Jeff Bezos will raise wages for Amazon employees in the United States to $15 an hour. That’s great. What’s not so great is that he is also now trying to lobby the government to force that wage standard on other companies.
Amazon is free to pay its employees what it wants. That’s how it should be.
In fact, raising wages is actually a good strategic move from the online retail giant. For one thing, Amazon faced pressure from employees and society for better conditions and better pay, drawing a spate of bad press. Amazon is also competing for workers since the economy is hot and unemployment low. Finally, the pay increase is likely calculated to offset attempted unionization efforts from Whole Foods employees since the chain was acquired by Amazon.
[Bernie Sanders: Amazon's $15 wage is the 'shot heard round the world']
Moreover, if Amazon wants to encourage other companies to raise wages for their employees too, that’s also great. Generally, though, other companies that are competing for workers will also be forced to boost wages when their competitor does regardless of any lectures from Amazon.
Claiming a little undue credit and getting to say some nice things about encouraging others to pay better is all fine and good too — although the obvious line probably comes with some eye rolls.
Unfortunately, Amazon wants a little more than just credit for nice words and the benefits of keeping employees happy. By pairing its wage hike with a lobbying agenda — a $15 federal minimum wage — Bezos signals that he wants to push the government to regulate its competitors in a practice known as “raising rivals’ costs.” The goal is to undercut competition by mandating higher wages that companies with smaller margins likely can’t afford.
That’s a far different game than just paying workers more or pushing other companies to do so. Instead, such lobbying is essentially asking the government to be Amazon’s enforcer and mandate that other companies follow their lead and march to his tune.
Some competitors, of course, will be able to keep up and will, without regulation, pay their workers more. Other smaller competitors with slimmer margins, however, may be squeezed out. The more of those small competitors that Amazon squeezes out, the easier time they have dominating the market and the more profit they make.
Critics might say that raising the minimum wage, regardless of how its accomplished, is a good thing. In reality, it’s much more complicated than just paying people more.
The higher wages workers earn, the fewer employees a company can afford to pay. That actually means fewer jobs and more people who, instead of making a little less, are just plain out of work. Moreover, a mandated minimum wage hike, rather than market-driven increase, means that goods and services may quickly go up in price. Generally, such increases hurt the very demographic that higher wages are supposed to help. Finally, a quick jump in minimum wage means an accelerated push to automate low-skilled jobs which, without market-driven time for adjustment, makes that inevitable process all the more painful.
In short, boosting the minimum wage and doing so on Amazon’s time frame has one pretty clear winner: Amazon.
The U.S. government should not be in the business of picking economic winners and losers at the expense of the market, competition and, yes, workers. It’s unfortunate, but unsurprising, that Amazon wants to do just that with its lobbying efforts.