ChrisWeigant.com

Jeff Bezos Does The Right Thing

[ Posted Wednesday, October 3rd, 2018 – 16:34 PDT ]

We could all use a dose of good news right about now, which is why it was heartening to hear that the leader of Amazon just announced he would be raising his employees' pay so that nobody working for his company will make less than $15 an hour. That's good news for hundreds of thousands of American families, and it deserves to be praised and celebrated. But the lion's share of the thanks really should go to a politician, because if Senator Bernie Sanders hadn't publicly shamed Amazon's Jeff Bezos, this probably never would have happened.

The two are now buddies, at least if their Twitter feeds are any indication. They've both had warm words for each other since the announcement was made, with Sanders giving Bezos credit for acting and Bezos giving Sanders credit for his efforts to ensure that all full-time workers receive a living wage. Bezos even committed to pushing Congress to increase the federal minimum wage for all, and he could now bring some real weight to that argument.

This all came about because Bernie Sanders got incensed that corporate America has built into its business model paying their low-income workers so little money that they still qualify for federal assistance to the poor. A full-time worker is still eligible for food stamps (for instance) when their wage is so pathetically small that they cannot afford to feed themselves. What this does is shift a portion of the expense of hiring an employee from the corporation to the federal government. Or, to put it another way, our tax dollars subsidize some of the wealthiest corporations on the planet, because they are too cheap to pay their workers enough to live on. This is what outraged Bernie, because this business model is indeed truly outrageous.

So Bernie introduced a bill which would have addressed this problem, by taxing the corporations one dollar for every dollar the federal government paid out in benefits to their workers. This would have completely recouped the cost to the taxpayers, and put those costs where they really belong -- on the corporations' ledgers, not the taxpayers.

Some scoffed at his bill. One complaint was defeatist in nature: "It'll never pass, so why even bother?" This is true -- the bill was going nowhere and (sadly) it might not even have gone anywhere if Democrats had been in control of Congress. The other complaint came from some economists, who astonishingly tried to argue that giving low-income workers higher pay would somehow hurt those workers. I guess these economists don't have a whole lot of friends who make minimum wage, because if they did they would know what a bizarre claim this was, but whatever.

Amazon, in fact, is a case study why the opposite of "trickle down" works for everyone, not just the lowest-paid workers. Amazon will not just be giving their entry-level workers raises, they will in fact be giving raises pretty much across the board to all of their workers. This is almost inevitable, really, when you think about it. If the grunt workers are making $15 an hour, then the people who supervise those workers -- their immediate bosses -- really have to be making more money than the people they're supervising. So maybe their pay goes up to $16 or $17 an hour. The managers who manage these supervisors will likewise need to be making more than the people they are in charge of, so they will need a raise too. Other than the upper ranks of management (where salaries are already so much higher than their immediate underlings), this pressure inexorably happens from the bottom upwards -- one might call it a "rising tide lifting all boats," in fact. Unlike the fantasy of trickle-down, the effects are immediate and will help just about all the workers at Amazon. Which is good news indeed.

But make no mistake about it, it was public shame that caused Bezos to reconsider. Bernie Sanders named his bill the "Stop Bad Employers by Zeroing Out Subsidies Act," or the "Stop BEZOS Act." Not too subtle, is it? Amazon had just become one of the biggest corporate entities the Earth has ever seen, being valued at over one trillion dollars. Jeff Bezos himself is one of the richest men on the planet as well. So it's hard for either him or his company to argue that they somehow can't afford to pay their employees a living wage. Bezos and Amazon are rolling in money, so it's an impossible argument to make.

Amazon may wind up making even more money as a result of this move, in fact. Many are drawing parallels with Henry Ford's decision to pay his assembly line workers the unheard-of wage of $5 a day (instead of the more-common $10 per week). If the workers make enough money, Ford reasoned, they would actually be able to buy his cars. If he sold more cars, then he and his company would wind up making more money in the end. The same effect may play out for Amazon, for the same reason. If Amazon employees now have spare money to spend, some of it might be spent on Amazon products. More demand for Amazon products means more money for Amazon, and as a result, they'll hire more people to keep up with the growing demand.

