Amazon’s decision to raise workers’ minimum wage to $15 per hour was welcome news, even Sen. Bernie Sanders praised the move.
But for some Amazon employees, the excitement didn’t last very long as they learned that existing financial incentives and bonus programs, including stock and monthly bonuses, that usually boost paychecks will be eliminated starting November 1.
Several Amazon warehouse workers in the U.S., who spoke to Yahoo Finance on the condition of anonymity fearing reprisals, talked about how the change will negatively affect them. After the removal of these perks, some workers said they will be making less. Most of the workers who voiced concerns have been working for the company for more than two years, and have been earning close to $15 an hour before the raise.
While these workers’ hourly rates will rise modestly, they said they could lose thousands of dollars that they would have collected from the stock and monthly-bonus programs. Amazon said those who are already making $15 an hour will see an increase in pay but did not specify how much.
An employee earning $15.25 an hour who has worked for Amazon for more than three years in Arizona crunched the numbers. Although he is getting a $1 an hour raise, which would equate to as much as $2,080 in additional pay a year, he said he could have earned a few thousands of dollars more from the incentive programs. “Amazon isn’t giving its employees a raise, they’re taking money from us,” he told Yahoo Finance. “It only looks good if folks don’t know the truth.”
An Amazon spokesperson said “all hourly operations and customer service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.”
In the past, Amazon had used stock options as a major selling point during the recruiting process. “One of the ways we foster ownership among employees is through Restricted Stock Unit (RSU) awards. RSUs are a key part of our global compensation program, which has been carefully designed to help us attract, motivate and retain employees of the highest caliber,” according to an Amazon brochure about the program.
Under RSUs, full-time warehouse workers usually receive two or three shares each year after a two-year vesting period. Amazon stock (AMZN) has been on a bull run — the share price has more than tripled since 2016 and now is around $2,000. Amazon said it’ll replace RSU with a “direct stock purchase plan” but didn’t offer any specifics.
Another major perk that Amazon is phasing out is employee’s monthly bonuses, called Variable Compensation Pay (VCP). An employee can earn up to 8% of their monthly income, but it depends on how many hours they work and the facility site’s production goals. An average worker usually receives $1,800 to $3,000 a year through the VCP program, according to employees who talked to Yahoo Finance. Some said it’s especially frustrating to see the program removed now, since VCP doubles during peak months in the holiday season.
Amazon said its decision to eliminate the financial incentive program was based on employees’ feedback. “We’ve heard from our hourly fulfillment and customer service employees that they prefer the predictability and immediacy of cash to RSUs,” the company wrote in a blog post. “The net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability.”
The Amazon spokesperson also said, “The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and RSUs.”
The decision was widely cheered by new employees who will immediately see a significant increase in their paycheck. Amazon posted a video on the company’s YouTube page featuring employees’ excitement and appreciation.
While the minimum wage increase will also apply to Whole Foods Market workers, it’s unclear how the change will impact its stock option plan, which the company recently announced in response to some employees calling for unionization. Last month, in a letter to employees, CEO John Mackey said Whole Foods will create an Amazon equity program for all employees with at least 6,000 service hours.
Do you work for Amazon/Whole Foods? We want to hear your experience. Drop us a line via [email protected] or follow Krystal on Twitter.
Read more:
Amazon bought Whole Foods a year ago. Here’s what has changed