Raising their minimum wage to $15 while the US federal minimum wage still lags behind at $7.25

Question Description

Company: Amazon

Key issue: Raising their minimum wage to $15 while the US federal minimum wage still lags behind at $7.25

The issue we are looking at is wage increases but the main question that arises is whether this truly is a problem or not? Looking at evidence and perceived changes in the economy regarding minimum wage we observe that many smaller companies will thrive to survive.

When Amazon decided to change its minimum wage to 15$, this caused panic and pressure on other companies to match Amazon’s minimum wage as well as the government provided wage. Essentially this wage allowed employees to receive more benefit and monetary compensation than waiting for stock options, many have expressed their content in having more time available for things they like while many others are upset that they lost some bonus options and compensation packages.

However, this is the expected adaptation of employers, some specialists forecast that this wage increase will cause higher unemployment and turnover. Employers adapting to business cycle changes in normal situations will do so by cutting specific compensation packages, decreasing wages, and terminating employees but that without altering the cycle.

Unemployment has been declining in the US, bringing the rate down to 3.7%. Textbook economic theory suggests that companies should raise wages to attract better workers when unemployment is low. Amazon, being a major US employer also affects the US economy by raising the minimum wages of nearly all their employees, around 550 000 individuals.

Based on behavioral economics this would be still costly, raising the wage by cents is perceived the same as zero for the employee. A 4$ increase from their previous $11 minimum wage therefore doubles the current federal US minimum wage that stands at $ 7.25.

We find relevance in witnessing large media coverage and long term change as well as utilizing management concepts. Beginning with competitive intelligence followed by a CREST(N)/SWOT analysis, while adhering to social responsibility and strategic management formulation. Focusing on the main strategic issue at Amazon, wage increases influencing economic stability.

Problems caused by the wage raise:

Competition for qualified employees
Automation
Smaller businesses ( decreasing in size or going out of business )
Metropolitan business vs Marginal areas

Our plan:

We shall proceed forward with our research about the key issue at hand and divide up the work according to the presentation rubric.

Organization’s current position – Morgan Eyking // Zub
1. Description
2. Internal analysis
3. External analysis
Key issue Mo // Hussain
1. Justification for the issue
Three Alternatives Mo // Hussain
1. Justification for alternative 1
2. Justification for alternative 2
3. Justification for alternative 3
Recommend alternative
1. Justification for recommendation (my part)