Amazon’s campaign to have Congress approve a national minimum wage of $15 an hour isn’t as much altruistic as it is anti-competitive, according to labor policy researcher Rachel Greszler.
“It just gives them a competitive advantage and it forces out the little guys,” she told The Epoch Times.
“We’re calling on Congress to raise the federal minimum wage to $15 an hour and urging other major corporations to increase wages to this level,” an Amazon spokesperson told The Epoch Times in an emailed statement. “We’re pleased that multiple companies have taken this important step—which will help workers and their families, communities, and our overall economy—and hope more will follow suit.”
Amazon officials didn’t respond to specific questions by The Epoch Times regarding the criticism the company has faced on this issue.
There are multiple problems with Amazon’s assertions in Greszler’s view.
Endowed with a gargantuan capital base, Amazon has been able to make investments in automation that small competitors have little chance to match.
The company has “automated out of existence a lot of its low-productivity jobs,” Greszler said.
The edge that small businesses have is agility. They’re able to put together a scrappy team of workers who may endure low wages in the hopes that there will be a reward if the company makes it big.
“Many of them can’t yet afford to pay all their workers at least $15 per hour but that doesn’t mean that they should just be driven out of business or prevented from starting and growing,” Greszler said.
“I think that if Amazon had to pay the equivalent of $15 minimum wage when it first set up shop 25 years ago, it might not even exist today.”
It’s especially untimely to increase the minimum wage now, she said, when government restrictions amid the COVID-19 pandemic put many small businesses on the edge of bankruptcy.
COVID-19 restrictions have forced many restaurants out of business, particularly focusing on shutting down indoor dining—exactly the service where workers traditionally earn their tips.
One of Amazon’s arguments is that the federal minimum wage “has been stuck at $7.25 since 2009.” But the rate seems to have little to do with how much Americans actually earn.
Amazon has pointed to several studies suggesting a positive impact of such a shift, but the government can’t just wish higher wages into existence, Greszler warned.
To be worth $15 an hour, a full-time employee has to produce value in excess of $36,000 a year for the employer. For those who can’t do that quite yet, “we tell them that there’s just no place for them in the labor market,” she said.
Proponents of a higher minimum wage theorize the money to fund it will come from excessive profits of the employers. That may apply to companies such as Amazon, but hardly to small businesses, Greszler said.
“The average small business owner makes $70,000 a year. They can’t pay 10 employees twice the wages on that,” she said.
Another problem is, “we’ve never dealt with a 107 percent increase in the federal minimum wage,” Greszler said. “This just has such broad implications across so many areas of the economy that I don’t think we even know how widespread the upheaval would be.”
For instance, she’s estimated that child care costs would go up 21 percent for a family with two children, spiking the bill by $3,700 per year.
The uncertainty has been underscored by the CBO’s estimate that the hike would cause the loss of anywhere from zero to 3.7 million jobs. The estimate had only 66 percent confidence.
Imposing a national minimum wage rate would seem to dent the competitive advantage of states where a lower cost of living could attract businesses with potentially lower labor costs.
For Amazon, “this is really about driving out competition and preventing opportunities,” Greszler said.