Raising the minimum wage helped Walmart boost sales — and the same could happen to Amazon

  • Amazon says it’s raising the minimum wage for its workers to $US15 an hour.
  • Walmart, Amazon’s biggest rival in online shopping, increased its minimum wage back in 2016. That same year, the retailer saw a boost in sales, which the CEO attributed to the pay raise.
  • It’s possible Amazon could see similar results as Walmart in reaction to its pay increase.

Amazon could see a spike in sales after raising its minimum wage, if a similar move one of its biggest rivals took two years ago is any indication.

The company announced Tuesday it would increase the pay of more than 250,000 minimum wage employees to $US15 an hour. The raise, which will go into effect on November 1, is more double the federal minimum wage of $US7.25 an hour.

Although Amazon may be the most recent company to raise its minimum wage, one of its biggest competitors has also taken steps to increase hourly employee pay in the past, with interesting results. Back in February 2016, Walmart raised its minimum wage to $US10 an hour for more than 1 million of its employees.

Just three months after announcing the pay increase, Walmart reported that its sales were better than expected, while similar retailers such as Target and Macy’s saw a decrease. On a call with reporters in May 2016, Walmart U.S. CEO Greg Foran attributed his company’s boost in sales to the minimum wage raise, which he said made it possible for employees to spend more of their money in Walmart stores.

“The simple answer is yes, we are seeing improved associate purchasing in our stores,” Foran told reporters. “Associates are feeling more engaged.”

Walmart’s minimum wage, however, only increased by $US1 in 2016 (since then, it’s been raised to $US11 an hour). This 2016 pay raise seems tiny compared to that of Amazon, which raised its hourly pay by $US7.75. These companies are two of the biggest retailers for online shopping and are continuously vying for each other’s customers.

Both companies also share in the continued criticism that’s been heaped on them as symbols of everything that’s wrong with big business. Both have been shamed by critics for their alleged treatment of employees and working conditions, their destruction of small rival businesses, and for the growing net worth of their CEOs.

But while Walmart has taken a more concerted effort to improve its image since it was tarnished in the mid-2000s, Amazon has gotten mostly bad press. CEO Jeff Bezos was named the richest man in modern history with a record-setting net worth of $US150 billion. In Amazon’s announcement Tuesday of the minimum wage raise, the company said it was responding to critics of its pay practices, which has notably and vocally included Sen. Bernie Sanders. (In the hours after Amazon’s announcement of the pay increase, Sanders held a press conference and praised the company’s move.)

Despite the criticism, Amazon continues to make more than ever. As another holiday season approaches, it’s worth noting that the company brought in about half of all online holiday sales in 2017.

While it’s not guaranteed, Amazon could see similar results as Walmart in light of its pay raise. Walmart is not the only retailer that has attributed its success to higher wages. Costco, which raised its minimum wage to $US14 an hour earlier this year, is continuing to see an increase in sales.

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