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.
Amazon said the effect of the higher pay will be reflected in its forward-looking quarterly guidance. Shares of Amazon were trading marginally lower Tuesday morning.
The company and CEO Jeff Bezos have been facing criticism for its pay disparity. 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.
"Today I want to give credit where credit is due," Sanders said in response to the announcement. "What Mr. Bezos has done today is 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."
Amazon said it will also start advocating for an increase to the federal minimum wage.
Amazon's starting pay varies by location — $10 an hour at a warehouse in Austin, Texas, for example, and $13.50 an hour in Robbinsville, New Jersey. For 2017, the median Amazon employee earned just under $28,500, according to company filings. Bezos earned $1.7 million.
Amazon is also raising wages for British employees to a minimum of £10.50 ($13.61) for workers in London and £9.50 ($12.31) in the rest of the country.
"We listened to our critics, thought hard about what we wanted to do, and decided we want to lead," Bezos said in a statement. "We're excited about this change and encourage our competitors and other large employers to join us."
The announcement comes ahead of Amazon's annual holiday hiring push. Last year the e-commerce giant said it would hire 120,000 temporary employees for the holiday season.
In August, national wage growth posted its biggest increase of the economic recovery, according to the Bureau of Labor Statistics. Payroll gains beat expectations and the unemployment rate held near a generational low of 3.9 percent — making holiday hiring tougher for many retailers.
—CNBC's Tom Rotunno and Jeff Cox contributed to this report. The Associated Press also contributed.