Finance
Amazon’s wage hike is ‘not all roses’ for its workers
Amazon announced recently that it will increase the minimum wage for its US and UK employees starting next month.Noah Berger/Reuters
- Amazon announced last week that it will increase the minimum wage for its US and UK employees starting next month.
- The tech giant said it would phase out its restricted stock unit program and variable compensations.
- Certain Amazon employees will actually “lose out” after the new wage change, Nomura Instinet said.
- Watch Amazon trade in real time here.
Amazon announced last week that it is raising minimum wage for US and UK employees, but Nomura Instinet analysts say the pay hike comes at a cost.
“This was not all roses as Amazon is eliminating restricted stock options and monthly incentive bonuses for hourly employees,” a team of Instinet analysts led by Simeon Siegel said in a note sent out to clients on Monday.
Siegel noted that, prior to the hike, Amazon’s US fulfillment center employees earned an average hourly wage more than $15 when including stock and incentive bonus. And so, these employees will actually “lose out” after the new wage change.
Last week the tech giant said that, starting from November 1, it will lift its US minimum hourly wage to $15 per hour and its UK minimum wage to £10.50 ($13.60) for the London area and £9.50 ($12.36) for the rest of the UK. The decision follows sustained pressure from Sen. Bernie Sanders, who attacked Amazon for the amount it pays its workers.
Amazon explained its decision to phase its restricted stock unit program citing hourly employees preferred the “predictability and immediacy of cash to RSUs,”or restricted stock units, and mentioned that the company is “phasing out the incentive pay component.”
By Siegel’s calculation, the wage increase — spanning full-time, part-time, temporary, and temporary agency employees in the US and UK— could drive $1.3 billion to $2.7 billion of incremental expenses. But the plan to phase its restricted stock units and variable compensations could save Amazon $900 million. Therefore, after excluding savings by eliminating benefits, Amazon could see a net cost of $400 million-$1.9 billion, suggesting only 15-70 basis point of deleverage, Siegel said.
Siegel has a “buy” rating and $1,990 price target for Amazon.
Jefferies analyst Brent Thill recently said that the incremental cost is affordable for Amazon because the e-commerce giant “has several high-growth, high-margin businesses that allow it to pull investments from other areas to accommodate a wage hike.” He added that the wage hike could bring many operational, strategic, and political benefits to the company, which should “offset a good portion of the incremental cost.”
Amazon shares have lost 5% since the wage hike announcement, but are up 59% this year through Friday.
Now read:
Markets Insider
Tesla layoffs hit high performers, some departments slashed, sources say
ChatGPT vs. Gemini: Which AI chatbot won our 5-round match?
Tesla layoffs hit high performers, some departments slashed, sources say
Meta to close Threads in Turkey to comply with injunction prohibiting data-sharing with Instagram
Lenovo LOQ 15 (2024) review: A cheap gaming laptop, but can it run AAA games?
TechCrunch Mobility: Cruise robotaxis return and Ford’s BlueCruise comes under scrutiny
‘The Sympathizer’ review: Park Chan-wook’s Vietnam War spy thriller is TV magic
Tesla drops prices, Meta confirms Llama 3 release, and Apple allows emulators in the App Store
Naval Ravikant’s Airchat is a social app built around talk, not text
NASA discovered bacteria that wouldn’t die. Now it’s boosting sunscreen.
VC Arjun Sethi talks a big game about selling his company-picking strategies to other investors; he says they’re buying it
X users are still complaining about arbitrary shadowbanning
Nigerian fintech Zone raises $8.5M seed to scale its decentralized payment infrastructure
Apple sued, Microsoft’s AI ambitions and Nvidia’s surprises
TechCrunch Mobility: The wheels are starting to come off the Fisker EV bus
Pokemon resets some users passwords after hacking attempts
Lordstown Motors’ ousted CEO settles with SEC for misleading investors
Amazon Big Spring Sale 2024: Shop 350+ deals on Apple, robot vacuums, security cameras, more
Maju Kuruvilla is out as CEO of one-click checkout company Bolt
Where’s the AI in these ‘AI-powered’ products for your home?
Tesla layoffs hit high performers, some departments slashed, sources say
ChatGPT vs. Gemini: Which AI chatbot won our 5-round match?
Tesla layoffs hit high performers, some departments slashed, sources say
Meta to close Threads in Turkey to comply with injunction prohibiting data-sharing with Instagram
Lenovo LOQ 15 (2024) review: A cheap gaming laptop, but can it run AAA games?
TechCrunch Mobility: Cruise robotaxis return and Ford’s BlueCruise comes under scrutiny
‘The Sympathizer’ review: Park Chan-wook’s Vietnam War spy thriller is TV magic
Tesla drops prices, Meta confirms Llama 3 release, and Apple allows emulators in the App Store
Naval Ravikant’s Airchat is a social app built around talk, not text
NASA discovered bacteria that wouldn’t die. Now it’s boosting sunscreen.
-
Business4 days agoAPI startup Noname Security nears $500M deal to sell itself to Akamai
-
Business6 days agoYoshi Mobility has come a long way since gassing up cars on the side of the road
-
Entertainment4 days agoHow to watch ‘Argylle’: When and where is it streaming?
-
Entertainment3 days agoNASA discovered bacteria that wouldn’t die. Now it’s boosting sunscreen.
-
Business4 days agoUS think tank Heritage Foundation hit by cyberattack
-
Entertainment3 days agoDyson 360 Vis Nav robot vacuum review: Dyson should just stick to upright vacuums
-
Business3 days agoTesla drops prices, Meta confirms Llama 3 release, and Apple allows emulators in the App Store
-
Entertainment4 days agoCrypto and taxes: Which forms you need to file
