On November 1st, Amazon’s voluntary $15 an hour minimum wage takes effect. A $15/hour minimum wage actually can help them. They can more easily afford it than their competition. By voluntarily adopting a $15/hour minimum wage, Amazon CEO, Jeff Bezos increases pressure on competitors to do the same, and further emboldens the likes of Senator Bernie Sanders to mandate the higher minimum wage through legislation – potentially forcing other retailers to take on extra costs before they are ready.
So who is Amazon’s competition? Walmart. Like Amazon, Walmart has the financial strength to absorb an increase in labor costs, better than most. (In fact they just increased their own self-imposed minimum wage to $11/hour in January.) But not better than Amazon. Hourly wage labor is a bigger expense for Walmart than for Amazon. Walmart as of 2018, has almost 4 times the number of employees as Amazon (2.1 million to .56 million, although, of course, not all are hourly.)
Amazon’s comparative advantage in hourly wage labor cost is likely to grow stronger despite the voluntary wage increase. As they continue to automate processes, from robotic fulfillment and sorting to driverless delivery trucks to drones, their reliance on low skilled hourly labor, as a percentage of overall costs will fall. Walmart meanwhile will also certainly leverage technology to reduce reliance on such labor, but they will not beat Amazon at this game.
It is possible, but seems unlikely, that Amazon’s self inflicted wage increase is not, at least in part, a swipe at Walmart. Why not do it? Even if the move does not ultimately force Walmart to raise wages, or if it does, and Walmart handles it, the tactic is worth a try. There is virtually no downside. And there is upside – in the form of good press, and political favoritism – no matter what. And Walmart, at the very minimum, now must deal with this to some degree, in some manner – whether paying lobbyists to fight back against the useful idiot, Bernie Sanders, or paying more money to their employees. Maybe this is just a distraction, maybe it’s a significant, unplanned cost. Either way, it’s an obvious, easy play by Amazon.
Meantime, whether Bernie Sanders is a co-conspirator or a indeed useful idiot, he is carrying water for exactly the type of behemoth corporation he says is the problem.