Amazon Unbound: Jeff Bezos and the Invention of a Global Empire

by Brad Stone

Bezos convened an S-team meeting to reconsider the issue of worker pay. Earnings in Amazon fulfillment centers varied by state, but some employees were making as little as $10.00 an hour, which was above the $7.25 federal minimum wage. The S-team weighed a number of proposals from operations chief Dave Clark, including incrementally raising wages to $12 or $13 an hour. Instead, Bezos opted for the most aggressive plan, raising the entry-level U.S. hourly rate across the board to $15. At the same time, he compensated for at least part of the additional expense by discarding supplemental sources of worker income, such as stock grants and collective bonuses that were awarded to employees based on the performance of their facility. The move was tactically brilliant. Amazon had surveyed its warehouse workers over the years and found a large majority were living paycheck to paycheck and would rather have the instant gratification of up-front pay than stock grants. By getting rid of the grants, Bezos not only helped to partially offset the pay increase but eliminated another incentive for unproductive or disgruntled low-level workers to stay at the company for more than a few years.

Smart incentive structure