The news that Amazon will raise its minimum wage to $15 an hour has a direct impact on its workers and its bottom line, but the more lasting impact may be for America's middle class and corporate employer psychology at large.
By now, higher minimum wages have been a labor market and political theme for several years. The "Fight for $15" movement began as early as 2012 in the wake of the Occupy Wall Street protests. Walmart became the first large employer to announce an increase in its minimum wage, in early 2015. At the time, observers were cynical about its motivations and Wall Street hated the move, making Walmart stock one of the Dow Jones Industrial Average's worst performers in 2015.
Now the Walmart move looks like the beginning of a trend. Bernie Sanders took up the mantle of "Fight for $15" in his 2016 presidential campaign. Other large employers have announced increases to their minimum wages and expanded worker benefits. Multiple cities have passed minimum-wage bills that raise their minimum wages to $15 an hour either immediately or over time. Amazon's announcement, which applies to Whole Foods employees as well, may be an inflection point, with large corporate employers recognizing that they're going to have to get to $15 an hour eventually if they want to attract and retain workers.
Amazon's move may have ripple effects in a way that fast food companies and other retailers haven't because of the influence of Amazon in the corporate world and in the minds of upper-middle-class Americans. Even as Walmart has arguably been a better corporate citizen in moving its company in more of a pro-worker direction than Amazon has in recent years, Amazon is seen as an innovative and sexy technology company in a way that Walmart isn't. Amazon making a big public move to raise worker pay will get broader cohorts of companies to do the same. Look for this as companies start to report third-quarter earnings over the next few weeks.
If $15 an hour becomes the new standard for entry-level wages in corporate America, its impact may be felt most broadly among middle-class workers. Average hourly earnings for non-managerial workers in the U.S. were $22.73 an hour in August. The historically low level of jobless claims and unemployment, combined with $15 an hour becoming an anchor in people's minds, could make someone people earning around that $22 mark feel more secure in their jobs. Instead of worrying about losing their job and being on the unemployment rolls for a while, or only being able to find last-ditch work that pays $9 or $10 an hour, the "floor" may be seen as a $15 an hour job.
That creates a whole new set of options for middle-class households. In 2017, the real median household income in the U.S. was $61,372, which is roughly what two earners with full-time jobs making $15 an hour would make. A $15-an-hour floor might embolden some workers to quit their jobs to move to another city even without a job offer there. It might let some workers switch to part-time to focus more time on education, gaining new skills or child care.
The U.S. has made a lot of progress during this long economic recovery in finding some level of employment for everyone who wants a job, but where there's still work to do is getting workers to a living wage and creating options for those who are just barely making ends meet.
From economic trends, labor-market conditions, political momentum and shifts in corporate psychology, there's a lot of energy behind progress for workers. Amazon's move should only accelerate that.
Conor Sen is a Bloomberg Opinion columnist. He is a portfolio manager for New River Investments in Atlanta.