SALT LAKE CITY — Amazon's newly announced $15 minimum wage policy should be a boon for Utah employees of the world's largest online retailer, with almost 1,500 set to work at the company's new procurement center in Salt Lake City and three Whole Foods stores, also Amazon holdings, along the Wasatch Front.
While an Amazon spokeswoman declined to detail exactly how many Utah employees will be impacted by the change, the company notes that the new policy, which implements on Nov. 1, will "benefit more than 250,000 Amazon employees, as well as over 100,000 seasonal employees who will be hired at Amazon sites across the country this holiday."
Amazon founder and CEO Jeff Bezos, who's long been under fire from industry pundits and some elected officials about wage disparity issues within his company, said the decision came, at least in part, as a response to those disparagements.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Bezos said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
Amazon's new Salt Lake facility — a sprawling, 850,000-square-foot facility near the Salt Lake International Airport — began hiring earlier this summer for new "warehouse fulfillment associates," the positions that represent the majority of the new hiring in Salt Lake City. Those jobs had been advertised by Amazon with a starting wage of $12.50 per hour, an earning rate that fell far short of the state's median wage of just over $17 per hour.
While Amazon's new minimum wage pushes the annual earnings figure to $31,200, the rate is still short of a figure revealed in a June report on Utah housing affordability that noted the minimum wage for a full-time worker to afford a two-bedroom apartment in Salt Lake City is $18.85 per hour.
Juliette Tennert, director of economic and public policy research at the University of Utah's Kem C. Gardner Policy Institute, said the wage change bodes well both for individual Utah Amazon employees and the state's economy.
"Given that $15 per hour represents a fairly significant boost above what we were initially expecting, $12.50 an hour, we should see more money filtering through the economy for household spending and additional economic growth," Tennert said.
"It’s one thing if money is just shifting around in Utah, that’s not a net gain, but the fact that Amazon is a global company means that wage bump is truly net new money."
Tennert believes the move could also put pressure on other Utah companies, which are paying less than $15 an hour, to make changes to compete for employees in a state that continues to see very low unemployment rates.
"With Amazon here, expanding and ramping up to a sizable workforce and then layering on this wage increase, that will increase competition for skilled labor," Tennert said. "I think that we could anticipate upward pressure on wage prices as other companies make moves to compete."
Utah House Minority Leader Brian King, D-Salt Lake City, ran into opposition for a legislative proposal in the last session aimed at moving the state's minimum wage, in increments, from its current federally mandated $7.25 per hour to $12 per hour by 2022. The bill's failure reflects another chapter in a perennial effort by Utah Democratic legislators to address low-wage issues.
On Tuesday, King told the Deseret News he was pleased to hear of Amazon's announcement and sees it as a smart move by Bezos.
"I think it's a good idea, and $15 an hour is a fair and decent wage," King said. "I think Amazon is recognizing that this is a good business move, in the sense that it distinguishes the company as fairly compensating labor.
"The people who work for Amazon is why the company has done well. Bezos is brilliant … but he didn’t do this alone."
Given Amazon's size and clout, the move Tuesday is a major victory for the $15-an-hour movement, which has organized protests of fast-food, gas station and other low-paid workers. Already, several states and cities have raised their minimum wages above the federal one.
Amazon, whose value topped an awesome $1 trillion in September, has been under political and economic pressure to pay its employees more.
But Amazon may also be offering raises out of necessity: With the economy booming and unemployment near rock bottom, employers are having difficulty finding help. Amazon, with about 100 warehouses around the country, will soon need to hire more than 100,000 workers to pack and ship boxes during the holiday season.
Amazon and Whole Foods hourly employees who already make $15 per hour will also see a wage increase, the Seattle company said. (Workers in Britain will also get a raise.)
The announcement was enough to soothe one of Amazon's fiercest critics: Sen. Bernie Sanders, I-Vt. The senator, who frequently uses Twitter to point out the disparity between Amazon's hourly wages and Bezos' vast fortune, congratulated Bezos for "doing exactly the right thing" and urged other companies to follow Amazon's example.
Sanders described Amazon's move as "a shot heard around the world."
It will have repercussions beyond retailers and will put pressure on any company that operates a distribution center, said Gerald Storch of the retail consulting firm Storch Advisors.
"This will lead to a general increase in minimal wages in all industries," he said. At the same time, Storch said, the wage increase will widen the gap between the healthy retailers, such as Amazon, Walmart and Target, and the struggling ones, which won't be able to afford to compete on salary.
"The weaker retailers have been cutting costs and squeezing every penny," Storch said. "They are in a very tough place."
Amazon, founded more than two decades ago, has expanded far beyond its bookseller beginnings. Despite its dominance, it shares a major problem with employers big and small: a tight labor market. Unemployment in the U.S. is 3.9 percent, near an 18-year low, and Utah's unemployment rate is even lower, reported as 3.1 percent in August. Higher pay for workers is one way of dealing with that.
"They'll gladly cross the street and take a better-paying job," said Marc Wulfraat, president of MWPVL, a supply chain consulting company.
Walmart raised its starting pay to $11 an hour earlier this year and said it has seen lower turnover among its employees. Target, which announced plans last year to raise hourly wages in steps to $15 by 2020 and now pays $12 an hour, said the number of job applicants rose 60 percent in the days after it increased its minimum wage by $2 to $11 per hour last year.9 comments on this story
Amazon said it doesn't expect to raise prices for its products to pay for the wage increases.
"Customers are going continue to see incredibly low prices every day," said Dave Clark, senior vice president of worldwide operations
The push for a higher federal minimum wage will be overseen by Amazon's Jay Carney, White House press secretary during the Obama administration. Amazon won't ask Congress to raise the minimum to a specific number.
But "we're sure $7.25 is too low," Carney said.