Why Amazon raised its minimum hourly wage to $20
Amazon announced an increase in its lowest US hourly rate to $20, matching the entry-level wage Costco set in 2025. The change affects the company's large US workforce and brings the average hourly rate to $24 before benefits. When the value of benefits is added, total compensation rises above $32 per hour according to company figures. The adjustment forms part of more than $1.5 billion in wage investments.
The company cited its focus on ongoing improvement even when results are already positive. Udit Madan, senior vice president of global operations, stated that the combined investments aim to help employees and their families prosper over the long term. The wage rise equalizes Amazon's minimum pay with Costco's current entry-level rate, a step the company presents as part of continuous efforts to improve conditions for hourly staff even when operations are performing well. The announcement emphasizes that Amazon continues to evaluate compensation structures to remain competitive while supporting long-term employee prosperity through coordinated wage and benefit programs. This investment reflects the company's scale as the second-largest private employer in the United States.
How Amazon's new wage compares with other major retailers
Costco raised its minimum hourly rate to $20 in 2025, and most of its workers now earn above $30 per hour. Amazon's move places it at the same starting level. In contrast, Target maintains an entry-level hourly rate of $15, while Walmart's stands at $14. Both Amazon and Costco therefore offer higher starting pay than several large competitors.
Amazon remains the second-largest private employer in the United States with approximately 1.1 million workers, behind only Walmart. The company also noted the creation of 390,000 additional jobs through independent delivery service providers. These figures illustrate the scale at which Amazon operates compared with other retailers that maintain lower entry wages, underscoring the competitive positioning the $20 minimum is intended to support. The alignment with Costco highlights a shared approach among select large retailers to set higher entry-level compensation than peers such as Target and Walmart, where starting rates remain notably lower. This positioning occurs while Amazon manages operations across fulfillment centers and delivery networks at a national level.
Additional benefits introduced alongside the wage increase
Amazon expanded grocery-related discounts for eligible employees. Workers receive a 10 percent discount without limit on qualifying fresh foods and essentials purchased through Amazon.com and Whole Foods Market Online. A 20 percent discount applies to in-store purchases at Whole Foods locations.
These new offers supplement existing benefits that include a free Prime membership for qualifying staff, health coverage starting at $5 per week with a $5 employee contribution, and prepaid educational programs. The combination of cash wages, grocery discounts, and longstanding perks is presented by the company as a coordinated package designed to support employees beyond the hourly rate alone. The grocery discounts apply across both online platforms and physical Whole Foods stores, extending the value of compensation into everyday household expenses for the workforce. This structure builds on prior offerings to create a broader support system for hourly employees and their families.
Impact on employees and company operations
The wage adjustment and expanded benefits are intended to improve retention and long-term financial stability for workers. The company employs a large hourly workforce across fulfillment centers and delivery networks, where pay levels directly affect recruitment in competitive labor markets.
By aligning its minimum rate with Costco, Amazon positions itself more closely with one of the higher-paying retailers while still operating at a scale far larger than most competitors. The investments reflect ongoing pressure to maintain workforce capacity amid retail sector competition. The more than $1.5 billion committed to wages forms part of this broader approach to sustaining operations through improved compensation. The scale of employment, including the additional roles supported through delivery partners, demonstrates how wage decisions at this level influence a substantial portion of the US retail labor market. Udit Madan highlighted that these measures work together to enable continued prosperity for employees over time.
Frequently asked questions
What is Amazon's new minimum hourly wage in the US?
Amazon raised its minimum hourly rate to $20 for US workers, matching Costco's entry-level pay set in 2025.
How does Amazon's average pay compare after the increase?
Average hourly earnings reach $24, and total compensation exceeds $32 per hour once benefits are included.
Which retailers pay less than Amazon at entry level?
Target starts at $15 per hour and Walmart at $14 per hour, both below the new Amazon and Costco minimums.
What new discounts does Amazon offer employees?
Eligible workers receive a 10 percent unlimited discount on fresh groceries via Amazon and Whole Foods Online plus 20 percent off in Whole Foods stores.
How many people does Amazon employ in the United States?
The company has approximately 1.1 million US employees and supports another 390,000 jobs through independent delivery partners.
