Discussion of raising the minimum wage has reared its head again amidst news that Amazon is setting a $15 minimum wage for all workers. Should the federal government follow Amazon’s lead?
Probably not. James Pethokoukis of AEI thinks this change will be great for Amazon – but this isn’t a policy that would work for every job across the country.
We can be confident that Amazon boss Jeff Bezos, the world’s wealthiest person, has coolly calculated that it makes ample business sense for Amazon to raise the minimum wage it pays its U.S. workers to $15 an hour. The logic seems obvious. The boost would give the trillion-dollar retailing giant an edge over rivals such as Walmart and Target in the competition for increasingly scarce workers. It also gives the company a reputational lift — or perhaps a political heat shield — after politicians such as Bernie Sanders have attacked it for its labor practices, including how some employees receive assistance from government safety-net programs.
Hiking the minimum wage makes sense for Amazon and its workers. That doesn’t mean it makes any sense for Washington to follow suit.
Many people are treating Amazon’s move as a call to raise the federal minimum wage to $15 — double the current $7.25 level. Although there is research supporting both sides of this issue, cautious policymakers should consider such a big jump to be way outside their acceptable comfort level. They should absolutely consider the risk of job loss for low-wage workers if there were a massive hike that affected workers living in both high- and lower-wage regions. It is foolish to assume that if the cost of employing a worker is doubled they will all still retain their jobs.