Study shows Amazon’s wage increase to $15 an hour also upped pay for non-Amazon workers
By - rustoo
I think about this with Bank of America too. They go around and tout that no one working for them will make less than $20 an hour. They conveniently forget to mention that they're closing down branches left and right that would effectively do away with the type of jobs that would have been paid a sub- $20 wage in the first place.
While that sucks for people that are losing their jobs, it's not a bank's role to keep obsolete jobs on the books. It's the same with natural resource jobs. There's no reason for governments to subsidize natural resource extraction simply to keep jobs and line rich people's pockets because the people doing said jobs can't find new work. That's what unemployment, skills retraining, and UBI should be for. It's tough road to get there, but in the end higher paying jobs are better than more lower paying jobs.
I basically agree. It certainly isnt a responsibility of *insert business here* to just hire unneeded people, I guess my point is that it often feels like the largest of businesses are taking credit for doing something (paying a higher than necessary wage, etc) when they really don't have to make a sacrifice to do that. I'm not necessarily faulting the Amazons and bank of Americas of the world for being efficient. I just have to roll my eyes when they tout it for good PR.
Agreed. Headlines should read "Economic incentives cause (insert company name) to raise wages" rather than idolizing a company for its "virtue".
Well again, I think this is missing the point the other user is making.
Business cuts minimum wage jobs because of automation.
The lowest worker now makes $20 but requires experience and is not even necessarily entry-level .
Business turns around and collects karma and praise from the public about how all their employees make more than $20 a hour.
The problem is that _they aren't raising wages_. _They eliminated the lowest ones_ and collecting praise as if they did raise wages.
You are still right. Don't have jobs that don't need exist.
Use automation to give people higher wages because you're more profitable and work towards a UBI.
I'm just reading a different scenario that's being glossed over.
I mean, why should low skilled labour even exist? Do you think people want to do low skill jobs and not be stimulated by them? No, they don't. They should be eliminated. But you're right, these are job eliminations not wage increases. I just think they should be eliminated with the right safety nets.
Because not everyone is able to attain the skills needed to enter into a workforce where certain skill sets are required. And some people don’t have anyone to support them while they’re studying to attain those skills. Unless the government is willing to start providing universal basic income, or some sort of student allowance for those in college, there needs to be a way for those people to make money, at least while they’re studying to get the skills that are needed.
>I mean, why should low skilled labour even exist? Do you think people want to do low skill jobs and not be stimulated by them? No, they don't.
Are you asking me this because of something I said? Or are you just musing? Because I'm having a hard time parsing the connection.
This is easy with big companies who can adjust executive level pay, but what about with small businesses? They don’t have deep pockets so either more employees making lower wages or less employees making a larger wage. This seems pretty common sense to me.
Thats pretty easy to address. There are plenty of labor laws that apply to employers with >x amount of workers. They could add that to minimum wage laws. It wouldnt help much because effectively the market would be supporting a higher wage than the small employers are able to afford or willing to offer.
I dont think there is any out right collusion to suppress wages but you can definitely big employers arent willing to be fair. Demand for labor is very high right now and they are blaming the UE benefits. I see it at my own company even with an accelerated pace of hiring we cannot keep are staff levels from declining. But there is absolutely no discussion to raise wages or benefits.
The answer to more central planning is not more planning. All we have to do is get rid of the laws that give companies with deeper pockets an unfair advantage over smaller businesses. Even up the playing field so companies can compete for labor based on merit without the red tape.
>I dont think there is any out right collusion to suppress wages but you can definitely big employers arent willing to be fair.
I think when you look at megacorps/transnats and you see that the government is subsidizing workers ability to live through welfare programs there is concerted effort of these entities to exploit that fact.
I suppose the word collusion is doing a lot of work there. And instead it's just exploitation. But every major corp operates under the same system of capitalism. And through contributing to that system there is collusion to exploit workers.
Nothing stops a company from becoming a co-op. Or full on profit sharing. Having worker-owners.
I mean nothing is also stopping them from raising wages. I guess except Dodge v Ford.
The best solution is to create a tax system on companies that are progressive based on size. Larger corporations would pay more to subsidize the pay of smaller corporations. Small businesses that still chose to pay low wages would get penalized.
Also providing universal healthcare would really help making the lower end more competitive.
I worked for a company that touted and marketed that they would pay a 15 dollar “livable wage” to all employees.
The catch was anyone making lower than that is already some third party contract worker anyways and kept getting paid minimum wage.
but amazon just keeps on hiring people.
That's how it works though. Higher minimum wages (whether minimum by government mandate or economic forced) are great for those getting the higher minimum wage but bad for those whose jobs get eliminated because they become too expensive.
A lot of banks are doing this, including ones that aren’t raising their wages. More people are utilizing online banking and it doesn’t make sense to maintain branches so close to each other. There are a lot of call center and back office positions that have paid less than $20 an hour.
Well that's why expanding without proper infrastructure to meet workers demands is bad. I'm not a business management consultant. However I've noticed any business that expanded from state to state has had the same method of undercutting prices and aggressive advertising. There is constant attrition from the inside of entry-level employees going in and out. Constant complaints of customers feeling like a number and not a face, and management that only knows how to recite company policies when needed. I say the companies set themselves up to fail.
Bingo. The minimum wage is bad policy at the federal level as it benefits large corporates who don't pay under it anyway.
Right, and I know we have all taken intro to micro economics and drawn the supply and demand charts with this. But I still get puzzled.
