24/7 Wall St. Insights

• Amazon.com Inc. (NASDAQ: AMZN) is boosting its starting pay and offering workers new benefits.
• One of those new worker benefits is a free membership to Amazon Prime.
• Also: 2 Dividend Legends to Hold Forever.

Amazon.com Inc. (NASDAQ: AMZN) announced it would increase the average starting pay of warehouse workers to $22 an hour, an hourly increase of $1.50. However, Amazon said the total average was actually $29 because of benefits.

The company added, “as one of the largest private employers in the country (we now have more than 800,000 people in these roles across the U.S.), this pay increase equals a total investment of more than $2.2 billion in our team.” All warehouse workers will benefit from the change. However, each one will need to decide which comp numbers best apply to them based on the new plans.

In an odd move, workers will also get a free membership to Amazon Prime, which costs consumers $139 a year. Prime members get free delivery on many orders, special sales of goods and services, and the Prime video service, which competes with services like Netflix. If workers leave, they cannot take this benefit with them. The company said, “Hourly team members in the U.S. will get Prime at no additional cost for as long as they are a part of the Amazon team.”

One study shows that Prime members spend an average of $1,400 a year on Amazon compared to $600 for non-Prime members. That means the workers with this benefit may also increase their shopping at Amazon.com. If so, the company may profit from the new worker compensation plan. Their shopping may offset the amount of their new pay packages.

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