Amazon announces plans to raise wages for half a million workers

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Following a historic union vote, Amazon Inc (NASDAQ:AMZN) has announced plans to raise wages for 500,000 employees. Despite those raises, the company won’t increase its minimum wage of $15 an hour. The pay increases are expected to start in the middle of next month.

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Amazon To Raise Workers' Wages

Workers at the e-commerce giant's warehouses will receive 50 cents to $3 more per hour. Amazon boosted its hiring efforts last year, hitting 1 million employees due to the massive increase in orders during the lockdowns. Analysts believe e-commerce adoption was accelerated, so they expect consumers' online shopping habits to continue.

Darcie Henry, a human resources vice president at Amazon, said in a blog post that the wage increases total "an investment of over $1 billion in incremental pay for these employees." Henry added that those increases are in addition to their "already industry-leading starting wage of at least $15 an hour." Amazon also invested over $2.5 billion in bonuses and incentives for its frontline teams last year.

According to CNN, the online retailer wants to hire tens of thousands of more workers in its customer, fulfillment, delivery and, package sorting and fulfillment divisions. As a result, Amazon moved up its yearly fall pay review for those teams, which will be the ones to see the wage increases.

Fallout From The Union Vote

The raises come after weeks of scrutiny over the company's labor practices. Employees at the warehouse in Bessemer, Ala. ran a union campaign, although the union lost by a wide margin. It is currently challenging some 500 ballots, although Amazon's lead is more than that.

According to MarketWatch, the union also filed a complaint with the National Labor Relations Board requesting that it set the results of the vote aside. It accused the online retailer of threatening to close the warehouse and lay off staff if they voted to organize. Amazon denies the claim. Employees have accused the company of trying to influence the vote against unionizing in other ways.

University of Massachusetts Amherst economics professor Arindrajit Dube told CNN that even though the e-commerce giant won the vote this time, there are reasons for it to be concerned. Dube explained that the company could face problems in parts of the country where working for it doesn't pay as well as it does in Alabama. The professor added that the labor market is getting tighter, which means the $15 an hour minimum wage is less and less effective in recruitment and retention of workers.

Amazon is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.