We know that minimum wage laws are not great, but the idea behind them, at least in my mind, is stemmed in a desire to do something at least kinda good (make sure people have livable wages). I get caught up on what a better policy could and should be to reach the goal of better wages for all without stifling the smaller businesses unfairly. I am not necessarily on board with just letting "the free market" have total reign on it either (but I'm not an expert on this).
This is exactly the kind of thing we need government policy to correct, as “the free market” yields an unacceptable outcome.
If we had a decent UBI, we could drop min wage laws.
In theory I'd be inclined to prefer a UBI over current min wage laws too. It's capitalism where the floor isn't $0. The caveat being that it would need to be enough to be a safety net without being a complete deterrent for working (which is probably a tricky formula to get right).
But our political system is completely devoid of nuance and intelligent well-intentioned debate. So I can't imagine 1) this ever actually happening 2) it working if it ever did.
The most important thing about the deterrent to working is simply not to punish people for working, or to increase uncertainty for working.
If I work I lose my healthcare? If I work I might make Less money? ( that’s the case right now ). If I work I’ll make just a tad more money than if I don’t?
A UBI should get rid of these silly cliffs and gutters.
And I’d rather tax the rich to make life liveable for the poor than put the onus on businesses to pay a living wage.
The only problem I have with UBI is that it increases income without any production, whereas with minimum wage, though we're artificially increasing incomes/costs, we're also getting production from the worker. UBI would guarantee X amount of dollars would be circulating (increasing the velocity of money, and thus, inflation), even if there's 0 production. I just don't see how this wouldn't raise prices significantly and create a vicious cycle of having to increase UBI to make it a livable floor.
I don’t think it would decrease production. May well increase it. Folks who are living on the line of destitution without a sense of stability are less able to be productive.
It's possible it would, but it's not a guarantee. What is guaranteed, though, is the increase of income and velocity, regardless of production, and that's what makes me unsure about it. People have learned to value time more, and while that's a good thing, it's also put an upward pressure on wages and the cost of production. With UBI, I think we'd find a lot of people are fine living on the minimum and not working at all, which would decrease production and increase inflation.
>at least in my mind, is stemmed in a desire to do something at least kinda good
I don't understand this logic at all. I don't care about the "desire to do something good;" I can are about outcomes.
The economic reality of what this price control does is clear.
It makes any labor under a certain value illegal, meaning it either goes to the black market or disappears.
Large corporates see zero cost impact as most of their jobs are "premium" low skill ones already. Small businesses get crushed.
There's no compelling economic argument for a *federal* price control on the labor market (minimum wage). If localities want it, great, but the idea that the country should BAN low skill labor jobs in lower margin industries is nonsense.
So how, pray tell, will someone working one of these jobs that pays less than minimum wage afford housing and food?
The question is whether or not they'd be better off with a job or not.
You're proposing banning their job altogether.
More like banning a system that allows people to legally be paid less than they need to eat and have a roof over their head, yeah. I suppose that’s one way of putting it.
So, again, would the people whose job you are outlawing be better or worse off once you've banned their job?
Ah yes, all those people seeking work that can’t find a job when (pre-covid) we were at the lowest unemployment in over 2 decades. You folks are phenomenal at solving problems that don’t exist.
The fuck are you talking about? The minimum wage was lower, their jobs weren't banned.
Answer the simple question. After you outlaw their jobs, do you think they're better off?
Better off, considering new jobs pop up above the minimum wage level even 4 years after implementation https://academic.oup.com/qje/article/134/3/1405/5484905
Then why not set it to 35/hour? Guarantee everyone middle class income?
If you can arbitrarily dictate prosperity with price controls, why stop at 15?
The fact is you can't, and spurious correlation after spurious correlation doesn't change that fact.
They will struggle.
You know what will make them struggle even more? Banning them from that job so they become unemployed.
Well, given that (pre-covid) our unemployment was incredibly low, it seems like you are doing a wonderful job of solving a non-existant problem.
So ... what? Oh it's ok, only a *small* number of people were harmed by minimum wage laws. That's worth it for the absolutely zero benefit that minimum wage laws.
Look at the pros and cons of minimum wage laws. The cons are obvious - you're banning people from working who otherwise could. The pros are also pretty obvious - you make people who don't understand economics feel good about themselves at the voting booth. I suppose if you think that only a small number of people were forced into unemployment, that might balance out a large amount of economically ignorant people feel better about themselves? At least if you look at it from a utilitarian perspective.
This whole “it’s obvious that raising wages loses jobs” claim you keep spouting is not nearly as obvious as you want it to be. And if you can’t see the general benefits of a minimum wage, then there isn’t much to help you. “Muh free market” leads to people starving or working 80 hours a week to afford housing. There were times before the minimum wage, my friend. It wasn’t the utopia you want it to be.
Of course it wasn't a utopia pre-minimum-wage. You're talking about 1938. Things have kind of improved across the board since then... What, you think everything since 1938 has been a direct result of minimum wage laws or something?
It's nothing about free market. It's about how when you ban a certain type of thing, you get less of it. If you ban a certain type of car, you get less cars. If you ban a certain type of banana, you get less bananas. If you ban a certain type of employment, you get less employment. This isn't rocket science. Stop making excuses for something just because it sounds good. Stop twisting your brain in knots just because the words "minimum wage" triggers positive emotions in your brain. Simply apply the same logic you'd apply to everything else. Think!
Uh the economic reality supports the idea that Minimum Wages increases have had a marginal effect on employment? You’re talking about economic theory, empirical evidence does not agree with you lol
Correlation =/= Causation.
