Amazon may paint itself as a benevolent corporation looking to help workers throughout the country, but their actions say otherwise.
When Amazon raised its minimum wage to $15 in 2018, many of its workers were outraged. The workers received a slight hourly wage bump but lost monthly bonuses and stock shares. (The price of Amazon stock has nearly tripled since then.) As a result, workers ended up with less money in their pockets.
A new government watchdog report found that Amazon, Walmart, and McDonald’s were among the top employers of SNAP and Medicaid recipients
Walmart is a strategic target of the $15 hour as it has more employees than Amazon and thus the cost will be significantly affecting the cost of goods and cash outlay thus diminishing its competitive advantages.
Besides putting Walmart under stress by employing such a strategy, Amazon is also trying to attract the skilled workforce from Walmart – a move that could easily affect the performance of any company in the absence of performers.
And then there is the strategy to keep out unions and maintain the tight management of employees that is key to the Amazon’s efficiency.
Murray Bilby
Amazon’s Wage Hike Comes with Strings
Company will pay for $15 minimum hourly wage by cutting bonuses and stock awards
| By Stephen Miller, CEBSOctober 10, 2018 |
updated on October 12, 2018
Amazon workers in the U.S.—full-time, part-time, temporary and seasonal—will earn at least $15 an hour starting on Nov. 1, the online retail giant announced Oct. 2. But there’s a catch or two, critics are pointing out.
First, the good news: Amazon said the wage hike would benefit more than 250,000 of its employees, as well as over 100,000 seasonal employees who will be hired for the holiday rush. “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” stated CEO Jeff Bezos.
Another positive: Money magazine’s website reported that “Workers whose pay was already above $15 per hour will get hourly raises of $1, according to two people familiar with the matter who asked not to be identified discussing the company’s compensation practices.”
The move “shouldn’t come as a shock—Amazon is in direct competition with other large-scale retail stores like Walmart and Target to employ the same group of workers, and these big-box retailers have been steadily raising wages over the last few years to attract and keep the best workers,” said Michael Farren, a research fellow at the Mercatus Center at George Mason University in Arlington, Va. “Amazon hired 120,000 workers for the holiday rush last year and will be hiring even more this year, so the wage increase just makes economic sense, especially given the current low unemployment rate.”
Amazon Giveth—and Taketh
Workers’ enthusiasm over the company’s announcement dimmed, however, when two days later the company said it would pay for the wage hike by eliminating monthly bonuses and stock awards for warehouse workers and other hourly employees.
The website MyNorthwest reported the details this way:
Before the raise, warehouse workers received anywhere from two to three Restricted Stock Unit (RSU) awards, vesting in full after two years. Sitting at around $2,000 a share, Amazon stock is traditionally touted as a massive value-add for employees when determining base wages. On top of that, employees also received monthly bonuses through the company’s Variable Compensation Pay (VCP) program, with the ability to earn up to 8 percent of their monthly income.
Time-based restricted stock units are a form of company stock, or equity, granted to eligible employees through a vesting plan. These units can only be converted to sellable shares if workers stay with their company for a particular length of time.
Raising base pay while eliminating incentive-based compensation could have advantages and disadvantages for Amazon’s employees, said Ketan Kapoor, CEO and co-founder of Mettl, an HR technology talent-measurement firm. He said the pluses for low-wage workers are:
- They can pocket more salary each month no matter how long they’ve been at Amazon.
- They can move to jobs outside the company without having to weigh the loss of time-based equity.
The disadvantages, Kapoor said, are:
- Employees may lose a sense of ownership, as they’ll be working only for a fixed paycheck and not for a stake in the company.
- They will miss opportunities to earn significant money over the long run as a reward for remaining with the company.
According to the website Yahoo! Finance, the typical Amazon worker received $1,800 to $3,000 a year through the company’s variable compensation program, and these bonus earnings could double during peak months. An anonymous employee told the news site that while an additional $1-an-hour raise adds up to $2,080 a year in total earnings, employees “could have earned a few thousand dollars more from the incentive programs” that Amazon has axed.
Amazon responded in a statement that “because it’s no longer incentive-based, the compensation will be more immediate and predictable” for hourly workers. Additionally, the company has disputed that overall pay for hourly employees would decline, according to several media reports.
“Although raising the minimum pay to $15 is fair in the sense it is substantially higher than the regular U.S. minimum wage, Amazon should give workers a choice if they would rather be compensated with the $15-per-hour base or with the previous variable plan,” said Stacy Caprio, a financial blogger at fiscalnerd.com.
| Update: Amazon Revises New Pay Structure Following Employee Complaints
In response to employee criticism over the revised pay structure for hourly workers, Amazon said it would roll out additional raises to workers for whom the lost stock and bonuses would mean a compensation cut, the Seattle Times reported on Oct. 10. A spokeswoman told the Times that the company also plans to replace stock awards given on employment anniversaries with cash bonuses totaling $1,500 after five years, and $3,000 every additional five years after that. Employees criticized how the pay adjustment was communicated. One worker told the Times that he first heard about the details from the media. |
An Anti-Competitive Strategy?
In its Oct. 2 announcement, Amazon said that it “will be working to gain congressional support for an increase in the federal minimum wage,” which was set at $7.25 per hour nearly a decade ago, and that it intends to “advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.”
That pledge provoked concerns among some free-market advocates.
