Heh. So the liberals got what they wanted.
The company announced Tuesday that it will raise its minimum wage to $15 an hour for all US employees. But tucked away in the announcement was the fact that Amazon will phase out its bonus and stock award programs for its hourly workers. The change was first reported by Bloomberg Wednesday.The company maintains that workers will make more money under the new system. All hourly workers will get a bump in pay, even if they are already making $15 an hour.“The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and RSUs [restricted stock units],” a spokesperson said. “In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.”
Surely, the primary reason that Amazon increased its starting wage is because the labor market is tight and the natural economic force of demand requires them to do so. But I’m sure that Bezos, a liberal himself, also felt the pressure from Bernie and the other socialists. Well, they got what they wanted.
But while Amazon hourly employees are getting a raise, they are missing out on one of the most important wealth creators in the history of mankind – ownership. For the employees who received Amazon stock, it’s gone up about 600% in the last 5 years. There’s a lot to be said for taking the cash up front in the form of hourly wages, but it’s no substitute for the wealth creation that ownership gives.
Owen sez: “Surely, the primary reason that Amazon increased its starting wage is because the labor market is tight…”
No, This is slight-of-hand at it’s finest. (Really great reporting, CNN….NOT!)
Besos did it to appear benevolent and appease the leftists, when all it does is line his own pockets, fraudulently puts the screws to competitors, and screws the employees.
The elimination – for every one – of the yearly 1share stock distribution means, at minimum, $1,654 (today’s closing price) x 250,000 that he and major holders don’t have to give away. Those making close to, at, or above $15/hr get the biggest shaft. And who making around $15/hr can afford go out and plunk down $1650 for a share, as AMZ’s new direct buy “plan” requires? Then take away the eliminated incentive bonuses.
Full Time employee…
1). $14/hr, $2,500 incentive bonuses, $1,600 share = $33,220/yr
2) $15/hr, no incentive bonus, no stock = $31,200/yr.
Given the above numbers, if all 250,000 AMZ employee were currently at $14/hr and were moved to the new $15/hr employment “package”, the savings to AMZ would be $500,000,000.00/ yr
As I said, “There’s a lot to be said for taking the cash up front in the form of hourly wages, but it’s no substitute for the wealth creation that ownership gives.”
But most hourly workers aren’t looking at the RSU part of their compensation. The vesting schedule and variability of stock price make it a great long-term wealth creator, but doesn’t pay any bills at the end of the week. So the increase in the starting hourly wage will help with attracting labor and Bezos gets to save his equity. Two birds with one stone, from his perspective.
“But most hourly workers aren’t looking at the RSU part of their compensation.”
Well, they ought to. This is not a retirement plan. In 4 years (AMZ’s vestment ) that share is considered taxable income, at the current price. Think what that means for those folks who stuck around long enough for that 600% price rise.
I understand that if you are just looking for extra cash as a holiday temp or summer job it doesn’t matter to you. But I am thinking more of the existing staff. Raising pay for some but taking away bennies for all does not equal improvement.
While Besos’s move might attract drooling newbies, and the costs associated with that, those who have already worked their way into the $15 and above club are going to be royally PO’d. Couple that with killing off incentive bonuses – which folks certainly do conisider as compensation – and you can expect to see a huge drop in production. Indeed, this is such a hack on current employees, I predict you will soon hear news of outright sabotage.
The rumblings have already started. And the stock dropped almost 5% on this announcement.