In one of Michael Moore's movies (I believe it was his first, Roger And Me, but I'm doing this from memory so excuse me if that's wrong), Moore interviews the head of a fast-food restaurant chain (again, from memory, I believe it was Dave Thomas of Wendy's, but I could be wrong about that). Moore asks him why he doesn't pay all his employees a living wage that is higher than the federal minimum wage. Moore points out that it would be the right thing to do and that anyone who works full time should really be able to live on the wages they make. At first, the C.E.O. considers the idea, and admits that it would indeed be the right thing to do, morally. Also, by offering higher pay, there wouldn't be so much employee turnover because his workers would want to stay in such good-paying jobs. But then he points out the reality of the marketplace -- if he paid that much, then he would be at a competitive disadvantage with all the other fast-food chains who were paying less.

The real solution to the problem, obviously, is to raise the floor for everyone. The federal minimum wage is currently a pathetic $7.25 an hour, or roughly $15,000 a year. In most place in America, that is simply not enough for a single person (much less a family) to live on. Congress hasn't acted to raise the minimum wage in over a decade. Even with unemployment at historic lows, there is no political push to do so from the Republican side of the aisle. Even on the Democratic side, many politicians consider the "Fight For $15" movement to be too radical. Democrats may back more modest increases, but now is not really a time for such timidity.

What Amazon's announcement shows is that corporate titans can be effectively shamed into doing the right thing. I hope Bezos is sincere when he pledges to push for a higher federal minimum wage for all, especially considering that he's now got nothing to lose. He's already upping his workers' pay to $15 an hour, so if the law changed he wouldn't even be affected by it. So he could indeed be the perfect champion for such a political effort.

Raising the minimum wage is an issue that cuts across party lines, because it is so popular with just about everyone. Ballot initiatives to raise state minimum wages have succeeded even in the reddest states (in Nebraska, for instance). Bernie Sanders can't shame each and every corporate leader individually, but the Democratic Party can indeed build momentum for raising the federal minimum wage by fully supporting the Fight For $15.

The most important part of this fight has so far received the least attention politically. I have no idea why this is so, but while you hear the "$15 an hour" figure a lot, you almost never hear about the proposal to add a COLA to the federal minimum wage. This isn't a sugary soft drink, but instead a Cost Of Living Adjustment -- a yearly raise to counter inflation. This is important for a number of reasons, not least of which is that if Congress passed a COLA with a minimum wage hike then they may never need to have gigantic political battles over the minimum wage ever again. Rather than a once-in-a-decade political brawl that pits business owners against workers, the minimum wage would automatically (and very gradually) rise over time, obviating the need for Congress to argue about dramatically hiking it. Which would put an end to all the partisanship surrounding the issue.

Jeff Bezos didn't come up with the $15 an hour number out of thin air. The Fight For $15 movement has been around for a while. More and more Democratic politicians have said they support it, meaning that if Democrats take even one chamber of Congress in the midterms, a minimum wage hike bill might actually make it to the floor for a vote.

Bernie Sanders hasn't passed his bill, of course. Despite the provocative name, it targets more corporations than just Amazon. But Bernie has proved that even bills with no chance can sometimes effect positive change in the real world. Even if Democrats only controlled the House, passing a $15 an hour minimum wage bill would put the issue in the political spotlight. It would restart a long-overdue conversation. It might even shame some other corporate leaders to follow the lead of Jeff Bezos, in fact. It may be a while before the federal minimum wage is lifted -- we may need a Democrat in the White House and control of both chambers of Congress to make it happen, in fact. But in the meantime, we should certainly applaud corporations who do the right thing. Amazon and Jeff Bezos deserve credit for doing the right thing, and Bernie Sanders also deserves credit for goading Bezos to do so.

-- Chris Weigant

 

Follow Chris on Twitter: @ChrisWeigant

 

28 Comments on “Jeff Bezos Does The Right Thing”

  1. [1] 
    neilm wrote:

    What about a simple law that calculates the cost of all the salaries and benefits for congress and tie the minimum wage to that.

    For instance, base salary for congress is $175K+benefits - let's conservatively call the total package $250K.

    If we tie the annual minimum wage to 1/8th of the median congress person's package, we make everybody happy when congress gives itself a pay hike.

  2. [2] 
    Don Harris wrote:

    It is heartening to see that despite being shamed by Bernie, Bezos was able to rise above vindictiveness and do the right thing by finally addressing something he should have addressed a long time ago.

    Let's hope this catches on and spreads to the media and reality based blogs.