“This is a tactic that economists call ‘raising rivals’ costs,’ and it’s intended to make it harder for business competitors to compete on the basis of lower prices,” Farren said.
“Now that [Amazon] has raised its own per hour labor costs, it wants its competitors’ labor costs raised too,” blogged Ryan Bourne, an economist at the Cato Institute, a libertarian think tank. However, “some businesses face such tight margins that they could not possibly do what Amazon has announced.”
03-06-19
Whole Foods reportedly cuts worker hours to make up for its new $15-an-hour wage
After Amazon raised its company-wide wage floor to $15 last year, workers at Whole Foods are seeing their hours slashed.
One of the most common arguments against raising the minimum wage, like cities such as Seattle and San Francisco have done recently, is that if businesses are forced to pay workers more per hour, they’ll simply cut the amount of shifts they offer workers to keep their costs the same.
While this hasn’t happened in the cities, it seems like it has happened at Amazon, which decided to raise its own minimum wage to $15 and then decided to manage the costs of that decision via scheduling.
Workers at Whole Foods (which Amazon bought in 2017) told the Guardian that after Amazon enacted a $15 minimum wage last fall, they’ve seen their shifts cut dramatically. One employee in Illinois said they dropped from 30 hours a week to 20; their take-home pay actually declined after the hourly raise. These shift reductions have affected workers across the board, particularly part-time workers, who saw their hours reduced from 30 to 21 per week on average.
In a statement to Fast Company, Whole Foods refuted the claims of the workers and said: “Our full-time store Team Members averaged the same number of hours in January and February 2019 as they did during the same time last year. We are proud to have increased the hourly wage for all store Team Members, and we will continue to schedule labor hours based on individual store needs to create the best experience for our Team Members and customers.” Whole Foods did not address the effect on part-time workers.
The same Illinois-based employee shared an internal email from their department manager, who told workers that the shift cuts were “the direct result of guidance from our regional team.” This cost cutting on the part of Amazon and Whole Foods has reportedly resulted in understaffing issues at stores. Employees in California told the Guardian that there are not enough people to work the cash registers to prevent long lines, and fewer staff are available to help customers on the floor. (We reached out to Amazon for comment, and will update the article upon receiving a response.)
Shift slashing at Whole Foods may be part of a larger strategy on Amazon’s part to raise the minimum wage without spending more money. Workers at Amazon’s warehouses, for instance, told outlets like Recode last fall that they were anticipating that the $15 minimum wage would lower their pay, as Amazon slashed bonuses and stock options for workers as part of introducing the wage floor.
This move could cast a shadow on broader minimum wage initiatives, becoming another data point for the argument that raising the minimum wage will actually lower worker pay. But that’s a choice on the company’s part, and one anticipated by the cities that have passed minimum wage increases. Several jurisdictions that have enacted a $15 minimum wage, including Seattle and San Francisco, have passed “fair workweek” legislation that protects hourly employees against the kind of shift slashing that’s happening at Whole Foods. And a study last year on the minimum wage in Seattle found that it has improved take-home pay for most hourly workers.
https://thecounter.org/amazon-advertising-15-minimum-wage-warehousing-industry/
Amazon has been advertising its $15 minimum wage. It’s still driving down pay across the warehousing industry.
by The Counter
03.02.2021, 4:26pm
https://thecounter.org/15-minimum-wage-amazon-top-employer-snap-recipients-walmart-mcdonalds/
Despite now offering $15 minimum wage, Amazon still a top employer of SNAP recipients in many states
by H. Claire Brown 11.19.2020, 12:09pm
A new government watchdog report found that Amazon, Walmart, and McDonald’s were among the top employers of SNAP and Medicaid recipients
A new report from a federal watchdog agency found that Amazon was among the top 25 employers with workers enrolled in the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) in six out of nine states studied. The company—which reported $5.2 billion in profit in the second quarter of this year—notably raised its minimum wage to $15 per hour in 2018. Yet the wage boost doesn’t appear to have lifted its employees out of poverty: In Indiana, for instance, Amazon lags behind only Walmart and McDonald’s among employers whose workers rely on the safety net for emergency food assistance.
Back in 2018, The Counter (formerly The New Food Economy) reported that Amazon was among the top 20 employers of SNAP recipients in four out of five states that responded to public records requests. After our story broke, the company raised its minimum wage to $15, a change we expected to push more of its employees out of ineligibility for safety net programs. Yet the findings from the new report indicate the opposite: Despite its commitment to increasing wages, many of Amazon’s employees’ paychecks are still being supplemented by the federal government.
The Government Accountability Office report, focused on the month of February 2020, was commissioned by Democratic Senator Bernie Sanders. (In 2018, Sanders introduced a bill that would tax employers for their workers’ use of safety net programs like SNAP and Medicaid.) The report found that, contrary to popular belief, more than half of SNAP enrollees worked full-time for 50 or more weeks per year in 2018. All told, 9 million wage-earning adults participated in SNAP that year. It’s a finding that undermines the Trump administration’s emphasis on imposing work requirements to shrink the safety net. In many cases, even when people get jobs—even at $15 per hour—they still don’t earn enough money.
“U.S. taxpayers should not be forced to subsidize some of the largest and most profitable corporations in America. It is time for the owners of Walmart, McDonald’s and other large corporations to get off of welfare and pay their workers a living wage.”