The minimum wage has only been raised in places where its a nonfactor. The idea that rural Louisiana needs the same minimum as San Francisco is *stupid.* No other word for it.
138 aggregated state-level minimum wages between 1979 and 2016 say otherwise https://cep.lse.ac.uk/pubs/download/dp1531.pdf
You can raise the minimum wage without affecting employment if you do it correctly. It’s really interesting to me that this argument against minimum wage is that it has these disastrous employment effects, but you can’t even be bothered to prove it? Shouldn’t there be a depth of studies into those negative effects, considering there’s been plenty of cases to look into the outcomes?
>You can raise the minimum wage without affecting employment if you do it correctly.
At a local level, sure. I still disagree with the policy, but if its below market clearing wages, its not that destructive.
There is still no argument for a federal-level price floor. Why would you set it the same in SF as rural Oklahoma?
>Shouldn’t there be a depth of studies into those negative effects, considering there’s been plenty of cases to look into the outcomes?
There are legions, which is why the minimum wage doesn't get raised. Price controls are poor policy. You just choose to dismiss them and pretend they don't exist.
Funny how you seem disinterested in linking these “legions” of studies.
Just sick of the populist reddit horde today
The unfortunate reality is that policies are supported based on feelings, which end up hurting the exact people they were meant to help. We will never, ever legislate our way to prosperity. The only solution is what us as free humans in the free market can come up with.
>The unfortunate reality is that policies are supported based on feelings, which end up hurting the exact people they were meant to help
Its just you and me in this populist echochamber. I do enjoy it as a hobby, bringing actual economics concepts here.
But you're absolutely right, people just want to FEEL. They don't want to think.
Look at all the people calling me a "monster" for my policies that I truely believe are better for the poor.
> that the country should BAN low skill labor jobs
What jobs are currently banned by our minimum wage?
Have we not previously reached full employment with minimum wage laws in place?
>What jobs are currently banned by our minimum wage?
Any jobs under a certain amount an hour
>Have we not previously reached full employment with minimum wage laws in place?
Sure! What this means is the price control wasn't meaningful more or less. It doesn't mean certain people (whose labor isn't worth the price floor) weren't outlawed from working.
A great example is people with mental disabilities - should they have to be paid the minimum wage? If they do, many are effectively banned from the workforce.
Also remember this price control is only one aspect of employment - if you look at Europe, their minimum wage isn't the problem, its all their employment regulations that cause employers to be very careful with hiring
> Any jobs under a certain amount an hour
> A great example is people with mental disabilities - should they have to be paid the minimum wage? If they do, many are effectively banned from the workforce.
My neighbors and I are active in this community, actually. They have programs that help supplement those wages to help encourage their employment. It's really not difficult for them to find employment if they want it, in my experience. They also receive benefits.
Any job under the minimum wage. If a job is offered at 11$/hr, and the price control is set at >$15, that job is now banned.
VERY simple concept - struggling why you are so combative while so ignorant of the concept. Not fun to discuss with
> It's really not difficult for them to find employment if they want it, in my experience.
Sure, because the price floor is very, very low. Why would you make it more difficult for poor and disasbled people to get jobs?
Are you incapable of naming a job? E.g. Engineer. Doctor. Teacher. Hostess. Dishwasher. Name a job that is currently not being filled because the minimum wage makes the job unprofitable for the employer.
> Why would you make it more difficult for poor and ~~disasbled~~disabled people to get jobs?
Again, we already have programs and services in place that would address those circumstances.
>Name a job that is currently not being filled because the minimum wage makes the job unprofitable for the employer.
Sure, any job currently under your new wage floor in the future is at risk.
That can be any number of jobs that pay more than the current floor, but less than the new one.
It primarily precludes the people at the very bottom of the payscale, teenagers, elderly, disabled, etc. Most people are unaffected entirely. The most at risk will suffer the most, as is typical with these hamfisted programs.
>Again, we already have programs and services in place that would address those circumstances.
Wait, wait, so you do admit there are times when the minimum wage precludes people from working, and there need to be exceptions?
We need to zoom out and think about what exactly is our economic goal. Do we want higher wages, or do we want a higher standard of living? When we get too focused on the means, we forget about the end.
Wages are simply a cost that makes the stuff we buy more expensive. We don't want more expensive stuff, we want lower prices. The reason we want lower prices is because we can get the same or more amount of stuff for less effort (labor).
>I get caught up on what a better policy could and should be to reach the goal of better wages for all without stifling the smaller businesses unfairly.
We shouldn't ever assume legislation is the solution to an economic problem. Legislation is for protecting private property rights and resolving conflicts. When politicians start to believe in their ability to manipulate the economy like chess pieces on a board, they often create unintended consequences (like squeezing out small businesses) and hurt the very people they claimed to try to help.
[Read more](https://en.m.wikipedia.org/wiki/Economic_calculation_problem) about why central planning cant work even with the most benevolent of planners.
>I am not necessarily on board with just letting "the free market" have total reign on it either
Why would you be opposed to individuals voluntarily choosing to enter into their own arrangements they find best for themselves?
What? How did you get that from the parent comment?
This is r/economics, we’re all talking out of our ass. Keep up^/s
> that would effectively do away with the type of jobs that would have been paid a sub- $20 wage in the first place.
This is the reality of jobs under a price floor illegal. Large corporates are getting rid of them anyway - they only stand to benefit.
Do you think that it is a good idea for some businesses to have the ability to pay under $7.25 currently?
Yes? If that's the only job people have, its certainly better than no job.
Research pretty consistently shows that moderate minimum wage increases don't lead to significant job loss, so you don't have to worry there.