  3. [3] 
    neilm wrote:

    A "$15 minimum wage" vote on the floor will be a real problem for the Republicans. Most congress people in deep red districts will wail "socialism" and it won't hurt them too much politically, but in the 60%-40% districts it could be a powerful tool for Democrats. The extreme right, financed by the usual cast of looney libertarians (the Koch's, etc.) are intent on proving that $15 minimum wages are bad for low paid workers, however time after time the opposite is true. Read Barry Ritholtz's excellent blog - search in there (he is a bit of a polymath and covers a lot of economics subjects) and you'll see he points to the real facts (https://ritholtz.com/).

    Also, Republican Senators will be pressured on this - why did the Senate kill the bill? Probably not a problem in Alabama where they are still fighting the Civil War, but in Texas we are already seeing Beta O'Rouke give credence to the possibility that Texas might go purple. (The more the right gloat if Cruz holds on, the more you know scared they are.)

  4. [4] 
    neilm wrote:

    OK, I'm putting my "Bezos Conspiracy Theory Tin Foil Hat" on. You have been warned.

    If my business was a leader at introducing automation (especially via robots - and let's not forget Amazon bought Kiva Robotics a few year ago), I'd look at human hourly wages as a competitive advantage that my business model had over my competition. And if I already knew that I was going to be able to cut my total employee to profit ratio due to further automation, I might make the following calculation:

    1. My business model is going to be seen as increasingly bad for American workers

    2. My total labor costs are going to go down significantly due to automation

    3. If I "altruistically" pay $15/hour and increase my own costs, even though the total dollar increase is less than the decrease I'll see due to automation, so while I'm already beating my competition on labor productivity, it will be slightly less

    4. I get to look like the good guy

    5. and I get to pressure my already less productive competitors to match my minimum wage, putting them at an even greater competitive advantage

    6. and make myself look even more of a John Lennon "working class hero"

    7. what am I waiting for?

  5. [5] 
    Patrick wrote:

    It looks like $15 an hour comes with a price.

    But Amazon is making other changes to employees’ compensation to help pay for the new wage floor in its fulfillment centers. Those changes include getting rid of what’s known as the “variable compensation program,” or VCP, which is based on a worker’s attendance and his facility’s production level, and eliminating a stock allotment program for certain employees.

    https://www.huffingtonpost.com/entry/amazon-minimum-wage-hike-compensation-cuts_us_5bb573d2e4b028e1fe3a6ba9

  6. [6] 
    TheStig wrote:

    Nelim-4 I completely agree.

    Patrick- 5 and Bezo's gambit is even easier when he takes back with one hand some of what he gave with the other.

  7. [7] 
    Don Harris wrote:

    "What are we going to do? The steel workers are threatening a strike!"
    "What you need to do is find a way to give them one dollar while taking two."
    -conversation between two business leaders
    The Cradle Will Rock
    (maybe not an exact quote)

  8. [8] 
    Don Harris wrote:

    While those already making above the minimum wage at Amazon may also get a pay increase, it might not work out that way across the board with a law raising the minimum wage.

    When NJ raised the minimum wage a few years back, the companies in the industry I was working in eliminated the jobs of people getting paid more than me, replaced them with workers making less than me and dumped the responsibilities of those that were making more than me on me and others at my pay grade.

    I'm not against raising the minimum wage, just not sure the "it will raise the pay of workers already making more than the minimum wage" argument will actually and/or always translate to raises for workers already making more.

  9. [9] 
    TheStig wrote:

    CW-

    "Many are drawing parallels with Henry Ford's decision to pay his assembly line workers the unheard-of wage of $5 a day (instead of the more-common $10 per week). If the workers make enough money, Ford reasoned, they would actually be able to buy his cars. If he sold more cars, then he and his company would wind up making more money in the end."

    This was not Ford's reasoning for increasing wages.
    He increased wages in order to reduce worker turnover. Inexperienced workers slowed down his production line.

    Ford was a welfare capitalist, which was a common industrialist strategy in the early 20th century. The idea was that a healthy and happy workforce was more efficient than a downtrodden one. It reduced the temptation for workers to unionize. At a very basic level, it was simply taking good care of your biological tools. It is a lot easier to be benevolent when it increases your profits AND your control of your own enterprise.

