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Amazon raises its minimum wage to $15 to quiet critics

Amazon's median salary is $28,446, well below other tech giants.

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Inside Amazon's Prime Now warehouse within a Manhattan highrise.

Ben Fox Rubin/CNET

Amazon on Tuesday said it will raise its minimum wage to $15 an hour in the US, a response to mounting pressure over its wages and its treatment of warehouse workers.

"We listened to our critics, thought hard about what we wanted to do, and decided we want to lead," Amazon founder and CEO Jeff Bezos said in a statement.

The new minimum wage will take effect Nov. 1 and apply to all full-time, part-time, seasonal and temporary employees, including those hired by agencies. The new wage will benefit more than 250,000 Amazon employees, plus over 100,000 seasonal employees who will be hired for the holidays. All hour operations and customer service employees will see an increase, even if they already receive $15. Amazon employs over 575,000 people worldwide.

Amazon on Tuesday also raised its minimum wage in the UK to £9.50 and £10.50 in London, effective Nov. 1.

Plus, Amazon will start advocating for a higher US federal minimum wage, which has been $7.25 since 2009. Amazon didn't specify what its prior minimum wage was, since it likely varied by state and whether employees were part-time or temporary. It previously said full-timers in the US make an average of $15 or more.

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Amazon and Bezos this year have been criticized repeatedly for the wages Amazon pays warehouse workers, who make up the bulk of Amazon's workforce. That's happened while the e-commerce giant's market value has surged to just under $1 trillion and Bezos has become the world's richest person. 

The median salary Amazon pays its workers worldwide is $28,446, according to Amazon's filings with the Securities and Exchange Commission. That's below other tech titans, which mostly employ higher-paying software engineers. Amazon said Tuesday the impact of the higher wages will be reflected in its earnings guidance.

One of the most prominent critics has been US Sen. Bernie Sanders, who last month introduced the "Stop BEZOS Act," which would require big corporations like Amazon and Walmart to pay the government for food assistance, public housing, Medicaid and other programs that their workers use.

Amazon has previously contested some of Sanders' claims, saying its full-time warehouse workers already make an average of $15 an hour when stock and bonuses are included. It also said many of its workers that use government aid programs are short-term employees or choose to work part-time.

But instead of only disagreeing with critics, Amazon this year has taken steps to make changes. In addition to the minimum wage increase, Bezos made a long-awaited push into philanthropy, pledging $2 billion for the homeless and for education.

"Today I want to give credit where credit is due. I want to congratulate Mr. Bezos for doing exactly the right thing," Sanders said in a short press conference Tuesday. He then called upon "other profitable corporations like Walmart, like the fast food industry, like retail in general" to follow suit with higher wages.

Bezos sent out a tweet thanking Sanders, adding: "We're excited about this, and also hope others will join in."

The change also offered a boost to the union-backed "Fight for $15" movement, which has been pushing for a $15 minimum wage in several industries, including fast food and child care. 

Amazon isn't the only major US retailer to raise its starting wage over the past year, a potential sign of the strong economy pushing salaries higher. Target last October raised its minimum wage to $11 an hour and committed to a $15 minimum wage by the end of 2020. Target raised the minimum again to $12 last month. Walmart this February raised its minimum wage to $11.

Moody's retail analyst Charlie O'Shea said Tuesday that the higher wages from these retailers should allow them to reduce their hiring and training costs and help them bring in and keep top-tier employees.

"As we have seen with other retailers who have already done this ... the returns will ultimately outweigh the costs," he said.

Updated, 6:52 a.m. PT: Adds more information on Amazon UK pay raises, Target and Walmart's prior raises and an analyst comment; 7:16 a.m. PT: Adds comments from Sanders; 9:07 a.m. PT: Adds Bezos tweet.

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