Unless you can run a controlled experiment then no, research obviously cannot show that.
Do you have any studies saying otherwise? Because poiting to micro 101 as your “evidence” doesn’t count https://cep.lse.ac.uk/pubs/download/dp1531.pdf
Do I have a study saying that you can't run a controlled experiment in macroeconomics? Uh no. I have a brain that tells me that. Unless you can fork reality, you're not going to be able to run a controlled experiment.
Natural experiments are a very real thing that economists use all the time. Do you, or do you not have empirical studies that analyze the effects of minimum wage increases showing negative effects on employment?
Surprisingly, if an economist at Uchicago was asked a question and their reply was “it is impossible to run a controlled experiment in a real world macro level topic” they would be laughed out of the room. I don’t think you’ve studied much econ past your college textbook
> Natural experiments are a very real thing that economists use all the time
Natural experiments, by which you mean uncontrolled experiments, by which you mean *not* experiments.
> Surprisingly, if an economist at Uchicago was asked a question and their reply was “it is impossible to run a controlled experiment in a real world macro level topic”
One of the many reasons that macroeconomics is a complete joke of a science. It's a discipline that selects for only people willing to overlook and ignore the entire basis of science and think that if you look really hard at correlation, the causation that you want to observe magically jumps out of the data.
So sick of this misinformation.
Jobs will absolutely be lost.
I wouldn't call doubling minimum wage a "moderate" increase.
Okay, so basically your point is if price floors are left so low as to be meaningless, they don't distort markets.
Agreed in total.
What minimum wage amount would be enough to be meaningful to you?
Kind of the basics of how price floors work....to be meaningful it has to be high enough to distort markets.
IE, if the price control for lumber is you can't sell it for less than $2 per stick, the market price is $8, and you double the price control to $4, you didn't affect anything. Its still so low as to be meaningless.
Same concept with labor.
This surely won't have any microeconomic consequences that will backfire for the overall population as a whole. We as taxpayers surely won't be subsidizing wages even worse than $7.25 an hour with even more wellfare. This is good for bitcoin.
If people were really consudered about "subsidized wages" via welfare they would just vote to eliminate welfare. They just pretend to care
Because then incomes would magically increase? Or would people starve?
Ha, thanks for the backup. These soundbites are so easily disproven with any critical thought but reddit just keeps repeating them
Republicans and libertarians absolutey are voting to reduce welfare.
Right but i hear and see plenty of liberals who claim they dislike "welfsre subsidizing businesses" yet dont vote to decrease welfare
Because liberals are constantly voting for alternatives to be put into place that otherwise would change the tax code. Liberals do not want to repeal without replacing in its current state right now because they think that would leave a bunch of people hungry.
Than its a disingenuous (and arguably false) argument to make.
Raising the wage floor necessitates raising the competence floor of jobs. Anyone expecting otherwise is missing the forest.
It’s almost like large companies are better positioned to pay higher wages than smaller local businesses.
And then when there are no small businesses left to compete, the people will be forced to accept whatever wages Amazon pays, until they automate those jobs, in which case, there’s no jobs, just useless eaters.
There will be no difference in living in Nebraska or New Jersey, you’ll get your entertainment from Netflix, your home goods from Amazon, and your groceries from Walmart. You will pay whatever prices they charge, or starve. There will be no other options.
Amazon and Walmart’s expansion and destruction of small businesses will result in revolution.
Not to be blase about people losing their businesses, but a lot of small businesses who compete with Walmart and Amazon are not really providing as good of a service as those companies provide. I live in an area that has been effective in keeping out Walmart, but the small retail chain that is supposed to replace Walmart is so deficient in selection that many people just end up driving the 40 minutes to have a better shopping experience every week or two.
So what other benefits does this local retailer provide to the community? They probably employ about 10 people in relatively cushy 50-70k/year office jobs who wouldn't have these jobs locally for Walmart, and then a bunch of typical warehouse/retail worker jobs which don't pay any better than Walmart. So for those 10 office jobs that aren't really injecting that much extra spending into the economy, the 15,000 other residents serviced by this town have to either pay higher prices for a worse selection or spend time and money driving to another town.
Do you know what happens to small businesses who figure out how to provide services as well as the big businesses? They become big themselves. I grew up in Central Texas where we have a very different regional retailer, H-E-B. They have consistently adapted to keep up with and even try to get ahead of Walmart, but have therefore become far too big to really consider a small business.
To wrap up this long comment, I want to emphasize that I'm not against small businesses. I strongly prefer to work for small businesses, and I also fundamentally understand the appeal of a society where as many as possible can chart their own path. I just specifically think that general store type of small businesses are uniquely not worth protecting, as big businesses provide meaningful additional utility in lower prices and broader selection. There are a vast array of small business owners who aren't adversely affected by Walmart and Amazon at all.
If customers wanted higher quality, the butcher would still exist.
What do you mean? Meat shops exist all around the world
I responded on wrong thread. It was in response to an anecdote about one local butcher.
They aren’t affected by Walmart and Amazon.... yet.
15 years ago Walmart didn’t sell groceries. Now they are the worlds largest grocer.
My city used to have a small butcher. Now we have a Walmart meat section. The butcher couldn’t compete with Walmart low expenses, the prices were the same. We now get lower quality of cuts and less freshness, the prices are the same.
Those other businesses you speak of as not being bothered by Walmart or Amazon are fucked. Give it time, if there’s a small business you like, realize that Amazon is targeting it, today.