    IBM, Kodak, National Cash Register, Sears, Standard Oil and US Steel all did pretty much what Henry Ford did, and so did many other companies to a greater or lesser degree. If you drive around the old industrial towns of the East and Midwest you still see the vestiges of social capitalism in parks, libraries, social clubs and planned communities.

    Bezos is dipping his toe into a deep pool.

  10. [10] 
    TheStig wrote:

    One thing I forgot to include in comment 9.

    The US military services have adopted/adapted a lot of ideas from social capitalism...and have retained more of them than current civilian enterprises. There are a lot of insider military jokes about this.

  11. [11] 
    James T Canuck wrote:

    Assume I've read all of the above...

    There's many 'living wage' programmes ongoing, around the world, to make an informed opinion about raising the minimum wage--better productivity, healthy and stable workforce, job satisfaction, low turnover, to say nothing of adding a massive influx of cash into local economies...

    Trickle up economics is what a well paid working class brings to the table. I don't think Ford or Bezos believe/believed that the bulk of their largesse would come home to roost.

    It's a shrewd move by Bezos, aimed at the likes of Wallyworld and Costco...

    LL&P

  12. [12] 
    TheStig wrote:

    JTC-11

    "Trickle up economics is what a well paid working class brings to the table."

    I'd love to believe that, but workforce numbers tell me otherwise.

    Total USA labor: 150 M
    Amazon USA labor: 0.50 M
    Walmart USA labor: 2.0 M
    Cosco USA labor: 0.14 M

    Walmart Amazon and Cosco employ less than 2% of the US labor force. I don't see this stubby tail wagging the dog. Any one company can grease the skids a bit, but greasing the skids doesn't haul the ocean liner up the shipway and into the building yard. There is a first mover problem with any one industry rising all the labor boats.

    I think it's a shrewd move on Bezo's part, but it's a local gambit directed against Internet competitors, not a global effort to lift the US economic engine.

  13. [13] 
    Paula wrote:

    Welp, re: yesterday's column, looks like Repubs, true to form, are now trying to use their unreleased FBI report to "clear" Kav. Dems reading it say its a cover-up and multiple reports indicate FBI only spoke to, I believe, 6 people.

    The whole thing has been a sham from the start - the usual suspects once again appear to be caving (Flake, Collins, Murkowski).

    People have been leaving the party so Repubs have to do something to regain members. They figure the sexual-predator demographic hasn't been mined and offers possibilities. Look for the recruiting messages: "GOP - where rapists go for career advancement!"

  14. [14] 
    Kick wrote:

    Heidi Heitkamp - No

  15. [15] 
    Kick wrote:

    Heidi Heitkamp - No

  16. [16] 
    Kick wrote:

    Heidi Heitkamp - No

  17. [17] 
    Kick wrote:

    I have no idea how that posted three times when I clicked submit once. Apologies.

    Wish we could count her vote three times. :)

  18. [18] 
    Balthasar wrote:

    Kick [17]: What you do is submit three times, while reciting: "There's no place like D.C."

    It won't get you anywhere, but you'd be right.

    You almost (but not quite) have to sympathize with the GOP:

    On the one hand, if Kav's nomination fails, it (temporarily) dashes the dreams of conservatives, who have been having semi-erotic fantasies of overturning Roe, the Voting Rights act, affirmative action, and maybe even Miranda. It would be a personal failure for Trump, and a giant disappointment for McConnell, who was probably hoping to cap his career with it. If the GOP, with political control of the whole government couldn't do it now, when could they?

    On the other hand, the Kav Nomination has energized their base like no other issue could. The best thing that could happen to their midterm prospects would be for Democrats to succeed at blocking Kavanaugh, sparking outrage, and driving the GOP base to the polls to retaliate.

    If Kav wins, that dissipates like morning fog, and they're back to facing the blue tsunami, now given an energy boost by the transparently rigged process. With SCOTUS firmly in hand, even Trump's base might go back to sleep.

    What to do? They've tried their best to fumble the ball, and in any other world, Kavenaugh would be toast by now - how many times does Kav have to lie before Joe Manchin grows a pair?

    So here's another Orwellian paradigm to add to our long list of unhappy truths in the Trump era: Success is failure.

    At least when applied to zombie nominees.

    :}

  19. [19] 
    Paula wrote:

    [18] Balthasar: Don't agree that a failure on Kav would energize deplorables - I think it would anger them but also demotivate them.

