Amazon is doubling the base salary to $350,000 per annum for some of its corporate and technology employees.
The decision to increase the base pay is to retain and attract the tech talent in a competitive job market. According to an internal memo, the tight labor market is forcing Amazon to give higher raise to corporate workers. “Increasing overall compensation ranges for most jobs globally, and the increases are much more considerable than we’ve done in the past”. The company reportedly gave this statement. Average minimum base salary for most corporate workers stood at $160,000 per annum. There was an additional $25,000 for workers based in New York City and San Francisco.
More Negotiating Power to Retain Employees
The change doesn’t mean that all corporate workers at Amazon will see an immediate raise. However, the move will give Amazon more room to raise specific workers’ pay. The worker in United States feel more empowered and employers are finding it difficult to hire and retain employees. In such situation, this policy will provide the tech giant some negotiating power. “As compensation is unique for each employee (considering their performance, job family, and market conditions), these updates to the base pay cap and the total compensation ranges will affect every employee differently”. The company said in their memo.
The “Great Resignation” Era
The coronavirus pandemic and its fallout prompted millions of workers to switch jobs or start their own businesses. The era is also referred as the “Great Resignation”. According to Labor Department data, nearly 30% quit their jobs. Moreover, the competition is more stringent for skilled tech workers. Companies like Apple are giving surprise six-figure bonuses to prevent employees from leaving their organizations.
According to Insider and New York Times, Amazon kept the base pay at $160,000 for a long time. This was far lower than other tech companies. However, they provided generous stock awards in addition to compensation. However, rich stock price growth has slowed down and low base pay at Amazon has frustrated many in-demand tech workers. More than 50 vice presidents have left in the past year with turnover for VPs rising to 10%. The high turnover prompted Amazon to increase the base pay of corporate and tech workers.
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