Amazon hikes minimum wage to $21 in shot heard 'around the world'

Washington | In a move that won plaudits from the White House to Bernie Sanders, Amazon said it would hike its minimum wage for more than 250,000 workers to $US15 ($20.89).

Having faced criticism for being among a group of superstar companies enjoying huge growth in a booming economy without passing it on, Amazon has become one of the first to break the mold.

Mr Sanders, a former Democratic presidential contender and harsh critic of Amazon's wages and employment practices, rushed to congratulate chief executive Jeff Bezos for "doing exactly the right thing".

"What Mr Bezos today has done is not only enormously important for Amazon's hundreds of thousands of employees, it could well be, and I think it will be, a shot heard around the world."

Congratulations to the 350,000 Amazon workers who will now receive $15 an hour. Thank you to the @fightfor15 movement which is sweeping the country. Today is not only enormously important for the workers, it could well be a shot heard around the world. https://t.co/dtRHTBoSH9
— Bernie Sanders (@BernieSanders) October 2, 2018

President Donald Trump's chief economic advisor Larry Kudlow said "good for them" and rejected any notion that rising wages is "inflationary".

"I'm in favour of higher wages," he said, adding that they were an example of a flourishing economy thanks to the Trump administration tax cuts and deregulation efforts.

News of the pay increase coincides with firming wages growth in an economy where the jobless rate is expected by the US Federal Reserve to remain below 4 per cent through 2020, which would be the longest period of low unemployment since the 1960s, when it was a key trigger for strong inflation.

September's jobs data will be released on Friday.

"This historically rare pairing of steady, low inflation and very low unemployment is a testament to the fact we remain in extraordinary times," said Fed chairman Jerome Powell said at the annual meeting of the National Association for Business Economics on Tuesday (Wednesday AEST).

"I was asked at last week's news conference whether these forecasts are too good to be true - a reasonable question."

Amazon's decision comes from a position of financial strength - the online giant is being spurred by a galloping economy and holds a dominant position in online retailing that is spreading relentlessly into more traditional sectors such as physical supermarkets.

While Mr Bezos challenged other companies to make similar moves, many retailers who compete against his firm may find themselves struggling, analysts warned.

Walmart currently pays entry-level employees $US11 per hour, while Target offers $US12. Amazon currently pays about $US11 an hour, Reuters reported, saying the cost would likely be offset by a recent increase in the annual fee for the company's Prime memberships.

The pay hike will take effect on November 1 and applies to full-time, part-time and temporary workers, the company said. AP

Mr Bezos, who has a personal fortune of about $US165 billion, has been under pressure in Washington and other capitals amid increased political and regulatory scrutiny of internet giants as well as a president who regularly rails against The Washington Post - which is owned personally by the Amazon founder - as "fake media".

Mr Bezos' firm and Mr Sanders have also traded blows in recent months, with Amazon in August accusing the left-wing senator of making inaccurate and misleading claims about its work practices.

"We listened to our critics, thought hard about what we wanted to do, and decided we want to lead," Mr Bezos said in a statement.

The company didn't indicate how much the pay hike would cost.

Shares in the company were 1.4 per cent lower in late trade in New York at $US1976.50; the stock has surged more than two-thirds so far this year and recently became the second US company with a market valuation topping $US1 trillion. Amazon's market value recently was $US978 billion.

The pay hike will take effect on November 1 and applies to full-time, part-time and temporary workers, the company said.

Amazon said it would now join in lobbying by politicians including Mr Sanders for an increase in the federal minimum wage, which has been stuck at $US7.25 an hour since 2009.

"We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $US7.25 was set nearly a decade ago," said Jay Carney, senior vice president of Amazon Global corporate affairs.

"We intend to advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country."

Amazon has more than 575,000 employees worldwide.

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