Amazon.com said on Tuesday it would raise its minimum wage to $15 per hour for U.S. employees from next month, seeking to head off criticism of working conditions at the world’s second most valuable company.
The online retailer said it would now lobby in Washington for an increase in the federal minimum wage and urged its competitors to follow its lead as the union-led “Fight for Fifteen” movement pushes for higher remuneration.
The new minimum wage will benefit more than 250,000 Amazon employees in the United States, as well as over 100,000 seasonal employees who will be hired at sites across the country this holiday, the company said.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” founder and Chief Executive Jeff Bezos said in a statement.
“We’re excited about this change and encourage our competitors and other large employers to join us.”
Amazon, which became the second company after Apple to cross $1 trillion in market value last month, paid its U.S. employees on average $34,123 last year. Bezos is listed by Forbes as the world’s richest man with a net worth of nearly $150 billion.
Amazon’s current minimum hourly wage starts at around $11 and analysts said the raise would cost it $1 billion or less annually and be offset by a recent $20 increase in the cost of Prime memberships.
Retailer Target Corp raised its minimum hourly wage last year to $11 and promised to raise it to $15 an hour by the end of 2020, while the world’s largest retailer Walmart raised its minimum wage to $11 an hour earlier this year.
Higher wages could further pressure margins at retailers that are already getting squeezed by higher transportation and raw materials costs, but the $15 still compares unfavorably with average U.S. blue collar wages.
Bureau of Labor Statistics show ordinary workers in the U.S. private non-farm sector on average earn $22.73 an hour. The mean hourly wage for non-management workers in transportation and warehousing is $21.94.
Amazon shares, trading lower before the company announced the wage hike, were down less than 0.3 percent at $1,997.75 in trading before the bell.