Amazon needs fewer workers to compete
Amazon snuffed out political criticism of its workers yesterday with a surprise decision to pay all employees $15, including temporary workers.
It's a raise for many of the 250,000 full-time employees and 100,000 temporary workers it hires around holidays. It also came with a promise to lobby for a higher minimum wage.
It all sounds very kind-hearted, right?
It might very well be but the genius of it is that it could also lead to a massive competitive win. If it leads to a rise in the minimum wage or even to widespread demands for raises at other retailers, then Amazon comes out ahead.
Why? Because Amazon needs fewer workers per dollar of revenue generated. Walmart, for instance, employs 1.5 million workers -- six times more the Amazon. If they're forced to match Amazons higher wages, it will take a much bigger bite out of profitability and may force them to hike the price of goods.
In the bigger picture, I think we're nearing a tipping point on broad US wages. Today's ADP report showed another 230,000 US jobs in September compared to 184,000 expected. I think we're past the point where workers are happy to have a job and into a time when people want a raise. And if the lowest-paid workers can get one, then it will cascade through the ranks.
In FX, our own Greg Michalowski is out with a great video on the lessons forex traders can take from Jeff Bezos:
