Amazon says it will spend more than $1 billion to raise pay and lower health insurance costs for warehouse and transportation employees in the U.S.

The company said Wednesday that the average pay for a worker in Amazon's vast logistics empire will increase to $23 an hour this year. The average total compensation, including benefits, will pencil out to over $30 an hour. Full-time employees will see about a $1,600 per year pay bump.

The tech giant is known in Seattle for its tens of thousands of corporate workers, but most of the company's workforce is made up of warehouse employees. Amazon is the second-largest private employer in the world, with 1.55 million workers.

Regulatory agencies and Congress have criticized the company's management of its warehouses, especially its working conditions. Injury rates that have surpassed industry peers in the past are a constant point of contention. Amazon's warehouses have also faced union pushes and in December, workers affiliated with the Teamsters union at eight of the company's delivery stations went on strike for higher wages, better benefits and safer work conditions.

Amazon reviews its pay and benefits in the fall, regularly raising pay for its warehouse workers, wrote Udit Madan, senior vice president of Amazon Worldwide Operations, in a company blog post.

We’ve been investing in pay for several years, and someone who has been with us for three years has already seen their pay go up an average of 35%," he wrote.

Amazon didn't say how much the average pay would be per state, including in Washington, where the minimum wage is $16.66 per hour.

Amazon is also making a substantial change to its entry-level health plan by lowering the cost to $5 per week with $5 copays, starting next year. That's a reduction of about 34% per week and an 87% decrease in copays for primary care, mental health services and most nonspecialist visits.

"A lot of the changes we’re sharing today are based on what our employees say matters to them, and they’re just one example of how we listen and respond to feedback, Madan wrote.

Amazon's pay for its warehouse employees is higher than at its rival, Walmart, but the e-commerce giant has faced criticism over working conditions at its fulfillment and delivery centers.

The U.S. Department of Labor announced in December that the Occupational Safety and Health Administration and Amazon entered a settlement that requires the company to implement OSHA-approved safety measures. After an investigation, OSHA claimed working conditions at the company's U.S. warehouses led to ergonomic injuries, specifically lower back problems.

Amazon prevailed in a warehouse safety case last year when a judge rejected allegations that Amazon fostered an unsafe work environment in three Washington state warehouses.

In that case, Washington state regulators accused Amazon of creating an unsafe environment in three warehouses. They alleged Amazon workers risked injury due to repetitive motions and a fast pace of work. In one citation, regulators claimed Amazon was willfully putting workers in harm’s way, prioritizing speed over safety.

An administrative court judge found that regulators failed to link high injury rates and specific jobs at Amazon warehouses, and did not establish that the pace of work at Amazon was hazardous or prove that the alleged violations were “the result of intentional disregard and plain indifference.”

Critics are skeptical of Amazon's progress in making warehouses safer, but the company said earlier this year that injury rates at its locations fell in 2024 for the third year in a row. Injury rates had spiked in 2019, fell in 2020 then jumped again in 2021. Since then, they've steadily decreased, according to Amazon.

Unions representing Amazon workers routinely demand higher wages, but safer work conditions are highlighted as well. Workers argue that the company's emphasis on speed and push for productivity lead to higher injury rates. The upstart Amazon Labor Union, affiliated with the Teamsters, won a major victory at a New York warehouse in 2022.

Amazon's worker-to-CEO pay ratio was 43:1 last year, according to a regulatory filing. That's up from 37:1 the year before. CEO Andy Jassy's compensation topped $40 million last year, due in part to the company's stock price rising.

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