    Dems don't need Kav on the court to be motivating - we're motivated. We're not going to stay home if he's blocked.

  20. [20] 
    TheStig wrote:

    Kick-14 thru 17

    I think Cab Calloway may have channeled your computer.

  21. [21] 
    Kick wrote:

    Balthasar
    18

    I hear you. I just disagree on this one. :)

  22. [22] 
    Kick wrote:

    Paula
    19

    Dems don't need Kav on the court to be motivating - we're motivated. We're not going to stay home if he's blocked.

    This! Totally agree with Paula. :)

  23. [23] 
    Kick wrote:

    TS
    20

    I think Cab Calloway may have channeled your computer.

    I'm fixing to hit it with a Callaway golf club! :p

    My connection is acting up lately so I'm guessing either you or CW infected me. ;)

  24. [24] 
    Balthasar wrote:

    Paula [19]: I think it would anger them but also demotivate them.

    I respectfully disagree. Faux News is called 'the outrage machine' for a reason - because that's what motivates deplorables.

    But it's not just them - the Russkies managed to manipulate Bernie supporters into boycotting the 2016 election by stoking their outrage at (supposedly) rigged primaries.

    I think the highly charged partisan atmosphere surrounding these midterms was already lighting up the flashing 'Warning' indicator for Democrats, who have been acting (in some cases) as though the midterm shift is already a done deal. It isn't.

    We've had Trump on the defensive - forced to insist that everything is hunky-dory when it very obviously isn't. But there's a reason that Republican wanted to have this fight now, rather than after the midterms, during the lame-duck session. They were spoiling for a good battle, because nothing draws a crowd faster than a fist-fight - P.T. Barnum used to hire guys to stage noisy arguments outside of his oddity museum for that express purpose.

    If we ignore that reality, we risk being blindsided again, because we were assuming that they were voting FOR republicans rather than AGAINST democrats. We dismiss that notion because it makes no sense, and it doesn't. But that doesn't take into account the crowd gathering around the periphery of the fight, where the real action is.

    :}

  25. [25] 
    Paula wrote:

    [24] Balthasar: Still disagree. Not sure why Bernie supporters would stay home if Kav is on or not on - but definitely don't think Dems will stay home NOR do Dems need yet another boost.

    Yes the outrage machine runs 24-7 in rightwing world but that has never stopped. Also, while polls and reports keep referencing Repub support they never mention the part about people leaving the Repub party so it's a higher percentage of a smaller number.

    None of the Dems I know are the least bit complacent. That's anecdotal so meaningless, but still.

    People who are Never-Trumpers are coming out strong AGAINST Kavanaugh - I don't see why left-the-party-over-Trump is going to gain them back by backing a rapist for SCOTUS.

  26. [26] 
    Paula wrote:

    I, for one, am not counting on low turnout by Repubs.

  27. [27] 
    Kick wrote:

    WHIP COUNT
    UNDECIDEDS

    D: Manchin
    R: Collins, Flake, Murkowski, Sasse

  28. [28] 
    James T Canuck wrote:

    Mr. K will, in all likelihood, get confirmed. Which is fine. Ok, he's a sexual deviant, reprobate and thoroughly vile, but it's not like he's the only one the right have in their arsenal of judges for SCOTUS. Their character isn't going to be an issue once they hit the bench, any one of 25 choices at Trump's disposal would vote along a party line... However, Mr. K's travail through the process has whipped up both sides, so if the outcome ensures one side will be motivated, better it be the left.

    If the Dems ride Mr. K's unpopularity into November they will take the house, from which, they can start looking into some of the right's sketchy practises in time for 2020...

    All things being equal, nothing on earth can prevent Trump appointing a right-wing zealot, (although, Trump's sister is a fellow atheist and a judge, I'm sure she'd be able to conjure up a name or two not fed to him by the GOP) other than a full sweep in November. For the democrats it's worth keeping up the moral indignation about Mr. K once confirmed, the GOP's counter argument that the Dems orchestrated the Ford episode will either fade away or otherwise serve as a distraction for the GOP base to remain at home in November, secure in the knowledge that they have their man on the court.

    After all poisons come out with the Dems having the power to inaugurate house committee after house committee, it will be 2020, Trump will be reduced to his fanatical base, the GOP will be in tatters, and the Dems can take the senate and the White House... Played logically, it's not that much of a stretch.

    LL&P

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