With increase in minimum wage, some Amazon workers fall behind

If there’s one thing we learned after the big tax breaks for corporations, it’s that when big business sounds like it’s giving a big chunk of money to the little people, the big picture provides an entirely different story.

Amazon got what it wanted from the media when it announced it was increasing the minimum wage to $15 an hour: a positive image for the company, including today’s Star Tribune editorial.

For Amazon, paying a higher wage will help the company find and retain employees while also blunting some of the criticism it has faced for treating employees poorly. And the $15 minimum should help lower-skilled employees, reduce turnover, minimize retraining costs and attract better job applicants.

In Minnesota, Amazon employs more than 2,000 full-time workers, most of them at a large fulfillment center in Shakopee. The company has a smaller sorting center in Shakopee, a transportation delivery station in Eagan and a Prime Now hub in southeast Minneapolis. And earlier this year, the company announced plans to hire an additional 200 engineers and other IT workers for its tech hub in the North Loop in Minneapolis, where it already has about 150 employees.

But the New York Times looked at the whole story of the Amazon announcement. In particular, it noted that while increasing minimum wage, Amazon is eliminating bonuses and stock options.

Near Minneapolis, Katy Iber, who handles returned products at an Amazon warehouse, works the night shift. Her region has a tight local labor market, so she already makes more than $15 an hour.

In an “all hands” meeting at the start of her shift on Thursday — her first day at work since the pay raise was announced — she learned Amazon was raising her base pay by $1 an hour.

But it was also ending monthly attendance and productivity bonuses, known as the Variable Compensation Plan, or V.C.P. And she would no longer be granted valuable Amazon shares. The trade-off meant she’d be losing money, she said.

It was as though the company was saying “‘thanks, we appreciate you going into the holidays. Here’s less money,’” Ms. Iber said. The New York Times reached Ms. Iber through the Awood Center, a nonprofit that is organizing East African workers in the region

At its Shakopee plant and others, Amazon offered a 4 percent bonus for attendance and another 4 percent bonus for meeting production goals. Both of those bonuses will end on November 1.

Another program gave employees two shares of stock, currently valued at $1,864.42 each. That program, too, is ending.

Ms. Iber’s bonus in August was $1.28 an hour. In the three months around the holidays, that could be more than $2.50. That’s far more than the $1 she’s getting with the increase the company announced to applause. She’s also down when considering the stock bonuses. She’ll keep what she’s got; she won’t get any more.

She told the Times she was hoping to buy a new water heater with bonuses this year. Now she says she’ll wait for it to break and put it on a credit card.

  • Gary F

    “But it was also ending monthly attendance and productivity bonuses, known as the Variable Compensation Plan, or V.C.P. And she would no longer be granted valuable Amazon shares. The trade-off meant she’d be losing money, she said.”

    Looks good for the people that only read the headlines, but Amazon will lose their most productive workers because of this. The job market is hot right now, time to make the move if you are one of the productive ones and not getting paid enough.

  • Guest

    Both good and bad news. Bankers make loans on predictable income which this move will help. It will also attract more folks who like cash now over a hope later.

    When government mandates $15, any extra vacation time, holidays, any benefits that do not count toward that one-size-fits-all mandate will go by the wayside.

    Some prefer cash-only jobs, some prefer benefit-rich jobs. Government will make that choice for you.

    • Government should require personal finance classes in high school.

      • BJ

        Government should require personal finance classes monthly.

        • Rob

          The government needs to take the classes first

          • Guest

            BUT BUT BUT can’t we just print more money and then it will be all good, or at least get a loan? 🙂

          • Rob

            It worked well for Venezuela

    • Rob

      And then there are some who would like a living wage with decent benefits. Unreasonable, I know.

  • Rob

    Everything about the world just makes me weary. Jeff Bezos has more money than God, yet gives his workers a raise with one hand while taking away some of their benefits with the other.

    “We have met the enemy, and they is us.” — Pogo

    • chlost

      Weary. That is it, exactly. This beaten down, old boomer is watching the world embrace it’s worst side, and I am worn out from the sheer outrageousness of it. All I am up to doing now is voting.

      • Sonny T

        But pay hikes are an indication everything isn’t all bad.

        • Rob

          A yuuuge pay hike WITH ample benefits would suggest things aren’t all bad.

          • Sonny T

            they gave us pizza on Fridays and nobody’s missed yet 🙂

          • Rob

            Pizza and circuses

          • Guest

            Rome was right 🙂

          • ec99

            It was a Colossal boon to Nero.

          • John

            Now I want to open up a restaurant and call it Nero’s Colossal Pizza.

          • 212944

            Now, I want pizza.

        • The Resistance

          Except when the pay hike results in a net income decrease.

          • Sonny T

            Is that really possible?

          • The Resistance

            Read the second to last paragraph.

          • Sonny T

            This is a good one. Amazon should have to answer to it.

            I’m saying for the average low-wage worker the pay is it. Many don’t realize that most working people get only these benefits: Paid holidays. One week vacation. And a medical plan they decline because it’s got an unpayable deductible.

          • The Resistance

            I have no idea why we’re responding to each other. I’m moving along now.

          • Rob

            I think most working people are really clear as to how little they get from the places they work. And yet, this awareness doesn’t stop working folks from supporting political oafs who pander to and stoke their misplaced grievances, thereby getting them to vote against their own interests.

          • Sonny T

            That’s overused. Neither party has done crap for workers.

            I’ll tell you one thing. I’m paying less taxes. And don’t tell me they’ll bill me later. Friend, I won’t have it.

