In every economy, it is natural to have regular debates about wages. As time goes by, it is natural that workers will push for mire wages. On the other hand, governments also give in to the workers' pressure and regularly revise the wages by determining the minimum wage per hour. The minimum wage in most countries is based on global organizations' minimum rates, such as the International Labor Organization (ILO). In the USA, the federal government has some directives laid down by the Department of Labor, but each state determines the minimum wage. The federal minimum wage stands at US$7.25 per hour, but ten states, including California, Connecticut, Illinois, New York, among others, have raised their minimum to US$15 (Hanbury, 2020). Lately, there is a race for better wages in the various states, and as it stands, corporates are joining the fray. In 2018, in a letter to the shareholders, I made it very clear that it was time to revise the hourly rates and set the minimum at US$15, which was twice the minimum wage set by the federal government. In doing, the Amazon low rank would end up earning more than 40 million Americans (Perez, 2019). Later, in 2019, I challenged the corporates to step up and raise their minimum wage to the US $16 per hour, which would even be better than our minimum at Amazon (Perez, 2019). The wage issue is very contentious, and I do not expect an immediate turnaround. However, I believe that change can begin at Amazon, especially with our global reach and a current workforce of 1.13 million employees globally (Soper, 2020).
About Amazon's entry-level workers' wages, my suggestion is to pay a minimum wage of $17 per hour for the workers in low-cost localities and $22 for those in cities and high-cost of living localities such as New York City. At $17 per hour, this will be one of the highest wages among the USA's corporates. Ben and Jerry's has a minimum wage of $16.92 fixed in 2015. Other companies with a higher pay per hour for entry-level employees include Wells Fargo at $15 (). The best example among corporates comes from Facebook because they have a minimum wage of $15 for workers in low-cost areas and $20 for high-cost areas (Hanbury, 2020). The entry-level employees require ample support and offering them competitive wages goes a long way in acclimatizing them to the cities. Workers in cities such as New York, Los Angeles, Florida, and all major cities face the challenge of high-cost housing, transport costs, healthcare expenses, and social amenity costs too. Unlike their counterparts in the low-cost mid towns, the persons working in major cities require a wage that caters to their expenses. The variations in the cost of living explain the $7 difference between the minimum wage for the two groups.
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Amazon's value chain depends on transportation, which makes the truck drivers the most critical ground soldiers. According to Schoolov (2019), Amazon makes "$18 to 25" per hour depending on the experience, age, and operation area. Payscale records corporate wages around the USA, and I noted that UPS pays a minimum wage of $25 per hour for the city and open road drivers. At Amazon, I suggest a pay a minimum wage of $30 for all trucker drivers. Furthermore, the truck drivers ought to get a comprehensive medical cover, a 401 (k) savings plan, paid holidays and leaves, credit facilities, and Amazon discounts. Besides, the company will offer housing allowances but will vary based on the cost of living. The critical role truck drivers hold at Amazon means that their welfare needs utmost attention. In that case, the driver will get better job security, paid vacations, overtime allowances, and credit facilities. Credit facilities will allow drivers to get subsidized credit to help them invest in other ventures as they carry out their work. The pay increase, benefits package, and more prominent role at Amazon will allow drivers much more freedom and better equity. The expectation here is that most of them will opt to remain with Amazon in the long-term, leading to stability in the supply chain and ultimately resulting in higher profits. The benefits package similar to that of the drivers will extend to warehouse workers and call center staff members. The implication is that all staff members are a vital cog that drives Amazon, and appreciating them improves overall service delivery and boosts overall productivity.
The decision to increase pay and extend benefits to the low echelon workers may not be popular with Amazon's stakeholders. The shareholders may argue that such a move eats up the profits, and the exponential growth of this wage bill may affect the company in the future (Ellig, 2013). In the past, Amazon faced calls for wage increases, and as the company grew more prominent, and then there is a justification for a regular pay review (Soper, 2020). Amazon has been performing very well and can absorb a significant pay increase and remain profitable. A pay increase that puts some employees at the top of the pay scale gives our suppliers' confidence because it is a testament to financial health (Ellig, 2013). According to Ellig (2013), pay increases and high wages are a fundamental tenet of quality service delivery, which implies a better customer experience. Thus, the pay increase will translate to improved service delivery because employee motivation will improve. In the end, shareholders will get a better return on investment when productivity increases and profits grow.
Based on the Microtrends data profile on Amazon, the company has consistently made profits every year since 2006. The most significant gross profit since 2006 was in the 2019/20 financial year, and the company accrued a gross profit of $39.03 billion. Such steady results in profitability imply that Amazon has performed very well in the last 14 years, and it had the best annual results in the 2019/20 financial year. As a result, Amazon added 248,500 new hires to its global workforce during the Covid-19 epidemic (a time when other corporates were furloughing their workers) (Soper, 2020). The expanding workforce and growing profits mean that the company's decision to increase wages will make Amazon one of the most attractive employers and give it access to the best human resources in the future.
Conclusively, the proposed wage increase and a new benefits schedule will position Amazon as one of the USA's best employers. Workforce morale will improve, leading to better service delivery. In the end, the company will accrue profits for the shareholders, thus convincing about the need for better wages. Amazon, as a company, stands to gain by increasing pay and benefits among its workers because they mean increased productivity. At Amazon, such payments and benefits increments are necessary and ought to be conducted all through the ranks. Still, truck drivers and warehouse workers require more pay and an improved benefits package. Informing workers that they are trusted, appreciated, and cherished by Amazon will boost morale and push productivity upwards. It will also trigger growth and a need for more hires. The expanding workforce and growing profits imply that Amazon will be the most attractive employer, which will give it access to the best human resources in the future, hence increasing its productivity and efficiency.
References
Ellig, B. R. (2013). The Impact of Company Stakeholders on Executive Pay. Compensation & Benefits Review , 45 (3), 136-144.
Hanbury, M. (2020, April 16). Jeff Bezos boasts in letter to shareholders that 40 million Americans make less than any Amazon employee. https://www.businessinsider.com/jeff-bezos-amazon-worker-earns-more-than-millions-of-americans-2020-4?IR=T
Olian, J. D., & Rynes, S. L. (1991). Making total quality work: Aligning organizational processes, performance measures, and stakeholders. Human Resource Management , 30 (3), 303-333.
Perez, S. (2019, April 11). Amazon CEO Jeff Bezos challenges rival retailers to raise their minimum wages, too. Retrieved December 10, 2020, from https://techcrunch.com/2019/04/11/amazon-ceo-jeff-bezos-challenges-rival-retailers-to-raise-their-minimum-wages-too/
Schoolov, K. (2019, June 19). What it's really like to be an Amazon Flex delivery driver as Prime one-day shipping expands. https://www.cnbc.com/2019/06/19/how-amazon-flex-delivery-drivers-get-paid-and-what-its-really-like.html
Soper, T. (2020, October 29). Amazon hires 248,500 people in Q3 as Jeff Bezos challenges large employers to raise minimum wage. Retrieved December 10, 2020, from https://www.geekwire.com/2020/amazons-hires-248500-people-q3-jeff-bezos-challenges-large-employers-raise-minimum-wage/
