net gain for them, though perhaps not as grand as a significant hourly raise might appear to be.

[bjl584]

I'm guessing that these raises are for the Amazon employees that work at the office? All of the warehouse workers that actually fulfill the orders are not employed by Amazon. Most of Amazon's workforce is contracted out to 3rd parties.

[Mjenn]

I’m not in the states but for us the big difference between a
bonus and a salary increase is that with salary you get pension and unemployment benefits, but a bonus is a one off. Therefore more salary is almost always better than a bonus.

But we we also have no minimum wage set by the government but McDonald’s employees make about 15 dollars an hour anyway.

With the booming economy, many companies here struggle to find people willing to work for anything less than 15 per hour even students.

[msomnipotent]

I was just talking to my nephew about this yesterday. He works in an Amazon warehouse. His raise was $1.40 per hour, which he prefers to the old system. The old bonus system was so complex that hardly anyone received one. He said that anyone who took time off during the bonus period didn't get a bonus, which I couldn't believe. I can see not getting one if you get a write up but for taking PTO? He also said that about 90% of the warehouse workers are employees at his warehouse, and more surprisingly, he has been sent home early a lot lately for lack of work. I'm sure it will start to pick up in a few weeks for holiday shopping, but I can't help wonder if maybe we will start to hear about oversupply and warehouse closings.

[Smallsteps]

Amazon has MANY more issues about how they treat their employees then just compensation. I have known current and past employees from warehouse on up to HQ and most tell me stories that made me NEVER to want to support them.
This is a pure publicity stunt nothing more. They were being outed for practices they have always done and they wanted to make sure hose who use them do not catch on to who they really are. I am glad some may benefit instead of playing the games and jumping through hoops to attempt to get the bonus it was ridiculous.

[amastewa93]

He also said that about 90% of the warehouse workers are employees at his warehouse, and more surprisingly, he has been sent home early a lot lately for lack of work.

That is extremely surprising. I totally get why the new system would work better for most warehouse employees, etc. Because, as the article stated, most of them probably aren't looking for stock options. The bonus loss would bother me a bit, especially because my family usually leans on those bonuses from work to cover Christmas. However, it seems like if they are sending people home early they may have too many employees, right?

[disneysteve]

Just to be clear, I didn't start this thread to bash Amazon or question their company policies. That's an entirely different conversation. My point was just to show that higher wages can't occur in a vacuum. You can't just pay people more without it impacting other aspects of the business. In this case, it is impacting bonuses and stock options. In other cases it could result in layoffs and increased automation to replace human workers. It could lead to higher prices for goods and services making that higher wage not all that helpful overall if your cost of living goes up as well.

[MooseBucks]

I’d argue that they can raise their minimum wages without reducing benefits. They’ve positioned their businesses to become more recession proof and have seen profits increase dramatically over the past 3 quarters or so.

[disneysteve]

I’d argue that they can raise their minimum wages without reducing benefits. They’ve positioned their businesses to become more recession proof and have seen profits increase dramatically over the past 3 quarters or so.

They’ve already seen their stock price drop since they announced the wage hike. If they didn’t come up with a way to pay for it, the value would fall even farther.

[Snydley]

Well if Jeff Besos stopped taking his absolutely insane salary, and also gave some of his unimaginable wealth back to the people who enabled him to get it, there would be a solution. He is truly disgusting.

[james.hendrickson]

Its possible that Amazon is increasing their pay because of economic pressure. The economy is getting better and employers need to offer higher salaries to attract good employees.