Small businesses in the crossfire of Amazon’s $15 minimum wage push

Op-EdAppeared in The Orange County Register on February 8, 2021By Elaine Parker

While the pandemic and associated government lockdowns pistol whipped the small business community last year, Amazon was swimming in cash—raking in billions of dollars in additional profits compared to the previous year. Now, as a final death blow to Main Street, Amazon is trying to persuade Congress to more than double the federal minimum wage.

The corporate giant has been running advertisements and publishing opinion pieces in support of a federal $15 minimum wage—a policy Amazon adopted for its workers in 2018 and an idea currently being considered in Congress. But the campaign doesn’t add up. Amazon’s higher wages compared to other businesses provides the company with a competitive advantage to better attract well-equipped job candidates. Why would Amazon risk losing that edge?

In reality, the well-being of minimum wage workers is not a priority for Amazon. Instead, the company prizes crushing its competitors. After a few years of paying more in labor costs because of its own $15 wage policy, Amazon’s executives know it will be a struggle for others to keep up if they were forced to adopt a similar compensation structure.

Amazon’s minimum wage crusade is likely targeted at major retailers, but small businesses are where the wage hikes will cut the deepest. Nearly half of all minimum wage workers are employed by companies with fewer than 100 staff members. And three out of five minimum wage employees work at restaurants—businesses that are among the hardest hit during the pandemic and already on the edge of bankruptcy.

The nonpartisan Congressional Budget Office estimates that a federal $15 minimum wage will kill as many as 3.7 million jobs. A significant portion of those losses will hit Main Street businesses. Amazon’s hometown of Seattle is proof. After the city raised its minimum wage, there was a 13 percent jump in the rate of businesses closing up shop. And entry-level workers ended up losing an average of $125 per month because employee hours were cut.

The consequences are no surprise. A recent analysis from economists at Trinity and Miami University finds that a federal $15 minimum wage, along with the elimination of the tip credit, will cost employers an additional $99 billion. Small businesses already strapped for cash would struggle to cover those costs in an economic boom, let alone amid a lingering global pandemic that created the weakest job market since the Great Depression.

Amazon may paint itself as a benevolent corporation looking to help workers throughout the country, but their actions say otherwise.

When Amazon raised its minimum wage to $15 in 2018, many of its workers were outraged. The workers received a slight hourly wage bump but lost monthly bonuses and stock shares. (The price of Amazon stock has nearly tripled since then.) As a result, workers ended up with less money in their pockets.

Amazon’s minimum wage hoodwink is a strategy to eliminate their biggest rivals. While not necessarily the intended target, small businesses are in the crossfire. Congress should avoid taking aim.

Elaine Parker is the president of the Job Creators Network Foundation.