November 2, 2018

Amazon's New Minimum Wage, Linked to Reduced Stock Compensation, Begins Today

Executive Director

In October, Amazon announced that, effective November 1, it would increase its minimum wage to $15 per hour, covering 250,000 people, or 40% of its current staff. The move earned praise from, among others, Senator Bernie Sanders, who said, "I urge corporate leaders around the country to follow Mr. Bezos's lead," referring to Amazon's CEO Jeff Bezos.

As part of the minimum wage adjustment, Amazon also said it would eliminate a restricted stock unit program, which provided shares to workers, including warehouse staff.
The New York Times published an extensive article comparing the Amazon restricted stock program to the former stock plan at Sears. Sears contributed 10% of pretax profit, and by the 1950s Sears employees owned a quarter of the company. The article quotes Joseph Blasi of Rutgers University as saying that in the mid-twentieth century "there was a notion that wages were not enough, and workers had a right to share in the fruits of their labor."

The article notes that Amazon "had been awarding two shares a year to warehouse employees, worth about $3,500 at the current price." It interviewed Amazon employees who calculated that their total compensation would decrease. In response to questions about the possibility that the change would decrease compensation for some workers, the Times reported that "Amazon officials said that over the next week they would adjust the pay of some employees to make sure workers did not end up losing money with the changes." The company also said it would create a new share compensation plan in 2019, but did not share any details.