Amazon’s $15 an Hour Minimum Wage and the Federal Reserve Board

Last week Amazon announced that it would impose a $15 an hour minimum wage for its workforce, including those hired through staffing agencies. This was a huge victory for the labor and community activists in the Fight for $15 campaign, as well as for Senator Bernie Sanders and Representative Ro Khanna, who had recently proposed legislation that would have penalized huge companies like Amazon for paying low wages.

As the world’s second corporation (following Apple) to reach a market capitalization of $1 trillion, making CEO Jeff Bezos the world’s richest person, Amazon had become a symbol of inequality in the country and the world. Its warehouse workers put in long hours, doing highly regimented and grueling work, and often were paid little over the national minimum of $7.25 an hour.

This was the reason that Fight for $15, Sanders and Khanna made Amazon a central focus of their efforts. The decision by Bezos to agree to a $15 an hour minimum wage will not only benefit the hundreds of thousands of Amazon workers who will get pay raises, but it also places pressure on other large employers to similarly raise their wages. In fact, Bezos explicitly committed himself to work toward a national minimum wage of $15 an hour.

While this win shows the power of progressive organizing, there is another side to this issue that should not be overlooked. Bezos agreed to this increase in the context of the tightest labor market in almost two decades. At 3.7 percent, the unemployment rate is the lowest it’s been since 1969.

The tight labor market forced Amazon to raise wages to attract the workers it needed to staff its warehouses. In some places, it may have already been paying close to its new $15 an hour minimum. In this context, the decision to accept $15 as a nationwide floor was much less of a lift than it would have been if the unemployment rate was still over 5.0 or 6.0 percent.

This low unemployment rate is largely possible because of policy decisions by the Federal Reserve…

Read more