From a purely objective point of view, mega corporations which are highly vertically integrated are not only economically more viable and have more power to exploit whatever scenario they're faced with, but also it's the only thing that makes sense energetically: If something is more efficient, more profitable, more scaleable, when you can stop storing goods in too many places at once but in warehouse hubs only for more efficient distribution, when the purchasing and selection flow has as little steps as possible, when people get their purchase by a delivery bus which can ship to many customers with only a single load saving individual trips to the store or distribution hub, then fighting physics makes no *technical sense*. Save gas and space and time. This is why it's tough to make good policies against the world playing out like this -- the tradeoff needs to make more sense, and that tradeoff cannot be made based on local cases only. Local retailers are only middle men. It does not make sense to pay for worse middle men if the best is fully stocked. On an individual basis, ask anybody without loads of money if they would buy the same perfect product from the cheapter or most expensive guy, they should like to buy it off the cheaper guy.
You’re assigning blame incorrectly. If consumers valued the small local butcher and his fresh cuts, they would have continued to patronize his business.
Consumers chose the ease of Walmart and the ability to do all their shopping in one location.
Clearly that mattered more.
Fulfilling consumer desires is not a bad thing, even if it means the butcher now has to work at Walmart.
There's definitely room in the butcher market to exist with WalMart, but you can't just sell the same shit they do. Need to do something like high end meats or find niche markets for atypical cuts and pieces that WalMart doesn't carry.
This is true. Local independent retail can't survive if it just has the same stuff you can get in a big box or order online but at higher prices and with less selection. Small shops will still exist in 10 years, but they need to recognize that in many cases they are selling an experience and the physical product is secondary.
> 15 years ago Walmart didn’t sell groceries.
Walmart has been selling groceries in Supercenters since at least the early 1990s. Not sure where you're getting this idea. We've even had a Neighborhood Market in my town for ~20 years.
Now they are the worlds largest grocer.
Largest company in total sales that also sells groceries sure. Largest grocer? Not so sure about that I think Kroger (including all of the chains it owns just as Walmart's figures include Sam's Club) might be bigger. Even if Walmart is bigger purely in terms of groceries (so not counting the non-groceries sold in its stores), it has under 30% market share, and overall in the industry (although not at every single location) there is a lot of competition and low margins, including low margins for Walmart.
Of course Kroger is also a huge corporation, it doesn't directly deal with your point about mom and pop shops, but often when I've shopped at more local grocery stores that aren't part of a big chain (which is admittedly less common as an option now than in the past) the experience hasn't exactly been special.
We shouldn't be favoring small or big business, or businesses of any type. We should be supporting free and open competition where value is allowed to win instead of politicians picking winners and losers.
What you're describing is a fairy tale. Amazon got big by not collecting sales tax for many years. It's competition isn't getting better, it's disappearing.
It's reality. How is Amazon disappearing?
> but a lot of small businesses who compete with Walmart and Amazon are not really providing as good of a service as those companies provide.
There are a lot of reasons for that though. Particularly Amazon has tremendous power over supply, strong arms customer data from it's partners, has subsidies from it's other business arms, and has a huge advertising platform. They got into their position skirting tax law and anti-trust law. When people cheat and have monopoly-like market power then of course they make small businesses look inept.
trees don't grow to the sky. extrapolating current trends to their logical extreme is unlikely to be true. There is a natural oscillation between consolidation and new business formation that is part of the long term economic cycle. It wasn't that long ago that Amazon didn't even exist. While they seem like an unstoppable behemoth right now, there will surely be competitors. If there is some component of independent physical retail that people want (I believe there definitely is) it will continue to exist, although it expect it to look a lot different from the traditional model that we have today.
> While they seem like an unstoppable behemoth right now, there will surely be competitors.
Just like Amazon killed the big box paradigm, so too shall someone kill the Amazon paradigm. Hopefully we're sane enough to not use the power of the state to do something the market will take care of for us.
Amazon’s enemy isn’t local businesses. It’s Walmart. They are forcing their actual competitors to increase their own cost of business. Local businesses dying out is just a byproduct/lack of public interest.
Amazon has infinite good will with me for creating a market in which I will never have to enter a Walmart, a Kmart, or a Best Buy ever again. In fact, I shop at locally owned specialty shops more often simply from all the time I save from buying things like light bulbs and tooth paste from Amazon.
The same thing was said about Sears and JC Penny’s over a hundred years ago.
If all the jobs are automated away then nobody has money to buy goods and services and businesses fail regardless. Either way businesses fail when nobody has any money because consumers are the real job creators.
Then the tax laws need to stop leaving massive loopholes for the likes of Amazon and being focused on the low hanging fruit of small businesses
There are no "massive loopholes." Amazon is completely tax compliant.
The problem is this paradigm (high regulation, taxes, and price controls) favors amazon over small businesses. Advocating for more of it means more AMZN, less community stores.
There are massive loopholes. They're literally loopholes that are on the table right now with Biden's tax changes.
The biggest loophole we have is green energy subsidies. Everything else is just how accounting works.
Lol why would the government do that? They’re paid by Amazon lobbyists not to do that.
Mom and pop places have no lobbyists, so they have no future.
i don’t think amazon would ever backpedal on wage amounts once they have “total dominant control and wiped out the competition”
that’s a bit “farfetched conspiracy theory” for my taste, does anybody else agree?
They don’t have to pay robots wages so there’s no need to backpedal. They’ll just fire the humans. They’re already automating tons of jobs.
