Amazon has announced plans to increase wages for contracted delivery drivers as part of a $440 million investment in its third-party delivery program. The company made this announcement during its annual Ignite Live conference, which was held with the 3,500 small businesses that participate in its delivery service partner (DSP) program. The DSP program, launched in 2018, consists of approximately 279,000 drivers who are responsible for delivering packages the final few miles to customers’ doorsteps.

While Amazon did not specify the exact amount of the wage increase, it stated that it anticipates the average delivery associate will earn an average of $20.50 per hour or more, along with benefits. DSPs have the flexibility to set their own wages and incentives, but Amazon establishes a minimum pay standard through its contracts with these companies.

The wage increases are expected to begin rolling out to delivery companies in mid-October. Amazon’s DSP program has played a vital role in the company’s logistics strategy, allowing it to reduce reliance on traditional carriers like the U.S. Postal Service and FedEx while speeding up delivery times. Since its inception, Amazon has invested approximately $8.9 billion in the DSP program, which has generated over $45 billion in revenue in the past five years.

This announcement comes at a time when Amazon is facing increased scrutiny and labor-related challenges, including efforts by the International Brotherhood of Teamsters to unionize its delivery driver workforce. Amazon has previously stated that it respects its workers’ right to join or not join a union and has been involved in debates over labor conditions and unionization in some of its facilities.

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