Minimum wage raise – There's more than meets the eye

Monday, October 8, 2018
 | 
Chris Woodward (OneNewsNow.com)

minimum wage illustrationThere are many things in business that involve trade-offs, and pay hikes at Amazon appear to be no different.

Since Amazon announced it was raising its minimum wage to $15 an hour and giving many employees already making that amount a raise, CNBC and other news outlets have said that Amazon is doing away with monthly bonuses and stock awards to pay for the pay hike.

Economist Aparna Mathur of the American Enterprise Institute says the minimum wage increase was a business move to get and keep workers in this job market.

Mathur

"They're not doing this out of philanthropy," she asserts. "If you're actually going to face an increase in costs, you might trade off other things that they might think that people value less. We have good research in economics showing that's often the case; [for example,] when you'll see state minimum wages being hiked, employers often react by cutting down other benefits so that on net compensation costs don't change all that much."

Amazon says that employees getting a bump in pay, while losing bonuses and stock awards, are going to be better off. Still, Mathur notes the possibility that Amazon one-day automates many of the positions in question.

"There are all these other things that we also need to worry about beyond just the hike in the minimum wage," she says. "There's a broader compensation package that we need to look at."

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