Amazon's $15 minimum wage gives a lift to California's vast warehouse region
In Southern California’s Inland Empire, where some 20,000 people toil in Amazon’s vast network of warehouses, the company’s announcement of an increase in their entry-level wage to $15 an hour was seen as a boost for the local economy.
“It’s huge,” said John Husing, chief economist of the Inland Empire Economic Partnership. “Nearly half of our region’s workforce is marginally educated, with just a high school degree or less. At Amazon, they’ve started at about $13 an hour. The extra two dollars will have an impressive impact on their quality of life.”
Local businesses from grocery stores to barbershops will benefit, he predicted, and Amazon’s move will put pressure on other companies in the region where entry-level warehouse jobs last year paid an average of $12.21 an hour.
But worker advocates, including union officials behind the successful drive to raise state and local minimum wage levels, cautioned that the raise is a mere step in the right direction.
“Amazon has gotten a lot of bad press over its labor practices,” said Sheheryar Kaoosji, co-executive director of the Warehouse Worker Resource Center, an Ontario nonprofit. “This is a good start, and a response to a tight labor market as much as anything.”
Many of Amazon’s workers are part time, so even with $15 an hour, Kaoosji said, “it won’t be enough to survive, especially with housing prices going crazy in Southern California.”
The wage increase will affect 30,000 hourly workers in Amazon’s California packing and sorting centers, along with an unspecified number of workers at Whole Foods, the grocery chain purchased by Amazon last year.
Nationwide, more than 250,000 Amazon employees will see a pay boost, along with more than 100,000 seasonal workers.
California’s minimum wage, now at $11 an hour for employers with 25 or more workers, is set to rise to $15 by 2022. Smaller employers, now subject to a $10.50 pay floor, will have an extra year to reach $15. The minimum is higher in several jurisdictions, including Los Angeles County, where larger employers must pay $13.25 an hour and smaller employers $12.
In announcing the move, Amazon Chief Executive Jeff Bezos appeared to acknowledge a growing national outcry over the company’s wages.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Bezos said. “We’re excited about this change and encourage our competitors and other large employers to join us.”
In an April filing with the Securities and Exchange Commission, Amazon disclosed its workers’ median annual pay as $28,446, or about $13.68 an hour, meaning half its workers earn less and half earn more.
The contrast between Amazon wages and the company’s market capitalization of close to $1 trillion — and with Bezos’ status as the world’s richest person, with a $165-billion net worth — has made the company a target.
Sen. Bernie Sanders, the Vermont independent, and Rep. Ro Khanna (D-Fremont) introduced a bill last month pointedly titled Stop Bad Employers by Zeroing Out Subsidies, or Stop BEZOS. It would tax companies whose employees rely on government benefits, after surveys showed that some Amazon workers collect food stamps.
According to the Massachusetts Institute of Technology’s Living Wage calculator, which examines the cost of living in states and counties across the nation, it takes a wage of $14.01 an hour for a full-time worker in California to meet basic needs. For a couple with one working adult and two children, the amount rises to $30.04.
Although Amazon’s wage increase applies to warehouse packers and sorters, it does not apply to most of the company’s delivery drivers. They are classified as contingent workers and are paid by the number of packages they deliver, often driving their own cars.
Lauren Lynch, an Amazon spokeswoman, declined to say how many drivers deliver Amazon packages. Contract drivers “are individual businesses that have their own pay and benefits structures,” she said.
The website of Amazon Flex, an app where gig workers can sign up to deliver packages, asserts that drivers “make $18 to $25 an hour.”
Although a company official posted a video on social media of Amazon employees at a San Bernardino warehouse cheering the announcement, workers commenting on the IE Amazonians Unite Facebook page were critical of the company’s eliminating stock options and incentive pay as part of the new package.
The company said the net effect would still result in a higher total, but some workers were skeptical.
Amazon’s minimum for logistics workers is higher than that of many companies operating in California, but it falls far short of the $20-and-up minimum that workers are paid at unionized companies such as UPS or grocery chains.
Randy Korgan, secretary-treasurer of Teamsters Local 1932 in Ontario, called the Amazon raise “a positive sign, but an incremental step. It shows the needle is starting to move because workers are saying enough is enough and corporations should pay a living wage.”
Korgan said the union gets many calls from Amazon workers. Just weeks ago, he said, Amazon told Inland Empire workers they would be getting just a raise of just 40 cents an hour. “But workers came together and ratcheted up pressure, saying they couldn’t survive on what they were paid,” he said.
The raise is also driven by the company’s difficulty in retaining workers, he said. A Teamster study of turnover at one Amazon warehouse in San Bernardino showed that the company had to hire 6,000 workers over a three-year period to maintain a workforce of 1,000.
Amazon’s Lynch addressed the assertion of high turnover by saying that the company “offers industry leading benefits” and “one of the reasons we are able to attract people to join us is that our number one priority is to ensure a positive and safe working environment.”
None of Amazon’s U.S. workers are unionized. The company’s orientation meetings regularly include anti-union videos, and the high turnover makes union organizing difficult, Korgan said.
Despite California’s declining unemployment rate, “there’s no shortage of workers,” he said. “There’s just a shortage of workers who will put up with Amazon’s working conditions. “
Kaoosji of the worker center said Amazon monitors workers’ every move, firing those who don’t meet pressurized productivity demands.
“A robot tells you that you have 45 seconds to pick up that package. And if you don’t make it, then your likelihood of being fired rises,” he said.
“It is really an intense, stressed environment. Workers who carry pedometers in their pockets find they are running 20 miles a day. And many workers are on call, and they are notified at the last minute to come to work, or told suddenly to go home. It makes it difficult to arrange child care or to hang on to another job if they are part time.”
Amazon disagreed with Kaoosji’s description. Lynch said the company questions workers “every day about how we can make things even better, we develop new processes and technology to make the roles in our facilities more ergonomic and comfortable for our associates, and we investigate any allegation we are made aware of and fix things that are wrong.”
Amazon’s wage increase comes amid growing militancy on the part of unions, which bankrolled a Fight for $15 movement in recent years, initially targeting McDonalds and other fast-food companies and then expanding to other companies.
In recent weeks, Disneyland, Orange County’s largest employer with 30,000 workers, agreed to raise minimum pay to $15 an hour or more for most of its workers after a coalition of unions placed an initiative on the Anaheim ballot to raise pay at companies that have accepted city subsidies.
This week, workers at fast-food chains, hospitals, child-care centers and colleges in California and other states are walking off their jobs to draw attention to the need for unions. “People are losing patience when they see that the economy is booming but their lives aren’t getting better,” Mary Kay Henry, president of the Service Employees International Union, told the Washington Post.
Numerous studies, including a 2016 study from the Economic Policy Institute and a June study from Princeton economists, show that unions historically reduce income inequality and suggest that current wage stagnation might be attributable to the decline of unions. Union membership in the U.S. stood at 10.7% of wage and salary workers in 2017 and at 15.5% in California.