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How Amazon's Higher Wages Could Increase Productivity 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. Ultimately, Amazon may very well benefit from increasing its minimum wage, even if it does end up paying its workers more. Here's why: 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. Of course, there remain open questions about the implementation of Amazon's new plan: Will employee benefits (like annual bonuses) be rolled back to finance the wage increase? Will some contract workers be excluded from it? We hope not, and we hope that Amazon is sincere about meaningfully improving wages for their lower wage workers. Furthermore, the law of unintended consequences being what it is, we're sure that not even Amazon will anticipate all of the effects of higher wages - one story that followed close on the heels of the announcement described brewing resentment among incumbent Amazon workers that newbies would get the same high wage as more senior employees.

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