When Amazon announced Tuesday that it was raising its minimum wage to $15 an hour for all employees, even vocal critics of its labor practices like Senator Bernie Sanders praised the company. The retail giant’s decision will undoubtedly put more money into the hands of its workers—especially the some 100,000 temporary US employees Amazon plans to hire in the coming months for the holiday season. But some Amazon workers, including one who spoke with WIRED, think they will earn less under the new policy—even though they are receiving an hourly raise.
The reason is that in addition to raising wages, Amazon is also slashing some performance bonuses and its restricted stock unit program. In total, workers say losing the benefits may amount to thousands of dollars in lost pay annually. The median salary for Amazon employees in the US, including stock and bonuses, is $34,123, according to the company. (That figure takes into account white collar workers at Amazon’s Seattle headquarters.)
During the holiday season in particular, the soon-to-be cut bonuses can be worth upwards of $300 per month, says the employee WIRED spoke with. “The timing of this; I don’t think it’s that much of a coincidence,” says the worker, who is employed at an Amazon fulfillment center on the East Coast. “November and December were the months where they would double the attendance and productivity bonuses.” (WIRED is granting the worker anonymity to protect them from reprisal from their employer.)
It’s not just bonuses that are being cut. Amazon is also ending its lucrative restricted stock unit program (RSU), which allows employees to vest stocks in the company after two years. In recent years, Amazon has steadily decreased the number of RSUs it has given employees as its stock price more than doubled. Warehouse workers were typically given several RSUs per year, though the number has shrunk as Amazon’s shares have soared in value, according to the employee.
Amazon said in its blog post announcing the $15 minium wage that it was choosing to phase out RSUs because “we’ve heard from our hourly fulfillment and customer service employees that they prefer the predictability and immediacy of cash.” The company says it will replace the program with a direct stock purchase plan before the end of next year and that hourly raises are meant to help compensate for the loss in RSUs. But Amazon has still been vague about how it plans to account for the lost productivity bonuses, which leaves some workers worried.
“There are a lot of people who are upset,” says the Amazon worker. “[Employees] got a bigger raise, but it still didn’t make up for the shares plus the bonuses.”
There is also still confusion about whether Whole Foods employees, some of which are reportedly trying to form a union, may still be offered an equity program, according to Gizmodo. (Amazon acquired the high-end grocery chain last year.)
Amazon disputes that any employees will make less as a result of the RSU program and incentive bonuses being cut. “The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and RSUs,” a spokesperson for the company said in a statement. “We can confirm that all hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.”
The employee who spoke with WIRED maintains they will lose at least $1,400 per year as a result of the benefits being cut, despite factoring in a $1 raise in hourly pay. When WIRED provided Amazon with the employee’s calculations, the company did not dispute their accuracy.
In one sense, Amazon has good reason to cut the benefits it previously offered and instead provide employees with more cash. One of the soon-to-expire bonuses, for example, was given based on whether an employee’s entire warehouse met its productivity goals—a factor no single worker can control. RSUs also aren’t vested for two years; many warehouse employees don’t work at the company long enough to claim them, causing millions to be forfeited each year.
“It’s not fair to offer [Amazon workers] compensation that most of them won’t get,” says Valerie Frederickson, the CEO and founder of Silicon Valley human resource firm Frederickson Partners. “In a way, it’s false compensation.”
But raising hourly wages and cutting the aforementioned benefits may still hurt some Amazon workers—particularly those that perform well at their job and have stuck around long enough to claim equity in the company. Amazon’s new compensation structure appears designed more to attract new employees in today’s tight labor market, rather than to keep loyal workers at the company for longer. After all, in the next several weeks, Amazon will need to begin competing against other retailers who are also hiring extra holiday season help.
Amazon likely also raised its minimum wage to stave off criticism from politicians like Sanders, who last month introduced legislation literally called the Stop BEZOS Act, which is designed to hold large employers financially accountable when their low-wage workers need to rely on public benefits like food stamps to make ends meet. The bill was introduced after Amazon spent months responding to negative reports about its grueling low-wage labor practices.
By raising wages, Amazon may also be attempting to ensure its employees don’t choose to collectively organize. Late last month, Gizmodo published excerpts from a training video the company distributed to Whole Foods managers that appears to teach them how to identify and dissuade employees who may be forming a union. Amazon workers have also repeatedly tried to organize for years. But by introducing a compensation structure that could hand some long-term employees the short end of the stick, Amazon’s plan to cool the desire for collective bargaining may have backfired.