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An Amazon fulfillment center in Kent, Washington. Photo: Grant Hindsley/AFP/Getty Images

Amazon raising wages to $15 an hour from as little as $10 an hour should win it political points and attract difficult-to-find workers.

Yes, but: CEO Jeff Bezos is calling for other companies to follow in Amazon's footsteps, as he said in Tuesday's announcement, and widespread pay rises could cause companies to raise prices, spurring inflation.

Amazon said the pay raises would benefit more than 350,000 workers, which is likely to cut into its thin profit margins.

  • Amazon is very conscious of keeping prices low to attract customers, Aparna Mathur, American Enterprise Institute's resident scholar in economic policy studies, tells Axios. "With the competition that Amazon faces I don't think they will get away with charging higher prices to consumers," Mathur said.

Economists have blamed low inflation on Amazon's cheap products.

  • Walmart, Target and Costco have upped pay for its workers in recent months, but their employees' minimum wages are still below Amazon's planned $15 an hour.

Reacting to the news on Tuesday, White House chief economic adviser Larry Kudlow told reporters that Amazon's "actions are not inflationary," while Federal Reserve Chairman Jerome Powell said "higher wage growth alone need not be inflationary," in a speech unrelated to Amazon on Tuesday.

Wages are finally starting to pick up steam, but inflation has remained below the Fed's 2% target. Powell said on Tuesday the central bank is "ready to act with authority" if anything changes on that front.

Go deeper

Off the Rails

Episode 4: Trump turns on Barr

Photo illustration: Eniola Odetunde/Axios. Photos: Drew Angerer, Pool/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. Axios takes you inside the collapse of a president with a special series.

Episode 4: Trump torches what is arguably the most consequential relationship in his Cabinet.

Attorney General Bill Barr stood behind a chair in the private dining room next to the Oval Office, looming over Donald Trump. The president sat at the head of the table. It was Dec. 1, nearly a month after the election, and Barr had some sharp advice to get off his chest. The president's theories about a stolen election, Barr told Trump, were "bullshit."

In photos: Protests outside fortified capitols draw only small groups

Armed members of the far-right extremist group the Boogaloo Bois near the Michigan Capitol Building in Lansing on Jan. 17. About 20 protesters showed up, AP notes. Photo: Seth Herald/AFP via Getty Images

Small groups of protesters gathered outside fortified statehouses across the U.S. over the weekend ahead of President-elect Joe Biden's inauguration Wednesday.

The big picture: Some protests attracted armed members of far-right extremist groups but there were no reports of clashes, as had been feared. The National Guard and law enforcement outnumbered demonstrators, as security was heightened around the U.S. to avoid a repeat of the Jan. 6 U.S. Capitol riots, per AP.

Felix Salmon, author of Capital
9 hours ago - World

China's economy grows 6.5% in Q4 as country rebounds from coronavirus

A technician installs and checks service robots to be be used for food and medicine delivery in Jiaxing, Zhejiang Province, China, on Sunday. Photo: Hu Xuejun/VCG via Getty Images

China's economy grew at a 6.5% pace in the final quarter of 2020, the national statistics bureau announced Monday local time, topping off a year in which it grew in three of four quarters and by 2.3% in total.

Why it matters: No other major economy managed positive growth in 2020. Although the COVID-19 pandemic was first detected in China, the country got the virus under control and became one of the main positive drivers of the global economy even as the rest of the world was largely under lockdown.