Today’s News & Commentary — October 2, 2018
Today Amazon announced that it would raise the minimum wage for its U.S. employees to $15.00/hour. These wage increases will apply to more than 250,000 Amazon employees, including those working at grocery chain Whole Foods, as well as over 100,000 seasonal employees. The company has come under fire for its working conditions, particularly in its fast-paced fulfillment centers; in recent years, Amazon has faced lawsuits alleging that the company uses contract employees to avoid labor costs and workplace regulations. The wage increases announced today will apply to part-time and contract employees.
Amazon’s announcement comes on the heels of minimum wage hikes throughout the country, including in Seattle. On Monday the Seattle Office of Labor Standards announced that companies employing 500 or more workers worldwide would need to pay their employees at least $16.00/hour. This marks the end of a two-tier system under which employers who contributed toward medical benefits paid a lower minimum wage than those that did not.
According to a new working paper published this month by the National Bureau of Economic Research, increases in minimum wage reduce criminal recidivism for property and drug crimes. Researchers examined data from over six million released prisoners to identify the effect of higher minimum wages and the availability of state Earned Income Tax Credits on recidivism rates. Their findings implied that by increasing potential legal wages relative to illegal sources of income, higher wages attract released prisoners to the legal labor market more than they reduce employment in that population.
While the cost of employee wage increases is offset by corporate tax cuts, the Wall Street Journal reports that only a fraction of these savings are actually going to employees. A nonprofit tracking companies that have announced spending plans for their corporate tax savings found that while 80% are passing some of those savings onto workers, only 7% of these savings are going to workers in the form of wage increases, bonuses, benefits, training or retirement contributions. Meanwhile, a survey of 152 companies by an executive recruitment firm revealed that just 14% were funneling any part of their tax-cut savings into base salary increases.