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Oct. 2, 2018, 1:00 p.m. EDT

Amazon’s bump to a $15 minimum wage is also kind to its stock

Critic Bernie Sanders gives nod of approval as Amazon will now lobby for the federal minimum wage

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By Rachel Koning Beals


Reuters

Amazon.com Inc. — which last month briefly joined the elite club alongside Apple /zigman2/quotes/202934861/composite AAPL +0.79%   claiming market capitalization of $1 trillion — will now pay its workers a minimum wage of $15 per hour.

The hourly wage increase covers Amazon’s 250,000 U.S. full-time, part-time and temporary employees and its over 100,000 seasonal U.S. workers, as of Nov. 1, the company said Tuesday.

Investors, so far, are comfortable with the move and its upfront cost to the company. The stock churned in choppy action Tuesday, holding on to the roughly 72% gain it’s scored so far this year, compared with a 9.4% rise by the broad-market S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.20%

“Amazon’s announcement that it was raising starting wages for employees to $15/hour, as well as other pay increases, is positive for the company despite the incremental costs that will result,” said Moody’s Lead Retail Analyst Charlie O’Shea, citing the positive boost of attracting and retaining a quality workforce.

“As we have seen with other retailers who have already done this, including Walmart /zigman2/quotes/207374728/composite WMT -0.33%   and Target /zigman2/quotes/207799045/composite TGT +0.27%  , the returns will ultimately outweigh the costs,” O’Shea said.

Wages have been a critical topic as the retail disrupter changes how the world consumes. The typical U.S. Amazon employee was paid just over $34,000 annually in 2017 (the median runs at $28,446 when global wages are included), Securities and Exchange Commission filings have shown. For comparison, United Parcel Service Inc. /zigman2/quotes/201245396/composite UPS -0.93%   has reported median compensation of $53,433.

Read: Amazon cracks down on bribery by workers

Amazon founder Jeff Bezos recorded total compensation of $1,681,840 in 2017, almost all of which was money paid for personal security. Bezos drew a salary of $81,840 last year and received no additional stock. Bezos’s compensation is 59 times the median Amazon worker’s — information now required to be released as part of the Dodd-Frank Act upending financial regulation in the wake of the 2008 crisis.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon /zigman2/quotes/210331248/composite AMZN -0.80%   founder and CEO.

Amazon’s stock gains this year have helped to boost Bezos’s net worth to $163.4 billion, according to Forbes data .

Read: Do Amazon warehouses hurt local jobs?

Social media data firm Sprout Social said that Amazon’s transparency with Tuesday’s action could help soothe some of the social damage it produced earlier this year when it attempted to better its reputation through employee ambassadors that would tweet positive things about the company without actually fixing worker conditions that had gained their own messaging traction on social media.

Overall, data from Sprout Social finds that 46% of the consumers it surveyed want brands to be transparent about employment practices on social media, 50% want visibility into business practices and 53% want to hear about company values.

Opinion: Amazon vs. Apple — which should you own if you can only own one?

In August, former presidential candidate Bernie Sanders solicited testimonials from Amazon warehouse workers about low pay for his website and used those stories to promote his legislation; he welcomed Tuesday’s announcement.

Related: Bernie Sanders refers to Amazon’s $15-an-hour wage as ‘shot heard round the world’

Amazon — which leaves investors and much of the nation on edge as it decides where to locate its satellite headquarters and the 50,000 new jobs that come with it — does offer health care coverage, 401(k) matching for qualifying employees and up to 20 weeks of paid parental leave in its benefits package.

Amazon’s public policy team will also begin advocating for an increase to the current $7.25 federal minimum wage, set roughly a decade ago, the company said Tuesday.

/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 262.20
+2.06 +0.79%
Volume: 20.51M
Nov. 11, 2019 4:00p
P/E Ratio
22.12
Dividend Yield
1.17%
Market Cap
$1155.87 billion
Rev. per Employee
$1.98M
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/zigman2/quotes/210599714/realtime
US : S&P US
3,087.01
-6.07 -0.20%
Volume: 1.41B
Nov. 11, 2019 5:04p
loading...
/zigman2/quotes/207374728/composite
US : U.S.: NYSE
$ 119.04
-0.40 -0.33%
Volume: 4.44M
Nov. 11, 2019 6:30p
P/E Ratio
26.82
Dividend Yield
1.78%
Market Cap
$339.72 billion
Rev. per Employee
$223,654
loading...
/zigman2/quotes/207799045/composite
US : U.S.: NYSE
$ 110.45
+0.30 +0.27%
Volume: 3.08M
Nov. 11, 2019 6:30p
P/E Ratio
18.28
Dividend Yield
2.39%
Market Cap
$56.28 billion
Rev. per Employee
$209,322
loading...
/zigman2/quotes/201245396/composite
US : U.S.: NYSE
$ 123.14
-1.16 -0.93%
Volume: 1.32M
Nov. 11, 2019 6:30p
P/E Ratio
21.41
Dividend Yield
3.12%
Market Cap
$106.62 billion
Rev. per Employee
$149,503
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,771.65
-14.23 -0.80%
Volume: 1.95M
Nov. 11, 2019 4:00p
P/E Ratio
78.44
Dividend Yield
N/A
Market Cap
$885.43 billion
Rev. per Employee
$359,671
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Rachel Koning Beals is a MarketWatch news editor in Chicago.

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