“At a time when huge corporations like Walmart and McDonald’s are making billions in profits and giving their CEOs tens of millions of dollars a year, they’re relying on corporate welfare from the federal government by paying their workers starvation wages. That is morally obscene,” Sanders wrote in a press release. “U.S. taxpayers should not be forced to subsidize some of the largest and most profitable corporations in America. It is time for the owners of Walmart, McDonald’s and other large corporations to get off of welfare and pay their workers a living wage.”
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The report also found that no private employer accounted for more than 4 percent of a state’s total SNAP recipients. In most states, restaurants employed the highest share of working SNAP recipients, followed by department stores and grocery stores.
Amazon employees appear to be heavily reliant on Medicaid, too, despite the company’s claims that it offers generous health insurance and tuition assistance programs. Of six states that provided data to GAO, Amazon ranked among the top 10 employers of Medicaid recipients in five.
The Counter reached out to Senator Sanders and Amazon for comment and will update this post if we hear back.
https://dazeinfo.com/2021/02/25/amazon-minium-wages-strategy-crush-walmart/
Amazon’s New Strategy To Crush Walmart: Thinking Out Of The Box
ByAbhradeep Ghosh February 25, 2021
Amazon’s latest move to beat Walmart is sneaky and out of the box.
The Bezos-owned e-commerce giant believes $15 as the starting minimum wage per hour for workers will be good for business. And, it has been lobbying U.S Congress for the same since 2018. This move, according to industry experts, is a new weapon for choice for Amazon to battle with rivals, especially with Walmart.
Post the successful completion of the U.S election, Amazon embraced the ‘Raise the Wage Act’ which aims to increase the federal minimum wage to $15/hour in the United States. To show their support regarding the same, the company has been incessantly runnings ads everywhere from podcasts to the New York Times newspaper.
In a blog post published in late January, the Senior Vice President of Global Corporate Affairs – Jay Carney wrote that the company holds the belief hour of labour is definitely worth $15 and is also ‘good for business’.
In the same blog post, he mentioned that Amazon witnessed application for hourly positions more than doubling when it took the decision to raise the starting wage. Thus $15/hour will surely boost a worker’s morale and lead to more retention in the workforce.
Carney, in the final paragraph, wrote that Amazon is thrilled to see other major companies such as Target, Best Buy and Costco also increase their wages to $15 an hour as a minimum standard and hope more will follow suit.
A Cunning Strategy Hidden Behind An Act Of Goodwill?
Now, experts believe that Amazon’s incessant rallying behind the campaign to raise the minimum wage to $15/hour, besides what appears to be an act of goodwill for the end employees, is also a strategy that can majorly affect rivals such as Walmart negatively.
Why?
Because Amazon has already implemented the $15 an hour minimum wage rule for themselves and thus it has little to fear from it becoming a new federal minimum standard. But, for companies such as Walmart that are still operating below $15/hour, it will come off as a big disadvantage because they are yet to factor in the expense and adjust their costs accordingly.
In a recent interview, Michael Farren who is an economist at the Mercatus Center – a think tank, mentioned how Amazon is very likely using this cause to drive a wedge against their competitors, particularly smaller ones as they cannot possibly afford to increase the minimum wage without increasing the cost of their final products.
Farren said given the fact that Amazon has already streamlined their costs after integrating the $15/hour wage into their operations, they needn’t increase their product pricing. But, that is not the case for other rivals such as Walmart which will most likely need to drive up the costs of their products if the federal minimum wage is increased.
Besides putting Walmart under stress by employing such a strategy, Amazon is also trying to attract the skilled workforce from Walmart – a move that could easily affect the performance of any company in the absence of performers. Also, this has put all the Amazon workers, who have been protesting and demanding better working conditions, in satisfaction mode.
Clearly, Amazon has employed the strategy with an aim to kill two birds with one stone!
This is truly what one can call: killing two birds with one stone. On one hand, Amazon lobbying for increased minimum wages puts forth the company in a positive light in front of U.S workers and on the other, it is secretly hoping to disrupt the competition.
https://www.supplyht.com/articles/103955-bruce-merrifield-embrace-all-will-high-hourly-wages
$15 Living Wage vs. Amazon and Costco strategies.
April 21, 2021
The “$15-hour living wage” movement will continue. It will buy votes, liquidate jobs and boost McDonald’s prices more than the new, net wages. Although many voters are weak at system-thinking math, Amazon and Costco are not.
Last fall, Amazon bragged that they were leading the way to the magic “$15/hour” at all locations along with benefits and skills training. Though Amazon did not mention that they needed to hire a lot of folks fast, that they are trying to charm democrats who want to break-them up for being evil, or that their $200-400 million automated warehouses can be shut down if they do get unions.
Newsflash: Has Amazon worked workers too hard in Bessemer, AL where a unionization vote is underway?
Simultaneously, why did Costco announce a new minimum wage of $16/hour with good benefits? No surprise — they have had the highest wage scale within retail America since their founding. How exactly do they sell commodities at a 13% margin, pay great and still financially thrive? Best-service pay logic!
Like Amazon, Costco pays the most to hire the best work ethic, and to get best service quality execution that wins best customer loyalty and growth. In addition, they cross-train to deliver more services with an inclusive culture and daily contact with happy customers. The financial results:
- 157% margin dollars per head;
- For 141% of the average compensation for an area job niche;
- 6% annual turnover rate (v 30 to 60%) for retail in general;
- .12% theft/shrinkage (a retail best);
- Best customer retention/growth; and
- A great ROI.
