Amazon’s Dilemma: Whether or Not to Increase Wages for Employees

Author: Hannah Viller Møller

The BRB Bottomline: “Make Amazon Pay” is a recent campaign initiated by employees in the United States and other countries such as Japan and Australia. Amazon employees are fighting for higher wages and better working conditions, and they are willing to protest and engage in strikes to achieve their demands.

Strikes and protests by Amazon workers have led to debates and generated global attention. Amazon is known as a company with great success, which a look at its numbers from the latest quarter (July 1 – September 30) confirms. Amazon’s revenue is around 143 billion dollars and profit has almost tripled from last year. Moreover, Amazon is a company with societal importance due to its high number of employees. For instance, the great number of workers at Amazon can impact the environment as well as taxes all over the world. Despite Amazon’s profit and revenue progress, the company is facing complaints regarding working conditions for employees. Amazon has faced criticism and critiques from the United States, Australia, Japan, India, and several European countries. Ultimately, the big questions are: what is the best strategy for Amazon? How do they respond to criticism and protests by employees? Can Amazon solve these issues globally, or should they be handled locally?  

Can Amazon Afford it? 

Amazon can implement various strategies to reduce criticism from employees and any bad reputation regarding poor and unfair working conditions. Each strategy will come with unique benefits and consequences, making it  hard to tell which option will give Amazon the best possible outcome. One strategy for Amazon can be to not meet employee demands for higher wages, but can Amazon afford this? Amazon wishes to put an end to employee strikes and protests, ideally without raising employee wages. This ideal plan of action would have Amazon workers accept their conditions with time and ultimately end their protest on their own. However, can Amazon afford to wait and hope that everything will work out itself without implementing higher wages? What are the consequences for Amazon by not increasing employee wages versus the consequences of increasing their wages? Another scenario is that no action by Amazon, and therefore no wage increase, will lead to more frustrated workers and an even worse working environment. These developments could be the beginning of further consequences for Amazon in the long run. For example, a poor working atmosphere can create a bad reputation and a harmful image for Amazon worldwide. 

Even though a wage increase for employees can be costly for Amazon, it will likely be worth it to avoid growing a negative reputation. Finally, Amazon must investigate several factors before deciding how to proceed and satisfy its employees. Amazon must thoroughly examine the benefits and the consequences of changing its wage policy and how it will affect the company not only in the short run but also in the long run. 

Moving Forward & Amazon’s Principles 

Amazon is driven by four standards: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. When Amazon’s leadership is making decisions, they must take those principles into account and do their best to act following their own values. In other words, Amazon values unique employees, long-term thinking, and a safe work environment. Therefore, going forward for Amazon it can be crucial to consider such factors when deciding how to satisfy their current employees and optimize their working environment. Amazon can face adversity in the form of costs in the short run if they choose to prioritize employees and put more money into their workers. However, there is still no guarantee that higher wages will satisfy their employees and put an end to employee criticism worldwide. In fact, there is a possibility that it will have a negative impact and make employees demand even more. On the contrary, higher wages can also lead to greater productivity, help attract more skilled employees, improve employee health, and lead to other social benefits such as better morale. 

One can suggest that leadership must look beyond the current satisfaction of employees when making decisions. Instead, Amazon needs to do what is best for the company as a whole and what will help their business in the long run. Here, Amazon can consider factors such as increasing revenue and profit, its name, reputation, and publicity around the world, and how well its decisions align with their core values. Finally, the worst consequence of not raising employee wages for Amazon is that Amazon workers will leave. This potential departure could be a big issue since Amazon would no longer be able to produce and deliver at the same pace, likely leading to reduced customer satisfaction. Ultimately, this will lead to a decrease in revenue and profit due to a lack of employees: nobody wants to work for Amazon. Therefore, Amazon must be aware of this consequence while trying to balance whether and by how much to raise the wages for employees, since a raise in the wages will also lead to less profit. 

Take-Home Points 

  • Amazon’s surplus has almost tripled, however, the company is still facing criticism when it comes to working conditions for employees.
  • Amazon is in a dilemma and must decide how to keep employee wages at the same level or increase the wages for employees. Can Amazon afford to not increase employee wages? 
  • When Amazon is making decisions, they must take their core values into consideration. Moreover, they should look at the consequences of their decisions in both the short run and in the long run. 

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