Amazon‘s company-wide minimum-wage hike won’t cost the company more; rather, it will reduce the number of staff, David Bahnsen of private wealth management company Bahnsen Group told CNBC on Tuesday.
“They will not end up spending more in wages. They will end up hiring less people,” Bahnsen said on CNBC’s “Closing Bell.”
The new minimum wage will benefit more than 250,000 Amazon employees — including part-time and temporary employees — as well as another 100,000 seasonal employees, the company said. Some employees who already make $15 per hour will also see a pay increase.
Bahnsen, who is founder and chief investment officer at Bahnsen Group, said that once Amazon addresses the “hurdle” of actually hiring as many staffers as it needs, the company will spend less on wages, not more.
“Through time, they are going towards an automation process that’s going to be hiring less people,” Bahnsen said.
Amazon did not immediately respond to CNBC’s request for comment.
Liz Dunn, founder and CEO of Pro4ma, said, “Amazon’s margins will get squeezed in the near term,” but the change will benefit the company long term — and also maybe hurt Amazon’s competitors.
“Amazon has made it very difficult to be a retailer in the U.S. Part of the way that they’ve done that is raise the expectations about fulfillment, cost and speed,” she said in the same “Closing Bell” interview as Bahnsen. “This is one other way they are raising the expectations on retailers and making it more difficult to be a successful retailer if you are not Amazon in the United States.”
And politically, the move looks great, Bahnsen said.
“They can afford to pay this greater increase in wages and now go trade it in for a chip of political optics that are really beneficial for them,” Bahnsen said.
Amazon and its CEO, Jeff Bezos, have been under tremendous political pressure over pay disparity in the company. Sen. Bernie Sanders last month introduced legislation called the Bezos Act to tax corporations for every dollar that their low-wage workers receive in government health-care benefits or food stamps.
Sanders later praised Amazon’s announcement, calling the wage hike “not only enormously important for Amazon’s hundreds of thousands of employees; it could well be, and I think it will be, a shot heard around the world.”
But Bahnsen said the company shouldn’t get too comfortable. “Amazon is going to be in a political crossfire for years to come.”
Amazon’s shares closed down 1.65 percent on Tuesday at $1,971.31 per share.