Options for distributors
Distributors can choose to pay average compensation to get average work ethic and service quality, and then be a price-taker that gets weak profits, growth and innovative-change ability. OR, you can measure and grow gross-profit dollars per head to afford higher wages by working smarter.
For help is doing the latter, read my blogs 48 and 170. For a full-journey recipe, skim my “Core Renewal Roadmap.”
Pursuing penny-wise, service mediocracy will not allow you to both excel and make the digital changes that your best suppliers and customers are expecting. Choosing the status quo is more risky than experimenting towards Costco’s service-excellence math!
https://thecounter.org/amazon-walmart-online-snap-sales-explode-instacart/
Covid-19 has increased online SNAP purchases twentyfold—and Amazon, Walmart have a lock on virtually all those sales
by H. Claire Brown 07.09.2020, 2:38pm
More than 750,000 households had used food stamps benefits online as of late June. That’s up from just 35,000 in March.
As states went into lockdown in March and April and people began avoiding grocery stores, the United States Department of Agriculture (USDA) finally achieved a long-standing goal: making it easier for people to use federal food assistance dollars online.
Since 2016, the agency has inched towards allowing online purchases with Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) benefits. In 2017, it selected a group of retailers who would eventually pilot the program in a handful of states. But it wasn’t until April 2019 that internet sales launched in New York, and the second state—Washington—was not up and running until January 2020.
Though the reasons for the slow rollout are unclear, things have changed quickly in recent months. As the Covid-19 pandemic envelops the U.S., and states rush to support alternatives to grocery shopping in person, the pilot program has expanded rapidly. As of early July, 43 states are approved to accept SNAP benefits online, and 39 have the program up and running.
Covid-19 has rapidly increased the demand for online grocery shopping. As of early July, 43 states are approved to accept SNAP benefits online, and 39 have the program up and running.
iStock/jetcityimage
Between March and June of this year, the number of SNAP households that had shopped online increased from about 35,000 to nearly 769,000, a USDA spokesperson told The Counter in an email. That’s more than a twentyfold increase in just a few months. The agency said it did not have data to share on total dollar amounts spent online.
One thing is certain: At this point, two big retailers stand to benefit from the explosion in online SNAP sales. In 34 of the 39 states, Amazon and Walmart are the only participating grocers.
The reasons why are likely logistical. Few independent grocers have the web infrastructure to display and update their inventory online, making Amazon and Walmart a kind of duopoly by default. Even fewer have enough staff to assemble complex orders and deliver them to people’s homes. By contrast, Amazon and Walmart have been investing heavily in grocery delivery for years.
In 34 of the 39 states offering online SNAP sales, Amazon and Walmart are the only participating grocers.
Legislators have taken note of the apparent unevenness of the playing field. Last week, the two U.S. Senators from Illinois, Tammy Duckworth and Dick Durbin, introduced the Expanding SNAP Options Act, a bill that would provide funding for smaller retailers, direct-to-consumer farmers, and farmers’ markets to start accepting online orders. It calls for USDA to develop an easy-to-use app where shoppers can connect with small food businesses, and for the creation of a Technical Assistance Center to help retailers join the app.
Does the app sound a little like Instacart, the tech platform that allows users to order groceries online from retailers of their choice? The company apparently thinks so. In late April, Politico reported Instacart had hired former Republican Congressman Luke Messer to lobby for its inclusion in the program—a change that would allow customers to place orders from brick-and-mortar retailers on its platform using SNAP.
On one hand, Instacart makes sense for SNAP sales because of its existing relationship with grocery stores and its easy-to-use interface. On the other hand, Instacart is not a retailer—it’s merely a digitally enabled service where users hire gig economy workers to do their shopping for them. The app’s delivery fees and its tip-based compensation model for drivers may render the service prohibitively expensive for a lot of users (not to mention its potential markups). Importantly, SNAP dollars can only be used for food purchases—not delivery fees.
SNAP dollars can only be used for food purchases—not delivery fees.
Other retailers may find ways to make home grocery delivery more affordable—and less restricted by the rules that govern SNAP. Amazon currently offers Prime subscriptions, which typically include unlimited free delivery, to SNAP recipients for $6 a month. Walmart is launching an Amazon Prime competitor, Walmart+, in July, and it’s not yet clear whether the $98 annual fee will be discounted for SNAP users.
Though USDA does not release retailer-specific SNAP sales figures (and probably never will, since the Supreme Court ruled in its favor last year), analysts estimate Walmart derives about 4 percent of its U.S. sales from SNAP dollars. If that number is accurate, it means a hefty proportion of SNAP dollars are already spent at the corporation. In other words, federally subsidized food spending was already a big deal for the country’s largest retailers—and the pandemic pushed more and more sales online, Walmart and Amazon were already waiting in the wings.
https://observer.com/2019/04/jeff-bezos-amazon-minimum-wage-challenge-retailers/
In a Genius Move, Jeff Bezos Asks Competitors to Surpass Amazon’s Minimum Wage
By Gabriela Barkho • 04/11/19 1:48pm
Jeff Bezos wants the Walmarts and Targets of the world to pay their workers even more than Amazon.
