Amazon raises minimum wage

(Bloomberg) – Jeff Bezos blinked.

Bowing to political pressure, he announced plans Tuesday to raise the minimum wage for all Amazon employees in the U.S.

Effective Nov. 1, the company will offer $15 an hour to more than 250,000 current employees along with 100,000 more seasonal workers who will be hired during the holidays, Amazon said in a statement.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Chief Executive Officer Bezos said in the statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”

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An Amazon.com Inc. package sits in a bin before being placed on a delivery vehicle at the United States Postal Service (USPS) Joseph Curseen Jr. and Thomas Morris Jr. processing and distribution center in Washington, D.C., U.S., on Tuesday, Dec. 12, 2017. The USPS said it expects to deliver over 15 billion total pieces of mail this holiday season with expanded Sunday delivery operations in certain areas, delivering over six million packages each Sunday in December. Photographer: Andrew Harrer/Bloomberg

The e-commerce behemoth has been hit by lawsuits in recent years alleging that it has used contract employees to skirt regulations and cut costs in the U.S. and abroad. Vermont Senator and former presidential candidate Bernie Sanders has charged that Amazon pays its workers such a low wage that many of them have to apply for public assistance.

Amazon, like other retailers, is also responding to a tight U.S. labor market. Earlier this year, Walmart boosted its starting hourly wage to $11 an hour. Target last year increased its minimum hourly wage to $11, and will boost it to $15 by the end of 2020. Costco and other retail chains like TJX have also raised wages in recent years. Amazon’s pay hike includes workers at Whole Foods, which the company acquired last year.

The political pressure on Amazon has been ratcheting up in recent months. Sanders introduced a bill last month that would tax Amazon, Walmart and other big employers whose workers collect public assistance. If the companies paid a living wage, U.S. taxpayers would save $150 billion a year on government assistance programs, such as food stamps, Medicaid and public housing, Sanders argues. The bill is called the stop Bad Employers by Zeroing Out Subsidies Act -- or Stop BEZOS.

In a blog post responding to Sanders at the time, Amazon said it created 130,000 new jobs last year and that employees receiving food stamps include those who work part-time or only worked at Amazon for brief periods.

Amazon said company lobbyists will also begin advocating for an increase in the U.S. federal minimum wage, which has been $7.25 an hour since 2009. Amazon’s new U.S. wage implies an annual income of about $31,200 for a 40-hour-per week worker. The U.S. income poverty threshold for a family of four is about $25,000, according to 2017 Census bureau figures.