Amazon Fights Back
Populist fervor is motivating a political swarm against business as it resonates with donors and the clickstream media.
When Amazon announced it would raise the minimum wage it pays hourly workers to $15 per hour, Jeff Bezos gave employees a gift that harkens back to Henry Ford and the Model T. In 1914, the auto magnate doubled assembly line wages to $5 per day. According to historians at NPR, it gave rise to the American middle class.
The 2018 move by Jeff Bezos inspired similar wage increases at Costco and more recently, Walmart, which employ millions of hourly workers. Even Facebook responded by increasing wages among its contract workers. The new mantra for employers is to follow Amazon’s lead, and even the leader of the progressive wing of the Democrat Party took notice.
When Bernie Sanders praised Jeff Bezos for “firing a shot heard round the world,” he was reminding us that the increase was twice the national rate of $7.25 and more than 30% higher than President Obama’s hoped-for $10 per hour. At Amazon headquarters, it must have seemed a costly but worthwhile victory. If it was a victory, it was very short lived.
Before the wage increase, according to the Washington Post, which is personally owned by Bezos, “the median Amazon worker was paid $28,446, which translates to about $13.68 an hour.” Calculated by the number of affected workers, it comes to 350,000 employees receiving an average raise of $1,50 per hour, not including benefits which can escalate these figures up to 30%. It means Amazon is paying as much as $1 billion per year in increased wage costs. Yet, the Washington Post ran a second headline claiming, “Amazon is doling out raises of as little as 25 cents an hour in what employees call ‘damage control’.”
Demonizing business is too great a temptation for the click-driven media, and certainly, the politicians and crony activists who loom large in the policy-making wing of the Democratic Party. It is an old fashioned American hymn, perfected under President Obama, who taught the country to stick the blame on business when he unleashed the furies of the Holder Justice Department on bank CEOs during the financial crisis. The move worked brilliantly. Bankers were humiliated, their balance sheets brutalized while politicians like Barney Frank and Chris Dodd, two significant players who helped create the crisis, were mythologized.
Bankers in pinstripes with high pay weren’t likely to find much sympathy, and today, we still suffer from that legacy. America equates society’s ills from climate change to income inequality with corruption in business, and the corollary is that more regulation is in order. This is why the new generation of political candidates are using the Obama playbook to hoist their ambitions in the 2020 election. The latest to demonize Amazon for personal glory is none other than Obama protege´ and front runner, Joe Biden:
When politicians rant, business usually turns the cheek. But not this time, at least not Jeff Bezos. The lesson Bezos learned building one of the world’s empires of productivity and innovation is that fighting back is the job of a leader. When Democrat Congresswoman Alexandria Cortez-Ocasio endorsed Biden’s mudslinging against the company, the Seattle retailer fired a hard-hitting response aimed at her personally.
This may be the first time a business leader has dared to point directly at their political accuser and say, “I don’t care how powerful you think you are, but your facts are just wrong.” The question before us, as General David Petraeus asked about Obama’s Iraq War, “tell me how does this end?”
At Thunderbird, we did extensive research on corporate reputation and discovered that leaders who express vision with integrity, and do so forcefully, are likely to prevail. Amazon has changed the world through incredible efficiency and better prices that customers enjoy, and now the company has doubled down on its vision by increasing the pay of its hourly employees and the rest of the world is following suit. It is more than a good outcome; it is a good omen for business.
Amazon and its iconic founder are proving that fighting back is not only the best defense but the one that works.