In a letter to shareholders filed to the U.S. Securities and Exchange Commission (SEC), the CEO made the genius move of calling out competitors to raise their minimum wage, making Amazon appear as the leader of the pack when it comes to workers’ rights.
“Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage,” Bezos wrote in the letter. “Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.”
While this enthusiasm is certainly welcomed—the current national minimum wage is a measly $7.25—Bezos and Amazon’s push for higher employee wages is actually a smart strategy. As an e-commerce giant, the company has long been critiqued for not passing its enormous profits onto its warehouse employees in the form of better living wages. By pointing to other retail giants (you know who you are!) to bump their employees’ pay rates, Amazon already looks like an enticing place to work for some of those workers.
Appealing to a bigger workforce is nothing new for Amazon. The tech giant set its minimum wage at $15 per hour in 2018, igniting a nationwide campaign to attract manual workers to work for the company. By continuing its crusade for industry-wide better wages, Amazon will stand to benefit from even more good publicity.
This call out also highlights the lackluster effort its brick-and-mortar competitors have put into providing their employees with better pay. Take for example, Bezos calling out Target’s current plans to pay its retail workers $13 per hour starting this summer and waiting until 2020 to match Amazon’s current $15 rate.
It’s been an overall big year for corporations raising wages after years of pressure. This week saw Bank of America raise its minimum wage to a whopping $20 per hour, a noble move by a corporation that’s already been overshadowed by Bezos, of course. Elsewhere, Costco took a cue from Amazon’s $15 magic number last month, while Walmart continues to sit at the low-end of the spectrum at $11 per hour.
https://www.aier.org/article/the-real-agenda-behind-amazons-new-15-per-hour-minimum-wage/
The Real Agenda Behind Amazon’s New $15 per Hour Minimum Wage
any people assume that to raise wages, big companies must be dragged along by government policy. Amazon’s eye-opening announcement yesterday suggests otherwise. The online retail giant announced it would raise its company minimum wage to fifteen dollars per hour, and lobby for an increase in the federal minimum wage.
This new policy is not merely cosmetic. Amazon’s current median wage hovers right around fifteen dollars, meaning half of its 566,000 employees earn less. Amazon is putting real money behind its decision.
CEO Jeff Bezos’s statement was worthy of an Eagle Scout: “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead. We’re excited about this change and encourage our competitors and other large employers to join us.”
Of course, Amazon would not be voluntarily raising the pay of at least half of its workers unless it thought the move was good for business. But why? We can boil its rationale down to two likely hypotheses:
- Amazon believes it will directly benefit from the wage hike through some combination of public relations, political capital, worker retention, and morale.
- Amazon is seeking to raise its rivals’ costs, believing that brick-and-mortar retailers would be hit harder by an increase in the minimum wage.
These two hypotheses are not mutually exclusive. In fact, we’ll see below that Amazon’s reasoning is likely driven by a bit of both.
Clash of the Titans
We can shed some light on the prospects of raising rivals’ costs by comparing Amazon to the brick-and-mortar monolith that provides its greatest competition. Walmart’s current median wage is around twelve dollars per hour, meaning it would take a bigger hit if forced to implement a fifteen dollar minimum wage.
State minimum wages are also important. As the chart below shows, Amazon’s employees are disproportionately located in states with the highest minimum wages (particularly Washington and California). Amazon therefore has less to lose from a wage hike.
However, there are limits to this potential “kill Walmart” strategy. I had always assumed that a brick-and-mortar operation like Walmart was significantly more labor-intensive than Amazon. By at least one measure I constructed from readily available data, that’s not the case. Dividing each company’s 2017 net sales by its number of employees yields very similar figures for both, right around $200,000.
That doesn’t mean each firm has the same mix of skilled and unskilled labor. Walmart’s lower median wage suggests it depends more on the latter. But if Amazon was far more labor intensive, I would expect it to have higher revenue per employee. Could this strategy cause problems for Amazon’s biggest competitor? Sure. Is it enough on its own to explain Amazon’s voluntary wage hike? Probably not.
Save the Robots
Perhaps Amazon’s strategy is more forward-looking. A Google search of “amazon robots replacing workers” yields countless bold proclamations of the rise of the machines. Indeed, Amazon had over 100,000 warehouse robots working alongside people by mid-2018. Amazon’s warehouse-based model, with limited need for face-to-face customer interaction, seems plausibly better situated for automation than brick-and-mortar retailers.
Of course, large brick-and-mortar retailers have large-scale storage and stocking operations too. A similar search for Walmart reveals it is also far more than dabbling in robotics (apparently Walmart’s human employees love their robot colleagues.)
Davids and Goliath
What about small businesses? While pinning down a retail market share for this amorphous category is difficult, they do compose over 98 percent of retail businesses. Could Amazon’s seemingly magnanimous gesture to its employees really be an attack on Main Street?
While data are hard to come by, I would bet that small brick-and-mortar retailers are more labor-intensive than their big box and online competitors from (dis)economies of scale alone. They are also far less suited to automation than bigger rivals.
However, it is difficult to see what Amazon would gain from forcing a bunch of mom-and-pop stores out of business. In fact, Amazon derives significant revenue from small businesses, many with physical locations, that use its website as a platform.
Amazon’s competitors would be harmed by a higher minimum wage, but all our analysis up to this point assumes such a law would be passed. This political risk places another ceiling on how much Amazon stands to gain by raising its rivals’ costs.
