Editor's Note: Below are a selection of interesting excerpts from a recent institutional research note written by our Demography analyst Neil Howe. To access Neil Howe's research research email sales@hedgeye.com.
1. Amazon is raising its company-wide minimum wage to $15 per hour—and will also lobby Congress for an increase in the federal minimum wage. The Seattle-based giant, long criticized for its treatment of workers, has picked a side in the contentious minimum wage debate. (The Wall Street Journal)
Neil Howe: Sure, Jeff Bezos made this move in part to shed his Silicon Valley reputation as a sweatshop employer: Amazon pays its median worker about $28,500--versus well over $200,000 at Alphabet. Just saying "my workers do different things" wasn't cutting it. Last month, Senator Bernie Sanders targeted Amazon by proposing a "BEZOS" bill, which would tax companies like Amazon whose employees earned so little they qualified for public means-tested benefits. No way Bezos wanted to be simultaneously cross-haired by both Sanders and Trump.
But that's not all that's going on. Clearly, the job market is heating up--especially at the low-wage end where we are close to running out of "woodwork" job seekers. Pushing up the minimum wage will put upward pressure on higher-paid Amazon workers, which (even after netting out bonuses and stock options) may take 5% or more out of AMZN's earnings. Other big labor-market competitors, including Walmart, Target, FedEx, and UPS, will have to accelerate their own hike schedules in turn.
If this move is a harbinger, expect wage growth that could end up speeding past the new higher minimum wages enacted by states like California and Massachusetts ($15/hour by the early 2020s)--along with higher inflation and faster rate hikes. Unless or until we hit the next recession. And then all bets are off.
2. In his new book, The Coddling of the American Mind, NYU professor Jonathan Haidt expresses concern about the state of free speech on college campuses. While plenty believe that these concerns are overblown, Haidt and others like him argue that PC culture is undermining the role of the college campus as a place for open, thoughtful debate. (Bloomberg Business)
Neil Howe: Jonathan Haidt is one very smart guy, and I wish him the best of luck in his effort (see Heterodox Academy) to foster viewpoint diversity in academia. But I'm not optimistic. Abundant evidence shows that exposing people to opposing viewpoints does not make them more tolerant; instead, it further confirms them in their prejudices. As Diana Mutz demonstrates, while "deliberative citizens" (those who enjoy cross-cutting discussions) are often held up as the ideal, "participatory citizens" (those who love partisan blood sports) are the ones who actually engage in politics, run for student offices, engage in protests, and basically run things.
A better approach, IMO, would be to improve the employability of grads from non-Ivy League colleges (where the coddling problem is most severe). And to allow students to take fewer liberal arts classes--something that Millennials are already doing, young men especially--and thereby avoid compelling anyone to hear any social or cultural or political "viewpoint." As a proud liberal arts grad myself, I'm not happy about this solution. But I think the humanities curricula at many colleges is broken beyond repair. Btw, here is the cover for Haidt's original piece in The Atlantic.
