Amazon gave up and raised employee salaries

    Bezos did break. After all the stories about the horrors that are happening behind closed doors of Amazon warehouses, and the introduction of a new bill directed specifically against him to Congress, he recently said that he raises the minimum wage for all Amazon employees in the United States and Britain. At such a decision, according to rumors, the online store will lose several billions every year. But do not discount the old Jeff, he has a cunning plan.

    Previously, according to the US State Securities Commission (SEC), the median wage at Amazon was $ 28,446 per year, or approximately $ 13.68 per hour. For comparison, the median income on average in the United States is about $ 40,000, and Bezos himself receives such a profit every 10 seconds.

    In many cities, such a salary did not allow workers to even pay for rental housing. Thousands of employees at Amazon warehouses were actually homeless, and tens of thousands took state money. support in the form of Medicaid and food stamps. Senators and the public, led by Bernie Sanders, America’s Chief Socialist, tried to force the company to take better care of its employees - all the more so given its financial performance (Amazon recently became the second company in the world after Apple, whose share value went over $ 1 trillion ).

    Amazon had counterarguments. For example, the fact that offline retailers have their salaries even lower, that the company created 130,000 new jobs per year, and that their warehouse employees receive 30% more than the market average. But in the end, under the threat of state sanctions (they promised to make the company pay extra for everything that the government spends to support its employees), Bezos surrendered.

    Since November 1, the company has been carrying out the largest one-time salary increase in its history. She will start paying at least $ 15 per hour to her regular 250 thousand employees and even to 100 thousand seasonal workers, which she hires on holidays. Thus, the median salary for the 40-hour work week rises to $ 31,200 per year. So far, not forty thousand, but already significantly above the poverty threshold (in the United States for a family, it is $ 25,000 per year).

    At the same time, the salary of 37,000 Amazon employees in the UK (which so far no one has requested) rises. At an hour, the stockmen under London will receive £ 10.50 (about $ 13.60), and in other parts of Britain - from £ 9.50.

    Jeff Bezos wrote in his statement:

    We listened to our critics, deeply thought about what we want to do, and decided that we would step forward and set an example to the rest. We are very excited about these changes and encourage our competitors and other major employers to join us.

    Great joy, however, Amazon hardly feels. If only because it carries out the changes under pressure. A month ago, with the support of dozens of senators, Bernie Sanders passed a bill to the US Congress, according to which major employers in the country had to return to the state the entire amount that it had to spend on housing, food, Medicaid and other programs to help current employees of the company. According to estimates, this would save ordinary taxpayers at least $ 150 billion a year. The bill was called Stop Bad Employers by Zeroing Out Subsidies - abbreviated as Stop BEZOS.

    Sanders commented on the Amazon salary increase statement:

    Today I want to pay tribute to Mr. Bezos for what he did exactly what is needed. He is one of the most important corporate leaders in this country, and his decision will affect the entire corporate world. It also sends a specific message to the fast food industry, the aviation industry and the retail industry as a whole. It is time to pay workers so much so that they can live on it.

    In response, Bezos thanked the senator on Twitter.

    Amazon shares at the exit of the news fell by 2%. Such an indulgence company is unlikely to feel. In general, this year they grew by 71%, increasing the state of Bezos by $ 83 billion (he owns 16% of the online store, not counting his other projects).

    Amazon also said that the company's lobbyists will now begin to advocate raising the federal minimum wage in the United States, which is $ 7.25 per hour since 2009 (although some states and cities have increased it individually - say, in California from January 1, 2018, it will be $ 11 per hour, and in San Francisco since July 1 - $ 15 per hour).

    Unemployment in the US is at a minimum since 2007, which forces retailers to raise wages in the fight for employees. Earlier this year, Walmart began paying employees at least $ 11, and Target - $ 12, with plans to increase the cost to $ 15 by the end of 2020.

    The median salary in the largest American companies in 2017

    Prior to that, under pressure from the public - or rather, the same Bernie Sanders and several trade unions - even Disney surrendered. A month ago, she raised the salaries of her entertainment parks to $ 15 per hour.

    Next, as Sanders hinted more than once, the lineup for Walmart. The largest offline retailer in the world and before that paid its employees a couple of dollars less than Amazon. And the company in the US employs 1.5 million people, three times more than Jeff Bezos. The reason why the senators chose an online store as their first “victim” is probably due to its exceptional profitability. If Amazon shares did not grow by 40-70% every year, the company would perhaps be thanked for not having dismissed anyone. But when Bezos goes to conquer $ 200 billion, for the first time since Carnegie and Rockefeller, and many of his employees cannot even afford a roof over their heads, people have questions ...

    Honey spoon

    Interestingly, the "capitulation" under the threat of senators can even play into the company's hands. Economists say that Amazon’s salary increase decided very well to be held in time for November, when the main sales time begins. Last year, Amazon sold goods worth $ 2.6 billion on Black Friday. Half of all online purchases in the United States fell on one online store. This year, if the workers went on strike or if they did not manage to hire an additional 100,000 hands, the company would risk losing its profits during the main days of the year. Rumors have already appeared that it will be difficult for the company to hire its traditional one hundred thousand temporary employees for the next two months due to competition from other retailers.

    But now, after eliminating all the risks and considering the growth of the US economy, Amazon’s profit for Thanksgiving Day, Black Friday and Christmas will almost certainly increase compared to last year. And that means a continuation of the explosive growth of the company's shares. All the costs that the company will incur, raising wages in their warehouses at $ 1.32 per hour, can pay for themselves in the next two months.

    According to estimates by experts of Loop Capital Markets, the cost of an online store will increase by $ 2– $ 3 billion due to higher wages. For Bezos, this is a relatively small amount. Plus, Amazon continues to massively install robots in its warehouses, which should slow down the hiring of new employees, and help in the future to reduce the company's labor costs.

    Tricky plan

    But even these two or three billion is not necessary to lose! We are Amazon, every penny in the account! In parallel, having calmed down politicians and the public, the company (very quietly) cuts various bonuses, so that some employees are worried that their income may even decline significantly.

    The scheme is very simple. Amazon used to give employees incentives in the form of company stocks. Each warehouse worker when hiring received two shares of Amazon (each of which now costs $ 1950), which could begin to dispose of after two years of work in the company. Plus, he had the opportunity to receive one more such action each year. As Amazon's stock rose in price, such conditions became less and less profitable for the company itself, and now, on the news about the increase in minimum wages, this reward program is suddenly removed, "because of the uselessness."

    Bonuses for overfulfilment of the plan, as employees of the company say, also go. Previously, it was a good way to earn an additional up to $ 300 per month. Especially in November and December, when performance bonuses doubled.

    User The_splitwig wrote in "Twitter":

    My family works at Amazon, and they lost a lot. They already had more than $ 15 per hour (like almost everyone at their facility), but they lost all the bonuses and the share program. Now a year they will receive $ 3- $ 6 thousand less.

    An Amazon spokeswoman commented to CNBC that “we have removed additional incentives at the request of the workers themselves. Now their compensation will be more immediate and predictable. ”

    All politicians and journalists of Bezos have already praised, now they don’t want to give up their words. In the near future, he is again in good standing with the public, while remaining positive on all fronts. So it seems that old Jeff here kills two birds with one stone. And what, the Rockefeller of our time for just do not become ...

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