Why Amazon Is Flooding the Country With $15 Minimum Wage Ads

Amazon’s lobbying for a $15 minimum wage is a PR boon, hiring strategy, anti-union tactic, and move against competitors all in one.
February 25, 2021, 2:00pm
Why Amazon Is Flooding the Country With $15 Minimum Wage Ads
PHILIPPE LOPEZ / Contributor
On the Clock is Motherboard's reporting on the organized labor movement, gig work, automation, and the future of work.

For the past few years, Amazon has increasingly pushed data-driven quotas and warehouse and delivery efficiencies that workers say are dangerous and inhumane, while at the same time actively lobbying Congress to increase the federal minimum wage to $15.

In fact, Amazon is one of the few major employers in the U.S. that already pays its employees $15 an hour. Amazon has been lobbying in support of a $15 minimum wage for years, but has redoubled its efforts in early 2021: It’s advertising on podcasts, tweeting videos with workers, and publishing full-page newspaper ads saying that “It’s time to raise the federal minimum wage. Actually, it’s past time.”

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To many, this seeming contradiction between its apparent commitment to a fairer hourly wage (a policy supported by many on the left) while hyper-exploiting its workers doesn’t make a lot of sense. According to experts Motherboard spoke to, the reality is that Amazon workers are still struggling and the company is actually pushing wages down in the warehouse sector while convincing people who might otherwise work retail to take on backbreaking labor.  On top of this, the move has been a PR boon at the same time the company is escalating its war against unions. 

Over the past few weeks, raising the federal minimum wage to $15 has become one of the main points of contention in negotiations surrounding Joe Biden’s $1.9 trillion COVID-19 relief bill. Many have seized a recent Congressional Budget Office report to kill the proposal, pointing to the study’s projections that raising the minimum wage to $15 by 2025 would cost 1.4 million jobs. There's mounting evidence, however, that "the report's assumptions about job losses are problematic—significantly out of step with modern research on the subject."

In October 2018, after months of intense public criticism—including a bill introduced by Senator Sanders called the Stop BEZOS Act that proposed to tax large employers whose workers relied on social welfare programs—the company announced that it would begin paying all US employees $15 an hour. 

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"We listened to our critics, thought hard about what we wanted to do, and decided to lead," said chief executive Jeff Bezos in a statement accompanying the announcement. Amazon did not immediately respond to Motherboard’s request for comment about its $15 minimum wage campaign.

PR statements, however, are largely useless for illuminating a company’s motivations. At the time, some commentators suggested the move was concerned with not only hiring and retaining employees ahead of peak demand during holiday shopping seasons, but also with increasing demand among low-income customers by giving them more disposable income. Meanwhile, right-wing commentators trotted out the belief that higher wages hurt companies and have argued that Amazon had "weaponized" higher wages against competitors like Walmart, which would also be forced to pay its employees more under a federal law. 

According to Stacy Mitchell, co-director of the Institute for Local Self Reliance, a non-profit advocacy group that works to defend communities from corporate power, Amazon killed two birds with one stone: attracting new workers even though unemployment hovered at 4 percent while alleviating some of the never-ending negative coverage its labor practices garnered.

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"My read of it all is that they—for purely labor market reasons—needed to go to $15 an hour to meet their huge staffing needs,” Mitchell told Motherboard. “Recognizing that they were going to need to do that anyways because of market conditions, they decided to parlay it into a publicity move.”

It would be a mistake to stop the analysis there, however, Mitchell added. While Amazon is paying more to its warehouse workers than Walmart pays its shelf-stockers, warehouse jobs typically pay much more than $15 per hour. Amazon is pulling off a trick where it appears to be paying more than its competitors, but the job in question is not the same as those it’s being compared to when we talk about Walmart. In other words, as Bloomberg recently put it in a headline, “Amazon Has Turned a Middle-Class Warehouse Career Into a McJob.”

In that December 2020 article, Bloomberg reported on how new Amazon warehouses drag down wages in the local area, even though the company is paying more than minimum wage. In New Jersey, for example, warehouse workers were making $24 an hour before Amazon moved in, paying $15 an hour. In 2019, warehouse workers in New Jersey earned about $17.50 per hour. 

"In 68 countries where Amazon has opened one of its largest facilities,” Bloomberg notes, “average industry compensation slips by more than 6 percent during the facility's first two years.”

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And despite instituting a $15 an hour minimum wage, thousands of Amazon workers are hardly any better off. In November 2020, a Government Accountability Office study found that more than 4,000 Amazon employees are on food stamps in nine states—a record beat only by Walmart, McDonald's, and two dollar store chains.

Overall, it seems that even with a $15 wage Amazon only brings lower wages and more precarity with it. The natural backstop to this slide is labor unions, and a $15 wage gussied up to seem like a benevolent gift could be one more weapon in Amazon’s total war against unionization efforts in its warehouses. 

“Employers traditionally prefer to pay more to preserve their power and autonomy. That’s why it is common for employers to offer raises when workers start an organizing drive,” Georgetown history professor Joseph A. McCartin told Motherboard. “In Amazon’s case they have been trying to get ahead of the curve in supporting this wage hike. They’d much rather pay more to try to keep a union out so as to continue to make unilateral decisions about pay, working conditions, and the organization of the work.”

Amazon’s push to support a $15 minimum wage is yet another example of how the massive company can throw its weight around on multiple sides of an equation in order to secure a better outcome for itself. 

Critics have long argued that Amazon is a monopsony, which is a situation where a firm has enough market power to set prices for its suppliers and also wages for its workers with less outside pressure. In 2014, economist Paul Krugman made the case that Amazon enjoys the power of a monopsony by looking at how it shook down the publisher Hachette for a larger cut of its sales on Amazon’s platform. Or, for a more recent example, the 2020 House antitrust subcommittee report showed how Amazon's control of nearly 50 percent of the e-commerce market and nearly 200 million customers means that for countless third-party sellers, it is the only real buyer of their goods. 

In the labor market, Amazon has nearly 800,000 employees and in many towns is either the major or sole employer of warehouse workers. In an insightful piece for The Bull & The Run, McGill’s student-run newspaper, Julian Robinson wrote that if Amazon were indeed a monopsony, we would expect to see a few things: unilateral wage increases (check) coupled with long-term downward pressure on wages (check), but also horrible working conditions because Amazon’s labor monopoly allows it to unilaterally impose those terms as part of the price of working there (check).

"It seems to me that talking about $15 an hour is a way to avoid actually talking about the inhumane conditions inside Amazon's warehouses," Mitchell told Motherboard. "When you talk to Amazon workers, a lot of what the concerns they raise have to do with are the punishing working conditions. The grueling pace, the fact that they're physically taxed to the point of injury, that they don't get adequate breaks, that they don't have a lot of control over their schedule. It's all of those things that workers raise—this mechanization in a way where they're treated like robots as the rates they must meet keep rising."

Workers should get $15 an hour minimum wage, of course, because there’s little to no evidence it actually hurts businesses or the economy. But they should also get a workplace where wages, working conditions, and benefits are not unilaterally decided by their employer. Wages are important but if you are getting paid for dangerous work that might permanently injure you, perhaps the solution requires you get enough power to improve both your wages and working conditions. 

"When I say it's about power, it's not only the union but also the degree of government interference," McCartin added. "If they're paying $15 an hour and supporting that, what they really want is to be able to draw a curtain around their operations and hang on that curtain ‘We're paying $15 an hour and we support the wage for everybody.’ But what's really going on behind that curtain? The true cost of working in these places are things that they want to keep from being transparent—something a union would do and subject to negotiation.