Amazon announced that it was raising the minimum wage for certain employees to great fanfare last week - but several workers now believe they may actually be making less in the long run.
The hike to $15 per hour will increase wages for many of the Seattle-based commerce giant's employees, but the company is stopping monthly bonuses and stock grants in the process.
The cutbacks on those payments and investment opportunities may lead some of the warehouse employees - who are currently eligible for those bonuses - to see a decrease in their overall compensation.
The bonuses, part of Amazon’s Variable Compensation Plan (VCP), were based on monthly attendance and productivity. Employees were offered an additional four per cent of their base pay for good attendance and certain corporate-set production goals for the building as a whole.
At least one worker at a facility in Minnesota, Katy Iber, told the New York Times the labour market in her area meant she was already making more than $15 per hour and she was told her pay would increase by one dollar per hour.
However, without the VCP, she will see less annual salary.
Ms Iber noted it was as if the company was saying: “Thanks, we appreciate you going into the holidays. Here’s less money”.
The holiday season bonuses are usually double the normal amount to account for the volume of orders around the busy Christmas season.
Senator Bernie Sanders sent a letter to Amazon on 4 October, per the newspaper, which asked the company “to confirm how the total compensation of employees who would have received stock grants — those with the company for two or more years — will be affected as a result of the recent changes”.
Amazon has said it will adjust some pay, accordingly but did not provide specifics in a statement sent to The Independent.
The company argued phasing out the VCP would not affect compensation.
The wage increase “more than compensates for the phase out,” it said.
The company noted the raise is actually “more immediate and predictable” than relying on the VCP.
Amazon has said 250,000 regular employees and 100,000 seasonal workers would benefit from the new compensation policy.
A similar change is planned in the UK as well, but details were not made public.
The rate increase actually only “represents less than 1 per cent of [Amazon’s] projected 2019 revenue,” Deutsche Bank noted to the New York Times.
What complicates matters is what workers think they compensation will be with the VCP versus what Amazon estimates.
Employees are allowed to keep the two shares, currently valued at approximately $3,725, if they work for the company for two years.
As the newspaper reported: “Amazon said that if employees in 2018 get stock that was granted to them two years ago, that legally counts as compensation this year. But some employees believe that was compensation for work done two years ago”.
The change means while employees can retain these shares, they will no longer be able to earn new ones.
Not just a financial matter, some employees expressed frustration they were losing a sense of ownership within the company as well.
The company said in the statement: “Some employees have benefited from a bull market and the unusually strong appreciation of Amazon’s stock price in recent years. This is a good outcome for those employees, but such stock price appreciation is by no means guaranteed to continue. Stock markets and individual stocks can go up, but they can also go down.”
The company also plans to issue a “direct stock purchase plan in 2019” to employees who are interested.
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