          • Rob

            “I’ll take a slight tax cut, and a huge dose of corruption and venality, please. And when they reduce my benefits to pay for the tax cuts, could I get a pickle with that?”

          • Sonny T

            well that’s being a little overheated. The cut wasn’t that slight, not when you need the money. And as for corruption and venality I’d say name it. You would and I’d say not so. Then you’d say is so. and on and on

          • Rob

            I only know what I see, hear and read in legitimate, fact-based media. Your mileage clearly varies.

          • The national debt right now just jumped $1.2 trillion in this fiscal year.

            It took a little more than six months for the debt to rise from $20 trillion to $21 trillion.

            This is like climate denial. They’re going to come after Social Security, and Medicare, and student loans and just about everything else.

            There’s a bill coming.

          • Sonny T

            The cut is supposed to bring about a Clinton-era boom, which, if you recall wiped out the deficits.

          • Rob

            There isn’t an economist worth their salt who holds this view.
            There has never been an instance of a huge tax cut returning more tax dollars to the government.

          • Sonny T

            The cut doesn’t do it. It’s the growth

          • Economic activity growth means more taxes are paid and that balances the budget, or so the theory goes. So for some reason people are thinking their paying less taxes is somehow going to increase the taxes that are paid and the budget will be balanced.

            Neat trick.

          • Sonny T

            only if it works 🙂

          • Clinton pushed through a large tax increase in his first year. That and the dot-com bubble is pretty much why deficits were eliminated.

          • Jay T. Berken

            Including President H W Bush’s tax increases which help cost him his reelection.

          • Sonny T

            It can’t happen again?

          • What can’t happen again… a tax *increase* followed by a booming economy and lower deficits?

          • Sonny T

            Well we’ve discussed this before. The tax increase had little to do with the elimination of the deficit. It was almost entirely growth. This is what we’re looking for this time around.

          • This is categorically not true.

            It also ignores the role the Social Security trust fund played in reducing debt.

          • Sonny T

            This from Fact Check.org, which I think is left leaning, but whatever:

            “An equally if not more powerful influence was the booming economy and huge gains in the stock markets, the so-called dot-com bubble, which brought in hundreds of millions in unanticipated tax revenue from taxes on capital gains and rising salaries.”

            So we may both be right. Simple math would show that tax increases (or decreases) on individuals could hardly touch the deficit.

          • I’m not arguing an either-or position. All revenue creates an end to deficits and there were multiple revenue streams. But that’s not the situation with the current attempt. At best a 4 or 5 percent growth conceivably could replace lost revenue with tax cuts (although the CBO doesn’t believe so). But that doesn’t erase the deficit which, for some reason, disappeared from the radar screen of conservatives recently. Kick the can down the road, and all that.

            So there’ll be a bill to pay.

      • The Resistance

        Voting is a lot. Give yourself some credit. If everyone did what you did, the country would be in a whole different place.
        Speaking of which…I’ll do a brief thread hijack here to remind people to vote early. It’s so much better doing it at the kitchen table.


    • jon

      This is pretty standard in the business world.

      I’ve done the math most years my cost of living raise (2-3%) doesn’t cover the expense from the companies changing policies…

      When they switched us from vacation+sick time to one big PTO bucket they told us we’d have more time off, they lied, we had 1 days less off each year, and add that 0.3% pay cut in with the increase in insurance costs they pushed down, and the decrease in retirement funds, and we all took a 1% pay decrease that year rather than the 2% cost of living adjustment that was handed out… (less after considering inflation!)

      I’ve once in my life gotten a raise that wasn’t significantly (50%+) mitigated by the increased costs that same year… I don’t suspect it will ever happen again (changing jobs is the only way to get ahead.)

      Companies are in it for the money, and people cost more money than companies would like… but paying them less isn’t socially acceptable, but finding ways to pay them less while convincing them they are making more… that’s what business is all about.

    • You don’t become the richest person in the world by being magnanimous with your money. That amount of wealth is unethical.

  • Al

    Each Sunday, during the children’s Sunday School hour, my [fairly moderate-to-conservative] church holds adult education classes. This fall, we’re discussing what we think it means to be a responsible citizen. We spent most of the hour this past week on wages and the income gap, discussing Amazon’s case in particular. Our pastor kept trying to redirect the conversation back to citizenship, and folks just wanted to talk about Amazon. So: It seems folks (at least in my small sample size) are reading the news, and also reading between the lines.

    This group of stoic, polite, don’t-cause-trouble, Midwestern pensioners had some pretty strong words about their tax dollars going anywhere near Bezos.

    • Rob

      I think the fact that Amazon tends not to be a very good corporate citizen makes it a very good subject for any discussion about responsible citizenship.

  • The Resistance

    The citizens of whichever city lands the Amazon H2 headquarters will also be giving enormous taxpayer subsidies for the privilege. Amazon had some version of the word “incentive” in their RFP 2 dozen times, even though they just had their first quarterly profit of $2 billion. It’s a type of corporate gluttony I can’t wrap my head around. Everything is a pendulum, and there will be a reckoning for these modern day robber barons, but I don’t see it in the near future.

    I’m actually glad they passed us over for H2. I like the fact that I can live in a decent house in a decent neighborhood that costs less than a million bucks. My one car garage would sell for $500k in North Queen Anne/Seattle today. That’s nuts, and unsustainable.The Twin Cities will be just fine with a diversified economy that is slow, steady, and sustainable.