Amazon will invest more than $1 billion this year to raise wages and cut healthcare costs for over 1.5 million U.S. employees, the company announced this week. The initiative comes as the e-commerce giant faces mounting pressure to improve compensation in a fiercely competitive labor market. Company representatives indicate that Amazon is “proud to offer competitive pay and affordable healthcare,” underscoring the company’s efforts to retain talent and address employee well-being.
Amazon’s latest move represents its largest single-year commitment to employee compensation since it began expanding benefits. In recent years, the company steadily raised wages and broadened offerings such as tuition assistance. Udit Madan, senior vice president of Worldwide Operations, confirmed in a Sept. 2025 blog post that Amazon is “raising pay again across our network, lowering the cost of health care for those on our entry-level plan, and raising the annual progression increases.” Industry reports suggest the scale and timing underscore Amazon’s response to rising wages at competitors like Walmart and Target.
Major Pay Increases Target 1.5 Million U.S. Workers
Starting this year, company data shows that average hourly wages for U.S. fulfillment and transportation workers will top $23, with long-tenured employees receiving raises of $1.10 to $1.90 per hour. For full-time staff, that adds roughly $1,600 in annual pay. Amazon’s “step plan” now boosts year-over-year raises more than before. Internal reports reveal that workers with three years’ tenure have seen pay rises averaging 35% under the enhanced plan.
The benefits overhaul follows labor unrest at several Amazon sites last December and a recent OSHA settlement requiring ergonomic improvements. Industry analysts say the pay and benefit hikes reflect broader tech-sector trends. Research from TechGig indicates that “major employers like Google and Microsoft are also enhancing benefits to attract talent” in today’s competitive market.
Healthcare Costs Slashed as Benefits Expand Nationwide
Healthcare cost reductions form the second pillar of the package, according to company announcements. Beginning January 2026, entry-level health plan premiums will fall to $5 per week. Copays for primary care, mental health and most non-specialist visits will drop to $5, cutting copays by 87% and weekly contributions by 34%. Amazon estimates these changes will save employees hundreds of dollars annually while making healthcare more accessible for the majority of its U.S. workforce.
Amazon’s investment will test if higher pay and cheaper healthcare improve retention and job satisfaction. With more than 1.5 million U.S. workers, Amazon’s compensation policies often set benchmarks for retail and logistics. CFO John David Rainey told investors that scale advantages and strong supplier relationships help absorb rising labor costs, but warned that “small retail margins limit our ability to cover all additional expenses.”
Beyond Amazon, the move could prompt competitors to revisit their pay structures. Retailers have already increased starting wages in response to Amazon’s past raises. If Amazon’s new program bolsters employee loyalty, it may reshape labor standards across the industry. Policymakers and unions will watch closely to see if the investment yields long-term gains in workforce stability.
As Amazon implements its multi-billion-dollar plan, the stakes extend beyond its warehouses and delivery hubs. The company’s success or failure may influence wage negotiations and benefit offerings across U.S. commerce. For workers and employers alike, Amazon’s bet on its workforce represents a high-profile test of modern labor strategies.