Bernie Bros
While competitive concerns are likely important, it is impossible to ignore the impact Amazon’s wage hike will have on public perception. Last month, Senator Bernie Sanders took another step on his journey from idealism to demagoguery when he proposed “Stop Bad Employers by Zeroing Out Subsidies Act” (I’ll let you figure out the acronym).
The bill would have penalized large companies for employees who received public benefits. While it would have been disastrous for those employees, it underscores how issues like CEO pay are potent for many voters. Especially if it thinks higher minimum wages are inevitable, Amazon’s move is brilliant PR, casting them on the leading edge of progressive treatment of workers.
There’s also the workers themselves. Amazon may get significantly greater buy-in from entry level employees who will likely see the highest raises. For an operation of its size, heightened morale across many workers could make a big difference in productivity.
I know what you’re thinking: are Bezos and Sanders cool now? Totally. Sanders congratulated Bezos and urged “corporate leaders around the country to follow Mr. Bezos’ lead.” Perhaps Sanders should not be so excited. Amazon has just shown the possibilities when large firms voluntarily respond to a public debate. In today’s era of lightning-fast communication, big top-down legislation favored by Sanders and others is becoming obsolete.
Small businesses in the crossfire of Amazon’s $15 minimum wage push
OP-ED APPEARED IN THE ORANGE COUNTY REGISTER ON FEBRUARY 8, 2021BY ELAINE PARKER
While the pandemic and associated government lockdowns pistol whipped the small business community last year, Amazon was swimming in cash—raking in billions of dollars in additional profits compared to the previous year. Now, as a final death blow to Main Street, Amazon is trying to persuade Congress to more than double the federal minimum wage.
The corporate giant has been running advertisements and publishing opinion pieces in support of a federal $15 minimum wage—a policy Amazon adopted for its workers in 2018 and an idea currently being considered in Congress. But the campaign doesn’t add up. Amazon’s higher wages compared to other businesses provides the company with a competitive advantage to better attract well-equipped job candidates. Why would Amazon risk losing that edge?
In reality, the well-being of minimum wage workers is not a priority for Amazon. Instead, the company prizes crushing its competitors. After a few years of paying more in labor costs because of its own $15 wage policy, Amazon’s executives know it will be a struggle for others to keep up if they were forced to adopt a similar compensation structure.
Amazon’s minimum wage crusade is likely targeted at major retailers, but small businesses are where the wage hikes will cut the deepest. Nearly half of all minimum wage workers are employed by companies with fewer than 100 staff members. And three out of five minimum wage employees work at restaurants—businesses that are among the hardest hit during the pandemic and already on the edge of bankruptcy.
The nonpartisan Congressional Budget Office estimates that a federal $15 minimum wage will kill as many as 3.7 million jobs. A significant portion of those losses will hit Main Street businesses. Amazon’s hometown of Seattle is proof. After the city raised its minimum wage, there was a 13 percent jump in the rate of businesses closing up shop. And entry-level workers ended up losing an average of $125 per month because employee hours were cut.
The consequences are no surprise. A recent analysis from economists at Trinity and Miami University finds that a federal $15 minimum wage, along with the elimination of the tip credit, will cost employers an additional $99 billion. Small businesses already strapped for cash would struggle to cover those costs in an economic boom, let alone amid a lingering global pandemic that created the weakest job market since the Great Depression.
Amazon may paint itself as a benevolent corporation looking to help workers throughout the country, but their actions say otherwise.
When Amazon raised its minimum wage to $15 in 2018, many of its workers were outraged. The workers received a slight hourly wage bump but lost monthly bonuses and stock shares. (The price of Amazon stock has nearly tripled since then.) As a result, workers ended up with less money in their pockets.
Amazon’s minimum wage hoodwink is a strategy to eliminate their biggest rivals. While not necessarily the intended target, small businesses are in the crossfire. Congress should avoid taking aim.
https://www.wired.com/story/why-amazon-really-raised-minimum-wage/
Why Amazon Really Raised Its Minimum Wage to $15
The company didn’t act purely out of the goodness of its heart.
AFTER MONTHS OF increased public criticism about its grueling labor practices, Amazon announced Tuesday that it would begin paying all US employees, including part-time, seasonal, and temporary workers, at least $15 an hour and all UK employees at least £9.50 (with higher wages in London) beginning November 1. The move will affect 250,000 US Amazon employees and 100,000 seasonal workers, according to the company.
In the same announcement, Amazon also said it will begin lobbying Congress to raise the federal minimum wage, which is currently $7.25. Jeff Bezos—the company’s CEO and the richest man in the world—said in a statement that Amazon “listened to its critics,” and “decided we want to lead.”
On its face, Amazon’s decision to raise wages is unequivocally a good thing, with the power to positively impact the lives of hundreds of thousands of workers who were paid low wages even as their employer amassed enormous wealth. The pay increase also demonstrates the effectiveness of the Fight for $15 movement, a grassroots push formed in 2012 to increase pay and form unions in the retail and fast food industries.
“Amazon didn’t pick $15 for no reason whatsoever but because of its symbolic importance,” says Ben Zipperer, an economist at the Economic Policy Institute who studies low-wage labor markets. “Political pressure can actually change wages in our economy, which I think is a helpful reminder.”
