How Amazon’s Minimum Wage Hike Benefits Jeff Bezos

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(FEE Op-ed) — Amazon made headlines yesterday after it introduced it might increase its minimal wage to $15 an hour, a transfer that may impression greater than 350,000 of its U.S. staff starting November 1st. This resolution got here within the wake of harsh criticisms claiming that the net retailer each underpays and mistreats its employees. And whereas these accusations are largely exaggerated if not fully unfounded, CEO Jeff Bezos nonetheless caved in and appeased his critics.

To make certain, it’s higher for a non-public firm to lift its personal wage charges than for it to be compelled to by the federal government. However how voluntary is it actually when you’ve highly effective authorities figures continually making threats towards the corporate? The minimal wage could also be an act made underneath duress, in an effort to forestall authorities regulation and punishment.

Furthermore, earlier than we roll out the crimson carpet and have fun Bezos for this transfer, it might be smart to take a better have a look at why he did it. When you look beneath the floor, the corporate’s motives appear lower than pure.

Amazon is certainly not an underdog on this planet of on-line retail. Nevertheless, whereas the corporate is beloved by customers, it has been the goal of politicians and leftists who hate the wealthy and are obsessive about revenue inequality. The upper Jeff Bezos’ internet value rises, the extra criticism he appears to draw. However this criticism isn’t restricted to the left alone.

President Trump has had a love affair with condemning the corporate and has even accused Bezos of killing American jobs and chastised him for profiting from company tax breaks. Trump has additionally continuously blamed the corporate for the loss of life of brick-and-mortar retailers, in addition to for proudly owning The Washington Put up, which is usually essential of the president. However many of the flack Bezos’ has obtained has come from the left.

Senator Elizabeth Warren has routinely attacked the corporate and accused it of violating antitrust legal guidelines. And in a not-so-subtle blow, Senator Bernie Sanders not too long ago launched a invoice blatantly named the “Cease BEZOS Act.” Whereas the invoice’s title is definitely an acronym for “Cease Unhealthy Employers by Zeroing Out Subsidies Act,” its identify was clearly not an accident.

Sanders’s invoice is a direct assault on Amazon and seeks to levy a 100 p.c tax on authorities advantages, like meals stamps, utilized by its staff. Although the invoice would apply to any firm with over 500 staff, Sanders referred to as out Amazon by identify and accused Bezos of paying his staff so little that they’d no selection however to show to the federal government for assist.

Sanders additionally commented:

“In different phrases, the taxpayers of this nation would not be subsidizing the wealthiest folks on this nation who’re paying their employees insufficient wages. Regardless of low unemployment, we find yourself having tens of tens of millions of Individuals working at wages which can be simply so low that they’ll’t adequately maintain their households.”

The invoice was launched final month, proper after it was introduced that Amazon’s market cap had reached $1 trillion and that Bezos was now the richest man on this planet—a degree of success that progressives like Sanders despise. However accusing the corporate of forcing its staff on meals stamps is extraordinarily deceptive. Lots of Amazon’s staff are temp or seasonal employees who have been already utilizing authorities welfare applications previous to their employment with the corporate. In actual fact, when Snopes dug deeper into the declare, it discovered that 11.eight p.c of Amazon’s Ohio staff would possibly be on meals stamps, however that this quantity was merely an estimate that might not be confirmed.

This perpetual criticism from progressives has turned Bezos into one thing of a hero to those that help the free market. However this newest wage improve might change all that, because it has led many to surprise if the tables have turned and the bullied has now turn out to be the bully.

It’s one factor for Amazon to independently come to this resolution by itself and to take it upon itself to actively encourage different corporations to do the identical. In any case, in a very free market, it might be as much as every firm to work with its staff to set wage charges with out the federal government intervening. However that isn’t what Amazon has performed. As an alternative, Bezos additionally not too long ago introduced that it might start lobbying for a rise within the federal minimal wage, utilizing the federal government to coerce different corporations into elevating their charges, as effectively. And the timing of this resolution was not random.

The Wall Street Journal has astutely described Bezos’ resolution as “political insurance coverage.” Not solely does the wage improve assist the corporate look extra sympathetic and supply some safety towards the likes of Sanders and Warren, however it additionally helps squash the competitors.

Because it stands at this time, the marketplace for warehouse employees is extremely aggressive. And with the vacation season rapidly approaching, on-line retailers might be hiring an honest variety of seasonal staff to maintain up with elevated shopper demand. Amazon, for instance, plans to rent 100,000 non permanent staff this season. And for the businesses who can not afford to shell out $15 an hour for seasonal staff, this implies lacking out on high-quality employees.

Competitors, and particularly competitors for highly-skilled employees, is essential to the market course of, however this isn’t what Bezos is doing. Because the Wall Avenue Journal says, “Mr. Bezos’s $15 wage could be much more praiseworthy if he hadn’t mixed it with a plea for presidency to lift the labor prices of his opponents.” However sadly, the scenario is definitely even murkier than this.

Amazon has already begun automating lots of its warehouse positions, particularly in China. In actual fact, certainly one of its warehouses in China at the moment has solely 4 human employees. With the speedy fee wherein Amazon has been automating, it’s possible that the rise within the minimal wage received’t actually impression the corporate. If solely a handful of your staff are human, then elevating the minimal wage means little or no. And since different corporations can not afford to include AI as rapidly as Bezos can, this places the competitors in a tough spot.

Once more, all this may be wonderful if Amazon wasn’t concurrently pushing for the federal government to become involved in regulating the wage charges of its opponents, deliberately placing them at an obstacle.

Summing up the whole scenario completely, monetary investor and commentator Peter Schiff writes:

“Bezos isn’t any idiot. He’ll scale back his headcount, and step up his automation effort to get rid of as many low-skilled jobs from Amazon. Then he’ll foyer Congress to extend the minimal wage for his opponents that also make use of lower-skilled employees. As these opponents will lack the sources to automate, they are going to be pushed out of enterprise, and all their employees will lose their jobs. Much less competitors will make it simpler for Amazon to lift costs.”

As an entrepreneur, Jeff Bezos is an absolute hero and a benefactor of the human race. However our crony-capitalist political system can corrupt even the perfect of us.