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Nancy Koehn on BPR I 10/11/2018

Amazon Is Raising Its Minimum Wage. Here's Why Some Employees Aren't Cheering.

Amazon Wages
FILE- In this Sept. 13, 2018, file photo Jeff Bezos, Amazon founder and CEO, speaks at The Economic Club of Washington's Milestone Celebration in Washington. Amazon, which has faced political and economic pressure to raise pay for thousands of employees, is boosting its minimum wage for all U.S. workers to $15 per hour starting next month and said it will push for an increase in the federally mandated minimum wage, which now stands at $7.25 per hour. “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Bezos. (AP Photo/Cliff Owen, File)
Cliff Owen/AP
Nancy Koehn on BPR I 10/11/2018

Last week, Amazon announced that it would be raising the minimum wage for all its employees to $15 an hour.

However, employees quickly learned that when Amazon giveth, Amazon taketh away — because, at the same time, the company said it would also be getting rid of monthly bonuses and some stock benefits.

Amazon has since walked back the move, assuring employees in a letter addressed to Sen. Bernie Sanders that no employee would see their compensation go down as a result of the changes. But some are still skeptical.

Nancy Koehn, historian at the Harvard Business School, says the move could demoralize the corporate giant's workforce.

"Why not just say: 'Everybody is going to get $15 an hour, and, by the way, there will still be incentives to be productive and show up a lot and take an ownership in the company, which is what stock is," Koehn said. "I don't understand that."

Cost doesn't seem to be a prohibitive factor: Deutsche Bank has estimated that the wage increase will cost the company less than 1 percent of its 2019 projected revenue.

"This is not a make or break kind of enterprise they're undertaking, in terms of increased cost," Koehn explained.

Koehn believes Amazon is sending a message to its peers that slashing benefits is acceptable as long as it comes with a minimum wage hike.

"The signal to other companies is: yeah, raise the wages sort of — but not really — or take it away from some people and give it to others," Koehn said.

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