Amazon has also sustained months-long attacks from politicians like Bernie Sanders, who introduced a bill last month literally called the Stop BEZOS Act. The legislation is designed to force large employers to raise wages by taxing them when their workers need to rely on public benefits like food stamps.
Sanders’ initiative provoked a rare response from the typically shy Amazon, and the senator appeared pleased Tuesday when he learned his effort had seemingly worked. “Today, I want to give credit where credit is due. And I want to congratulate Mr. Bezos for doing exactly the right thing,” Sanders said at a press conference this morning. Bezos later basked in the praise on Twitter.
Amazon is likely betting, however, that increasing pay will do more than just alleviate pressure from lawmakers and activists who want the retail giant to improve its working conditions. In the coming months, the company will need to attract 100,000 seasonal employees in the US and once again try to dominate the holiday shopping season. It has to accomplish those tasks in an extremely tight US labor market—the unemployment rate recently dipped below 4 percent—where few people are looking for jobs. Wage hikes like Amazon’s have historically occurred in similar economies.
“This isn’t really anything new,” says Sylvia A. Allegretto, a labor economist and the co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley. “It typically happens around tight labor markets. Don’t forget that Amazon needs a lot of workers coming in for the holiday season.”
Making hiring matters worse for Amazon is the fact that it has faced a steady onslaught of bad press in recent months about its labor practices both in the US and beyond. One report published in April documented how some Amazon workers were forced to pee in water bottles to meet workplace demands, and another from July found some employees have suffered from workplace accidents that left them homeless.
Last week, Gizmodo also published excerpts from an internal video for Whole Foods managers that appears designed to train them to spot and squash labor organizing efforts. (It has previously been reported that employees of the Amazon-owned luxury grocery chain were planning to unionize.)
Taken together, those negative reports could make it more difficult to convince the already-small pool of job seekers to choose Amazon, especially when other retailers are also hiring for the holiday season. At first, the company tried to solve that problem by fighting back with its own counter-messaging, including via a new fleet of Twitter accounts tasked with spreading positive testimonies of working at the retail giant. Now it’s simply paying more, a move that could also help to reduce other labor costs in the long term.
“They have really high turnover rates—that’s very costly when you have to be constantly spending money on recruiting and training workers,” says Allegretto. “Paying a higher wage will help you retain those workers.”
Increasing wages also means that many more people—Amazon is one of the largest employers in the US—will have extra funds to spend on goods from places like, well, Amazon. Although the pay hike will cost the retail giant, it can potentially make up the loss via increased sales. “A lot of [Bezos’] customers are low-wage workers. There is a lot of demand that is unleashed when you start paying workers more money,” says Allegretto.
Amazon already has another established mechanism for reducing labor costs: automation. “It needs fewer workers today to sell and ship $100 million worth of stuff than it did just a few years ago. That trend is only accelerating,” Stacy Mitchell, the co-director of the Institute for Self Reliance, a non-profit that advocates for local economic development, said on Twitter.
Although Amazon has marketed itself as a leader by increasing how much it pays employees, the company is far from the first retail behemoth to raise wages in recent years. “Today’s announcement also illustrates how companies around the country are increasingly recognizing that higher wages can be good both for business and their employees,” Christine Owens, the executive director of the National Employment Law Project, a nonprofit that advocates for American workers, said in a statement. “Target is phasing in a $15 minimum wage by 2020, for example, and Costco recently raised its starting wage to $14.”
What separates Amazon from its competitors, however, is that the company is expected to announce the location of its highly anticipated second headquarters before the end of the year. The retail giant is widely believed to be receiving a lucrative government incentive deal from whichever city it chooses, in exchange for bringing tens of thousands of high-paying jobs. The last thing the company needs is the announcement to be overshadowed by concerns about how it treats its low-wage workers. Establishing a $15 minimum wage helps to buffer against some of that potential future criticism.
Amazon’s labor practices, and its decision to increase wages, are representative of wider issues facing American workers. While corporations have mostly recovered from the 2008 recession, employee wages have largely failed to rise along with stock prices. The federal minimum wage hasn’t been increased in nearly a decade, though many states and cities have legislated higher employee pay themselves. The gap between the rich and the poor is greater in the US than ever before, according to some experts. Corporations are starting to be held responsible for their role in increasing inequality, and some may be trying to alleviate the harms. But make no mistake: Amazon’s bottom line is still its priority, and it stands to benefit from bridging the economic divide, too.
Why Amazon Is Flooding the Country With $15 Minimum Wage Ads
Amazon’s lobbying for a $15 minimum wage is a PR boon, hiring strategy, anti-union tactic, and move against competitors all in one.
February 25, 2021, 9:00am
For the past few years, Amazon has increasingly pushed data-driven quotas and warehouse and delivery efficiencies that workers say are dangerous and inhumane, while at the same time actively lobbying Congress to increase the federal minimum wage to $15.
In fact, Amazon is one of the few major employers in the U.S. that already pays its employees $15 an hour. Amazon has been lobbying in support of a $15 minimum wage for years, but has redoubled its efforts in early 2021: It’s advertising on podcasts, tweeting videos with workers, and publishing full-page newspaper ads saying that “It’s time to raise the federal minimum wage. Actually, it’s past time.”