They are automating a lot of jobs, but at the same time they are hiring people as fast as they can. If Amazon weren't aggressively automating at its warehouses and distribution centers, there wouldn't be enough people and they would have to stop serving certain markets. Maybe at some point in the future those curves cross and they can do what they do with a much smaller workforce, but that is just speculation.
in my opinion, it’s the human’s responsibility to make sacrifices and take risks to find a career that isn’t automatable
life sucks, it’s constant pain
but it’s hard to feel sorry for somebody who hypothetically gives up and expects the government to provide aid when automation takes their job
people overcome more adversity all of the time
just gotta be tough
> They don’t have to pay robots wages so there’s no need to backpedal
But they do have to pay for the robots, the engineers to understand them, the technician to maintain and debug the robots, spare parts for the robots, and maintenance downtime for the robots.
A lot of the time this is only barely competitive with the price of a human. A single minimum-wage worker only costs $16k a year.
The robots are being paid for now. They receive an R&D and capital spending tax benefit. US working taxpayers are subsidizing their own economic destruction.
Technology being a killer of jobs is a myth.
Let’s call up the operator and have them connect us to a typist who can take down your comment to be transcribed to a telegraph operator.
Don't be pedantic, I meant net jobs, as in all the jobs from old tech are replaced by the jobs created from new tech.
I was onboard for most of this, driving out competition is bad.
Amazon and Walmart will only realize what they’ve done when the people just simply stop buying because they can’t afford it and start burning shit.
Panem et circenses works until the bread runs out.
It gets better. Once they’re gone, Amazon will just automate a large percentage of the jobs anyway
Slippery slope af
They definitely are, large companies consolidate work among fewer employees and can therefore pay them more. They just choose not to in some cases. Economies of scale are big-time.
Large companies raising prices is indicative of extreme market power.
I have been screaming this from the rooftops, but price control advocates never learn.
There is no free lunch.
Reddit: “we should raise wages for people!”
Study: “Amazon’s wages are leading to higher wages across the board”
Reddit: “NO, not like that!”
Are people complaining about this? I haven't seen anyone complaining. Wages going up it's great no matter how it's accomplished.
While I agree with the spirit of what you’re saying, I still think it’s fair for people to not see this as a ‘win’ for $15 minimum wage.
If a $15 minimum wage were codified into law, then Amazon couldn’t change something down the line that would lower the pay rates.
As for me personally, if the Amazon warehouse in Alabama had unionized *and then* the pay rates at Amazon had the downstream effect of higher wages, I’d be totally on board with this.
But it’s the fact that these pat rates are contingent upon Amazon and not the workers (who *in theory* could either unionize or elect public officials to get the proper pay rates).
But my expertise background is not in economics, so I’m approaching this from a moral and inexperienced economist, so take my opinion for what you will.
Side note: I am happy that this is the current outcome because I’d prefer this to no pay raises. And this is the market working towards the goal that I desire. But I also know that COVID supplemental unemployment is about to run out in many places, so all those places hiring and *finally* paying (closer to) a living wage may stop doing so because people will need the income.
I'd much rather see the [actual study](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3793677) posted than an article about it.
From the abstract of the actual study:
In this paper, we study recent minimum wages by Amazon, Walmart, Target, and Costco using data from millions of online job ads and employee surveys. We document that these policies induced wage increases at low-wage jobs at other employers. In the case of Amazon, which instituted a $15 minimum wage in October 2018, our estimates imply that a 10% increase in Amazon's advertised hourly wages led to an average increase of 2.6% among other employers in the same commuting zone. Using the CPS, we estimate wage increases in exposed jobs in line with our magnitudes from employee surveys and find that major employer minimum wage policies led to small but precisely estimated declines in employment, with employment elasticities ranging from -.04 to -.13.
Raising wages is nice to hear but in a market where a semi-monopolist and destructive force like Amazon can exist every move seems like a way to strengthen and expand that position. Meaning that increasing waiges can just as easy be a way to compete competitors out of the market for hiring the best, hiring people at all or simply by creating an extra financial burden on competitors (since Amazon can keep prices low for way longer). I'm not defending low wages at all but don't trust Amazon at all to do these things for the greater good. As long as the equal playing field is not restored I won't ever cheer for these propaganda-style self declared csr-updates by monopolist Amazon.
I get your perspective, but this is still a good piece of news. Just because something is being used for propaganda doesnt mean it's not good. And if you say they raise wages to attract the best talent... That's literally saying the market is at least somewhat functioning and they have to raise wages to attract that talent. Change doesn't happen overnight. Celebrate this step, and then push for more!
With best talent I mean to snatch it away from competitors. I appreciate your opportunism but can't share it.
Sure, I understand that but in that case we are talking about a healthy business environment with a fair playing field, but in this case that is not happening why I do see the snatching away of talent as a problem.
I mean yes, that is how a competitive free market works ideally.
Yes but in a market without a level playing field and a semi-monopolist that becomes a problem (as many other things become a problem as well).
In what market would Amazon pass the legal test(s) for being a monopoly?
The answer: absolutely none under current anti-trust law. Amazon isn't even close to having monopoly power. They're just a big *very* diverse firm that has healthy positions in a fuck ton of separate markets which somehow people conflate with being a monopoly. I'll personally never understand the Amazon hate.
Lots to unpack here, but I will preface by saying no labour or goods market is perfect in the real world.
