Why Amazon’s $15 Minimum Wage Is Great For Shareholders And The Economy

Posted On October 4, 2018 1:14 pm

Amazon just announced it will be raising its minimum wage to $15 for all US workers (and $12.30 to $13.59 for its 20,000 UK employees). Shares fell about 1.5% of the news, potentially due to investor concerns that higher wages would slow the company’s recent margin expansion in its bread and butter North American retail business.

However, as an Amazon shareholder myself (there are six reasons Amazon is the only non dividend stock I plan to own), I’m actually thrilled at this news. That’s because I consider it a brilliant long-term strategic move by the company that will ultimately enrich shareholders. More importantly, it also bodes well for wage and thus broader economic growth that could keep the bull market running for years to come.

Amazon Hiking US Minimum Wage To $15: What Investors Need To Know

Amazon’s higher wages go into effect on November 1st. While many US companies (like Walmart and Target) have vowed to eventually raise their minimum wages to 15 years, that’s spread out over several years. The higher wages will affect 250,000 full time US employees as well as 100,000 season employees the company is hiring ahead of the Christmas shopping season.

According to the Washington Post, warehouse pay for Amazon employees currently ranges from $12.25 in Omaha, Nebraska, to $16.50 per hour in New York City. Those making over $15 will get a $1 per hour bump as well. While bonuses and stock grants are being eliminated as part of the wage hike plan, overall worker benefits will increase. This is because employees will continue to receive Amazon’s already generous benefits package which includes:

  • Comprehensive healthcare, including medical, dental, and vision coverage
  • Company-paid life and disability insurance
  • Up to 20 weeks of paid parental leave
  • 401k matching
  • Career Choice, which pre-pays 95% of associates’ tuition for courses in high-demand fields, whether those jobs are at Amazon or another company
  • Career Skills, which trains hourly associates in critical job skills like resume writing, how to communicate effectively, and computer basics

But hiking wages for hundreds of thousands of employees will surely hurt short-term margins right? So how can I, as an Amazon shareholder, be so excited about this much higher worker pay? Because as Bezos told investors in 2017 “you have to think in four to seven year time frames”. And over the long-term Amazon’s higher pay is nothing short of a genius move that will help enrich not just its shareholders, but all US investors.

About author

Dividend Sensei
Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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