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Of course Amazon supports a $15 minimum wage

When the Raise the Wage Act was reintroduced on January 26th in order to raise the federal minimum wage to $15,  Amazon Senior Vice President of Global Corporate Affairs sent a letter to Congress asserting Amazon’s support for the bill.

It is quite possible that the Amazon corporation has good intentions. But that is something we can never know. However, there are a couple of things that make its support for a $15 minimum wage worrisome.

First, Amazon already raised its minimum wage to $15. This means that a $15 minimum wage would not be binding to the company. A $15 minimum wage would instead be binding to numerous businesses that pay below $15. These are the ones that would see their labor costs significantly rise.

Furthermore, even if Amazon hadn’t already raised its wage, compared to most small businesses, it has the ability to absorb the higher labor costs without suffering major consequences. What we should be worried about are the small businesses- they are the ones that tend to operate on thin profit margins and low cash flows.

As I have written before, minimum wage hikes, like most regulations, tend to hurt small businesses more than bigger ones. So, it is very possible that big companies like Amazon will gain with a $15 wage hike, at the expense of numerous small businesses. Big businesses, like Amazon, did not face disruption during the pandemic. In fact, most of them soared when lockdowns forced small “non-essential” businesses to close.

So, there is very little, if any, that Amazon stands to lose by supporting a $15 minimum wage. A high minimum wage will instead crush Amazon’s competition — small businesses — and affect low-skilled and low-wage workers that comprise those businesses. Intentionally or not, Amazon is supporting a bill that has the potential to decimate its competitors.

We should especially be worried about the minimum wage when we consider how integral small businesses are to the economy. In 2020, for instance, the Small Business Administration reported small businesses made up 99.7 percent of all businesses with paid employees. Additionally, small businesses employed 47.1 percent of all US workers. And on the net, they were responsible for 65 percent of new jobs created.

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