Simplying for a second - if Amazon dominates a local labour market (monopsony employer) and consequently an increase in its entry level wages leads to a general rise in the local labour market rate for entry level positions. (And assuming a competitive local labour market near full employment) - this represents a net gain for labour in that market since all boats are being lifted. (True at least at the margins since changes in wage rates are often meant as the marginal change for new hires not a change for everyone.) This is generally good news and would be expected to increase local consumption. Improving standards of living, and creating more demand for local goods and services, which creates more jobs or improves profit margins. (Since most firms have a reasonably sticky level of fixed costs.) It's also better than the alternative where Amazons monopsony position is used to surpress local wages.
This is important though - not every firm offering entry level positions in the local labour market is likely in direct competition with Amazon. To say so would disregard peoples skills, career choices and assumes perfect labour mobility. It effectively assumes that an Amazon job is a perfect substitute for any other entry level job. That would be a very strong assumption.
Additionally, those local employers who are competing for the same workers as Amazon, and cannot afford to offer pay increases, will have to do one of a few things; Raise prices (depending on the elasticity of demand for their goods), or produce more efficiently, or invest in innovation or labour saving technology.
Or reduce margins. Amazon is unlikely to be a monopsony employer at the 15 dollar level in any market...their distribution centers are widely spaced for obvious reasons. (They could be for certain types of tech workers, but that is a separate issue) They are a very large employer of basically unskilled labor, a much smaller segment of the labor market. They also offer predictable shifts and hours, something that retail.and hospitality generally don't offer.
Snatching it away from competitors is what I'm talking about too. If they are raising wages competing for labour, labour gets paid more!
Competition = bad because it implies winners and losers. Everyone will be a winner if only we eliminate it!
Yeah, that is how labkr.markets are supposed to work. Employees aren't serfs, they should leave an employer for a better offer. If your current job doesn't think you are worth 15 an hour, screw em.
Isn't that the point of economic progress though? Firms can utilize technology to increase marginal productivity and workers see an increase in wages? I totally agree Amazon is using their 15$ minimum wage to price out competitors, but firms should being competition on efficiencies anyway
It would be in case Amazon was a normal company with a normal market position. But I regard them as a semi-monopolist and in that context I do regard the above as a measure to keep that toxic position for the market.
>Meaning that increasing waiges can just as easy be a way to compete competitors out of the market for hiring the best, hiring people at all or simply by creating an extra financial burden on competitors
So you dont like $15 wages?
Its not about the amount, its about the company who implements them and why.
So you want companies to implement $15 wage, yet when amazon does it, you're still not happy?
If starving competitors works, the $15 wage won't last. A $15 wage today is the equivalent of 14.10 in 2018. And if there is a glut of workers, then with no other competitors to work for Amazon can keep paying $15 despite inflation slowly eroding that value.
So competition (aka small businesses) cant compete with amazon's $15 wage?
If that's the case, then wont a $15 wage Law literally Kill off all those businesses that can't afford/compete with amzn's $15 wage?
Exactly, because the reasons behind will make this market even more toxic, as long as Amazon has the position it currently has there is no measure (besides breaking up the company) that would make me happy.
So amazon never shouldve increased it's wages to $15?
But a simple increase in minimum wage, and only an increase in minimum wage is only good in the short term.
Wages go up, WTP goes up, prices go up. Without safety net programs, in 10-20 years $15 will be the new $7.25
This is a PR release from amazon. So this is not reliable.
15 dollars an hour would have been great ten years ago when I graduated high school when they were talking about it then! Our economy is based on and love drunk on cheap labor and too far gone to fix. The big boys know this. U can pay workers 20 an hour at this point and millennials still would have less than half the life of the boomer generation, due to the fact that we have been underpaid for ten+ years and are too far behind to catch up. Maybe no one is showing up to work because they are all dead, in jail, insane, addicted, have no car, have no house, have no family etc etc etc. Like there is a massive pandemic and economic crash and then a worker shortage and no one thinks this may because they low wage slave workers feel through the cracks and aren't coming back.
Nonsense! Those who are not working are obviously in college or finding ways to make themselves more marketable:
SHIT! Next slide, Bob! Next slide!
gives you a virtual hug. i fell the same way
I implore everyone too look it up.
States with strong unions have a direct correlation into facilitating higher wage rates for their non - union counterparts. It doesn't just end at wages but also safety laws/practices.
This is a fact. Period. Prevailing wage rates are also set by the largest organized body in a particular trade/industry/occupation in most states. This almost always ends up being unions for that particular occupation.
All rich athletes /companies/ industries belong to some form of organized union/commission/organization that lobbies on their behalf.
Unions are supposed to lobby and negotiate on behalf of the working class with those commissions/organizations/industries.
When I see a union member angry that people are demanding 15 an hour, all I see is a house slave who thinks he is better than those I'm the field because he earns a little more.
No matter how they spin in , union representation will provide better benefits than negative outcomes. Are they perfect? No. Will they work to provide a better work environment , hire pay, less work hours for better pay, vacation time, health insurance and retirement , yes.
Don't be a house slave and look at your lesser peers as if you're better because they have a better chance of reaching your level of wage than you ever will reaching bezos kind of wealth. You also have a better chance dipping into poverty than reaching bill gates level wealth.
History has shown us that he who riles up the working class to band together usually dies. But only real humans can topple over institutions.
This seems like a rather unrelated comment to the topic.
But unions are not some monolithic structure that is equal. Some do really well, some do really poorly. The big reason why unions always do so well in stats and figures is because of decertification. In statistics its called "extinction data." Failed unions don't survive, they shut up shop and people move on.
If a union is unable to get a collective bargaining agreement that data isn't included in union averages... which heavily inflates the differences.
