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Amazon recently made headlines by announcing that it would voluntarily increase its minimum hourly wage to $15. With a federal minimum wage of only $7.25, this pledge might seem like a curious decision - especially for a company as laser-focused on cost containment as Amazon. But thinking only about the costs involved in raising wages misses a key issue: pay hikes can also boost workplace productivity. Given Amazon's well-deserved reputation as a data-driven (and long-term oriented) company, you can bet that Amazon's management team has done the analysis and figured out that paying employees more is, from a business perspective, more benefit than cost. They're not the first company to make a decision like this - most notably, Walmart set a minimum wage of $11 earlier in 2018 - and we hope others come to realize that paying workers more can be a matter of enlightened self-interest. In fact, the company has been accused of being too self-serving in its minimum wage hike - concerns arose nearly immediately after its announcement that the increase might be financed by cuts to bonuses and benefits that would leave workers no better off than before. In our own research, we've explored the impact that minimum wages can have on businesses, as well as the ways in which higher wages can motivate employees and spur productivity. We're fascinated by companies' motivations to do prosocial (and also antisocial) things. And looking at Amazon's recent announcement, there's reason to think that a pay hike would be good both for Amazon's employees and its bottom line. The concept of efficiency wages is an old idea, dating back at least to Henry Ford's introduction of the "five dollar day" in 1914, at a time when the daily wage at manufacturing plants near his Highland Park factory was $2.30. Ford himself called it his finest cost-cutting move, because of the boost to productivity that came as a result. There's good reason to think that Jeff Bezos's $15 per hour will be as successful as Ford's $5 a day. Finally, some of Amazon's high wage PR may be directed at government officials. With a president who has taken to bashing the company and its leader, it can't hurt to look like the good guy once in a while. And if governments at the state and city-level make good on their pledges to raise the minimum wage locally, Amazon will be paying $15 an hour sometime soon anyway - so why not get out in front of the issue now? And, to be clear, if increasing wages turns out to be a profitable decision that does not take away from our support for Amazon's decision. We applaud cases in which companies do right by their employees, the environment, and society in general. And if Amazon ends up making more money as a result, that's all to the greater good. crossbody bags cyber monday

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