Updated 10:46 a.m. 12/16/2013. The strike by Amazon workers from Germany due to what they believe is low pay has not caused any concern, or excitement, among investors — although it was reported everywhere in the press. Amazon’s big announcement of the day was the release of its list of best-selling books for 2013. Shares actually traded up by 1% to $387.92
Some of the workers at Amazon.com Inc.’s (NASDAQ: AMZN) German logistics centers have gone on strike to protest what they claim are low wages and what they see as the blocking of collective bargaining. Amazon believes that these people are adequately paid, and even paid more than those who work at most other logistics centers in Germany. Viewed from the United States, the circumstances appear similar to those that have caused strikes against American companies that pay little more than the minimum wage. These strikes are usually aimed at America’s largest retailer — Wal-Mart Stores Inc. (NYSE: WMT) — and the largest fast-food company — McDonald’s Corp. (NYSE: MCD).
The media in America may have neglected to report whether Amazon’s logistics workers are paid above the German minimum wage. That is understandable. Germany has none. Most wages are set by negotiations between companies and unions. Under those circumstances, if Amazon has indeed blocked a bargaining system with employees, its workers may be paid very low wages by German standards.
The German government has proposed that in 2015 a minimum wage of 8.5 euros per hour be put in place, according to CNN Money. Based on currency ratios, the figure is about $11.55 in U.S. dollars. The number is not only well above the current American minimum wage of $7.25, but also above a proposal in Congress that the minimum wage be raised to $10.10 — an increase that probably would be reached in two or three stages.
To further complicate the analysis of how Amazon workers in Germany compare to Walmart employees in the U.S., an additional factor is cost of living. By some measures, Germany’s cost of living is 12% or more than in America. Given that, a comparison between Amazon’s situation and Walmart’s might make some sense.
However, the fact of the matter is that a direct comparison between U.S. wages paid at Walmart and German wages paid by Amazon is difficult, at best. Amazon’s workers claim they are underpaid. Germany’s cost of living may support that. But in the case of Walmart, the cost of living numbers for its lowest paid worker do not entirely capture what happens to these workers when their compensation drops them below poverty lines and they cannot afford some of the basic items of living at all. If poverty is the issue for Amazon workers, they have not made that plain, at least based on media accounts of their grievances. If the wages paid by Walmart and McDonald’s to some of their employees do not allow them to live above the poverty level, and Amazon’s payments in Germany do, apparently a comparison between the huge retailer and the huge e-commerce company does not have much bearing.