E-commerce behemoth Amazon.com Inc. (NASDAQ: AMZN) announced Tuesday morning that beginning November 1, the company will pay a minimum hourly wage of $15 to all U.S. employees. This includes full-time, part-time, seasonal and temporary workers.
The company said the pay hike will benefit more than 250,000 employees, as well as the 100,000 seasonal employees the company said it will hire for the 2018 holiday season. Amazon said it has more than 575,000 employees worldwide. The Seattle Times reported in April that the company had more than 300,000 U.S. employees.
According to a Glassdoor report from earlier this year, Amazon’s 45,000 Seattle-based employees earn an average annual salary of more than $110,000.
The math indicates that a tiny handful of Amazon’s non-Seattle U.S. workforce earned at least $15 an hour. Amazon’s latest proxy statement, filed last March, reported median employee compensation of $28,446. A full-time employee in the United States earning $15 an hour would be paid $31,200 annually, before taxes and not including bonuses or benefits.
Amazon CEO Jeff Bezos said:
We listened to our critics, thought hard about what we wanted to do, and decided we want to lead. We’re excited about this change and encourage our competitors and other large employers to join us.
What those critics were saying was none too pleasant. Online news site The Intercept reported that in Arizona, one in three Amazon employees depend on the Supplemental Nutrition Assistance Program (SNAP) to put food on their family’s table. In Pennsylvania and Ohio, an estimated one in 10 employees qualifies for SNAP assistance.
Amazon’s senior vice president of global corporate affairs, Jay Carney, who served as President Obama’s press secretary from 2011 until 2014, said:
We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago. We intend to advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.
Amazon also is changing its restricted stock unit (RSU) program for hourly fulfillment and customer service employees who told the company they preferred cash to RSUs. The RSU program, which would have vested in 2020 and 2021, will be phased out and a direct stock purchase plan will be put in place by the end of next year.
The company also noted that the effect of this change will be reflected in its earnings per share guidance. That handful of hourly workers currently earning more than $15 an hour also will get a raise the company said.
Amazon’s shares traded down about 0.6% in early Tuesday, at $1,993.00 in a 52-week range of $950.37 to $2,050.50. The stock’s consensus price target is $2,135.51. The company is expected to announce quarterly earnings later this month.