Amazon.com Inc said on Tuesday it would raise its minimum wage to 15 US dollars per hour for US employees from next month, seeking to head off criticism of working conditions at the world's second most valuable company.
The online retailer said it would now lobby in Washington for an increase in the federal minimum wage and urged its competitors to follow its lead as the union-led "Fight for Fifteen" movement pushes for higher remuneration.
The new minimum wage will benefit more than 250,000 Amazon employees in the United States, as well as over 100,000 seasonal employees who will be hired at sites across the country this holiday, the company said.
"We listened to our critics, thought hard about what we wanted to do, and decided we want to lead," founder and Chief Executive Jeff Bezos said in a statement.
"We're excited about this change and encourage our competitors and other large employers to join us."
Jeff Bezos, Amazon founder and chief executive. /VCG Photo
Amazon, which became the second company after Apple to cross one trillion US dollars in market value last month, paid its US employees on average 34,123 US dollars last year. Bezos is listed by Forbes as the world's richest man with a net worth of nearly 150 billion US dollars.
Amazon's current minimum hourly wage starts at around 11 US dollars and analysts said the raise would cost it one billion US dollars or less annually and be offset by a recent 20-US-dollar-increase in the cost of Prime memberships.
Retailer Target Corp raised its minimum hourly wage last year to 11 US dollars and promised to raise it to 15 US dollars an hour by the end of 2020, while the world's largest retailer Walmart raised its minimum wage to 11 US dollars an hour earlier this year.
Higher wages could further pressure margins at retailers that are already getting squeezed by higher transportation and raw materials costs, but the 15 US dollars still compares unfavorably with average US blue collar wages.
According to the Bureau of Labor Statistics ordinary workers in the US private non-farm sector on average earn 22.73 US dollars an hour. The mean hourly wage for non-management workers in transportation and warehousing is 21.94 US dollars.
Amazon shares, trading lower before the company announced the wage hike, were down less than 0.3 percent at 1,997.75 US dollars in trading before the bell.