Browsing the blog archives for November, 2018.

Amazon’s New Minimum Wage- Part II

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Amazon’s minimum wage is now $15 per hour. CEO Jeff Bezos says the change is all about “doing the right thing,” but he also wants government to mandate the company’s new minimum wage to his competitors. I questioned his motives in my last post, but a colleague vehemently disagreed. She insisted that “companies need to be responsive to social change and their stated intentions should be taken at face value.” I don’t think she is seeing the big picture.

Earlier this year, the Seattle city council unanimously passed a measure requiring companies with revenues in excess of $20 million to pay an annual $275 tax per employee to fund “affordable housing” efforts. Amazon (and other large companies) vigorously opposed the tax and the council rescinded it the following month. Supporters assumed that companies like Amazon would simply comply, lest they be scorned for condoning homelessness. They were wrong, and Amazon was justified in its response. Bezos later tweeted a $2 billion pledge to fight homelessness by supporting efforts by nonprofits, not the city’s tax scheme.

At first glance, it appears contradictory that Bezos did not trust Seattle’s local government’s ability to use tax funds properly to address the homeless problem, but does trust government to fight poverty by mandating a higher minimum wage. Indeed, Bezos is correct not to oppose Seattle’s money grab to subsidize housing. Private sector efforts are much more effective at combatting the problem. If you need evidence, consider the longstanding rent control debacle in New York.

I’m not convinced Bezos really thinks that really thinks a higher (government-mandated) minimum wage will improve conditions for those in poverty. Most minimum wage workers aren’t the primary breadwinners in their families anyway, and requiring employers to pay above-market wages encourages them to hire fewer workers. But Bezos has two reasons to campaign for a higher (government) minimum wage. It’s a virtue signal that Amazon “really cares” about the poor, and it would also create a burden to current and potential competitors by requiring them to match Amazon’s pay level.

The same media pundits who criticize “big oil” for “deceiving” the public about climate change seem willing to accept Amazon’s support for an increase in the federal minimum wage without questioning the motives. They should apply a simple standard. Amazon and other firms should be permitted to set wages and make other strategic decisions without government interference, but they should be criticized when they lobby for government intervention that restricts competitors from doing the same.

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