Amazon’s Wage Increase Threatens Reduced Pay for Some Workers

Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City (Photo: REUTERS)

While many have lauded Amazon's decision to increase employee wage, some experts are skeptical about the long-term effect of this. Some observers even went as far as saying that this wage increase will hurt workers in the long run.

Amazon announced that it is increasing per hour wages to $15. However, there is a fine line on top of that rather impressive deal. Based on the details of this salary increase, Amazon will be stopping employees' monthly bonuses as well as stock grants.

Once implemented, these cutbacks in terms payments and investment opportunities will most likely lead to some warehouse employees, who are eligible for said bonuses, to receive a decreased compensation.

These bonuses are part of Amazon's VCP or Variable Compensation Plan. These bonuses are based on an employee's monthly attendance and overall productivity. Through this compensation plan, employees can gain as much as four percent of their base pay as a bonus. This compensation plan essentially encourages workers to have good attendance rating, as well as motivate them to improve their overall performance.

It is also important to note that some labor market in the United States already imposes the $15 per hour rate. Some labor markets are even offering more than what Amazon set as the minimum wage. Because of this, many observers opined that Amazon's decision to hike wages will not affect all of its workers.

Some workers have even shared their concern about the cancellation of the Variable Compensation Plan. Some workers believe that the cancellation of the VCP will essentially cut their monthly wages substantially, especially those who are currently above the $15 per hour rate.

Based on market data, workers can earn double the normal amount of bonuses during the holiday season. This is because of the massive boost brought upon by volume orders during the busy Christmas season.

In a statement to The Independent, Amazon said that it will accordingly adjust workers' wages accordingly. However, the company did not provide any specific detail as to how it will adjust said wages. Additionally, Amazon argued that the cancellation of the Variable Compensation Plan will not affect workers compensation. In a statement, Amazon claims that the wage increase will "more than compensate" the removal of the VCP.

Amazon said that the new compensation policy will benefit 250,000 regular employees and 100,000 seasonal workers.

Reports claim that the same change in the compensation plan will be imposed by Amazon in the United Kingdom. However, details about this possibility have yet to reach the public.

© 2019 Business Times All rights reserved. Do not reproduce without permission.
Sign Up for Newsletters and Alerts