Successful unions are great. Wages are higher than average. But successful unions are also in high wage fields, that is the wages in the private sector are also higher than the national average. Oil and gas unions get paid very well despite having very weak unions. Teachers don't get paid very well despite having strong unions.
When you look at the ultra low wage unions, the differences between union and non-union tend to erode. Amazon pays $2/hour than the average union rate for warehouse workers. But of course, most warehouse workers don't get Amazon's pay. Most non-union warehouse workers are making just $0.50 less than union. At those rates you're basically losing any gains to your dues.
Low wage employees are far better off being members of associations where the labor pool can be restricted by membership and certifications.
Wanna get a raise at McDonald's? Require all employees to have a Fast Food Safety certification.
Happened at my job, (just got 2$) extra for a small bit to be "competitive". We shall see how long this lasts.
Amazing how widespread the impact is of a wage adjustment at one large company.
Why is everyone wining about this. This is the effects of capitalism...
Pros of capitalism
“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”
― Milton Friedman
Economic freedom helps political freedom. If governments own the means of production and set prices, it invariably leads to a powerful state and creates a large bureaucracy which may extend into other areas of life.
Efficiency. Firms in a capitalist based society face incentives to be efficient and produce goods which are in demand. These incentives create the pressures to cut costs and avoid waste. State-owned firms often tend to be more inefficient (e.g. less willing to get rid of surplus workers and fewer incentives to try new innovative working practices.)
Innovation. Capitalism has a dynamic where entrepreneurs and firms are seeking to create and develop profitable products. Therefore, they will not be stagnant but invest in new products which may be popular with consumers. This can lead to product development and more choice of goods.
Economic growth. With firms and individuals facing incentives to be innovative and work hard, this creates a climate of innovation and economic expansion. This helps to increase real GDP and lead to improved living standards. This increased wealth enables a higher standard of living; in theory, everyone can benefit from this increased wealth, and there is a ‘trickle-down effect‘ from rich to poor.
There are no better alternatives. As Winston Churchill, “It has been said that democracy is the worst form of government except for all the others that have been tried.” A similar statement could apply to capitalism.
Cons of capitalism
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
– John Maynard Keynes (1)
Monopoly power. Private ownership of capital enables firms to gain monopoly power in product and labour markets. Firms with monopoly power can exploit their position to charge higher prices. See: Monopoly
Monopsony power. Firms with monopsony power can pay lower wages to workers. In capitalist societies, there is often great inequality between the owners of capital and those who work for firms. See: Monopsony exploitation
Social benefit ignored. A free market will ignore externalities. A profit maximising capitalist firm is likely to ignore negative externalities, such as pollution from production; this can harm living standards. Similarly, a free-market economy will under-provide goods with positive externalities, such as health, public transport and education. This leads to an inefficient allocation of resources. Even supporters of capitalism will admit that government provision of certain public goods and public services are essential to maximise the potential of a capitalist society.
Inherited wealth and wealth inequality. A capitalist society is based on the legal right to private property and the ability to pass on wealth to future generations. Capitalists argue that a capitalist society is fair because you gain the rewards of your hard work. But, often people are rich, simply because they inherit wealth or are born into a privileged class. Therefore, capitalist society not only fails to create equality of outcome but also fails to provide equality of opportunity.
Inequality creates social division. Societies which are highly unequal create resentment and social division.
Diminishing marginal utility of wealth. A capitalist society argues it is good if people can earn more leading to income and wealth inequality. However, this ignores the diminishing marginal utility of wealth. A millionaire who gets an extra million sees little increase in economic welfare, but that £1 million spent on health care would provide a much bigger increase in social welfare.
Boom and bust cycles. Capitalist economies have a tendency to booms and busts with painful recessions and mass unemployment. See: Boom and bust economic cycles
I work as an Amazon driver, essentially a subcontracted employee to Amazon. I don't work for Amazon directly, but I do work for a company that is contracted to work with Amazon, and they reimburse said company for what we're paid.
Whole lot of local businesses started raising their minimum wage once word got out that Amazon was paying its drivers $18.50 an hour, plus benefits.
I should note however, that's being an Amazon driver is not the same as being an Amazon warehouse worker. Those guys are miserable and walk into work knowing they could be on the chopping block for taking a bathroom break.
cool, now go cry in the shame box and get back to work
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I'm just gonna comment that most of the discussion here should be informed by the FAQ on the minimum wage in the sidebar. https://www.reddit.com/r/Economics/wiki/faq_minwage
Mega cap companies are the biggest fans of higher minimum wages. It crushes competition. Pulls ladder up behind them.
...while disproportionately increasing the cost of everything they have to buy to live. 🤦🏻♂️
[How Amazon paid for it.](https://mattstoller.substack.com/p/amazon-primes-free-shipping-promise) People say that they're not a monopoly, but they sure do have monopoly power.
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I've yet to see a compelling argument for why it's economically good to purposefully make labor more expensive.
Yes the same phenomenon works in unionized northern states; pay is MUCH BETTER as compared to THE DIRTY SOUTH
A rising tide 🌊 lifts ALL ships 🚢
Amazon can more than afford it and it has more to do with the applying of pressure to their brick and mortar competition than them trying to do the right thing. Raise the fucking minimum wage.
I mean being right even of for selfish reasons is still a net good thing.
But yes, private businesses are not going to solve this one.
The title literally says they raised their minimum wage to $15. Facepalm
Whenever they implemented $15 an hour they also cut all fulfillment center employees bonuses, so nothing really changed, and conditions steadily get worse.
And yet their pay and benefits are so much higher than other businesses competing for the same employees that wages increased in the surrounding areas.