To many, this seeming contradiction between its apparent commitment to a fairer hourly wage (a policy supported by many on the left) while hyper-exploiting its workers doesn’t make a lot of sense. According to experts Motherboard spoke to, the reality is that Amazon workers are still struggling and the company is actually pushing wages down in the warehouse sector while convincing people who might otherwise work retail to take on backbreaking labor. On top of this, the move has been a PR boon at the same time the company is escalating its war against unions.
Over the past few weeks, raising the federal minimum wage to $15 has become one of the main points of contention in negotiations surrounding Joe Biden’s $1.9 trillion COVID-19 relief bill. Many have seized a recent Congressional Budget Office report to kill the proposal, pointing to the study’s projections that raising the minimum wage to $15 by 2025 would cost 1.4 million jobs. There’s mounting evidence, however, that “the report’s assumptions about job losses are problematic—significantly out of step with modern research on the subject.”
In October 2018, after months of intense public criticism—including a bill introduced by Senator Sanders called the Stop BEZOS Act that proposed to tax large employers whose workers relied on social welfare programs—the company announced that it would begin paying all US employees $15 an hour.
“We listened to our critics, thought hard about what we wanted to do, and decided to lead,” said chief executive Jeff Bezos in a statement accompanying the announcement. Amazon did not immediately respond to Motherboard’s request for comment about its $15 minimum wage campaign.
PR statements, however, are largely useless for illuminating a company’s motivations. At the time, some commentators suggested the move was concerned with not only hiring and retaining employees ahead of peak demand during holiday shopping seasons, but also with increasing demand among low-income customers by giving them more disposable income. Meanwhile, right-wing commentators trotted out the belief that higher wages hurt companies and have argued that Amazon had “weaponized” higher wages against competitors like Walmart, which would also be forced to pay its employees more under a federal law.
According to Stacy Mitchell, co-director of the Institute for Local Self Reliance, a non-profit advocacy group that works to defend communities from corporate power, Amazon killed two birds with one stone: attracting new workers even though unemployment hovered at 4 percent while alleviating some of the never-ending negative coverage its labor practices garnered.
“My read of it all is that they—for purely labor market reasons—needed to go to $15 an hour to meet their huge staffing needs,” Mitchell told Motherboard. “Recognizing that they were going to need to do that anyways because of market conditions, they decided to parlay it into a publicity move.”
It would be a mistake to stop the analysis there, however, Mitchell added. While Amazon is paying more to its warehouse workers than Walmart pays its shelf-stockers, warehouse jobs typically pay much more than $15 per hour. Amazon is pulling off a trick where it appears to be paying more than its competitors, but the job in question is not the same as those it’s being compared to when we talk about Walmart. In other words, as Bloomberg recently put it in a headline, “Amazon Has Turned a Middle-Class Warehouse Career Into a McJob.”
In that December 2020 article, Bloomberg reported on how new Amazon warehouses drag down wages in the local area, even though the company is paying more than minimum wage. In New Jersey, for example, warehouse workers were making $24 an hour before Amazon moved in, paying $15 an hour. In 2019, warehouse workers in New Jersey earned about $17.50 per hour.
“In 68 countries where Amazon has opened one of its largest facilities,” Bloomberg notes, “average industry compensation slips by more than 6 percent during the facility’s first two years.”
And despite instituting a $15 an hour minimum wage, thousands of Amazon workers are hardly any better off. In November 2020, a Government Accountability Office study found that more than 4,000 Amazon employees are on food stamps in nine states—a record beat only by Walmart, McDonald’s, and two dollar store chains.
Overall, it seems that even with a $15 wage Amazon only brings lower wages and more precarity with it. The natural backstop to this slide is labor unions, and a $15 wage gussied up to seem like a benevolent gift could be one more weapon in Amazon’s total war against unionization efforts in its warehouses.
“Employers traditionally prefer to pay more to preserve their power and autonomy. That’s why it is common for employers to offer raises when workers start an organizing drive,” Georgetown history professor Joseph A. McCartin told Motherboard. “In Amazon’s case they have been trying to get ahead of the curve in supporting this wage hike. They’d much rather pay more to try to keep a union out so as to continue to make unilateral decisions about pay, working conditions, and the organization of the work.”
Amazon’s push to support a $15 minimum wage is yet another example of how the massive company can throw its weight around on multiple sides of an equation in order to secure a better outcome for itself.
Critics have long argued that Amazon is a monopsony, which is a situation where a firm has enough market power to set prices for its suppliers and also wages for its workers with less outside pressure. In 2014, economist Paul Krugman made the case that Amazon enjoys the power of a monopsony by looking at how it shook down the publisher Hachette for a larger cut of its sales on Amazon’s platform. Or, for a more recent example, the 2020 House antitrust subcommittee report showed how Amazon’s control of nearly 50 percent of the e-commerce market and nearly 200 million customers means that for countless third-party sellers, it is the only real buyer of their goods.
In the labor market, Amazon has nearly 800,000 employees and in many towns is either the major or sole employer of warehouse workers. In an insightful piece for The Bull & The Run, McGill’s student-run newspaper, Julian Robinson wrote that if Amazon were indeed a monopsony, we would expect to see a few things: unilateral wage increases (check) coupled with long-term downward pressure on wages (check), but also horrible working conditions because Amazon’s labor monopoly allows it to unilaterally impose those terms as part of the price of working there (check).
“It seems to me that talking about $15 an hour is a way to avoid actually talking about the inhumane conditions inside Amazon’s warehouses,” Mitchell told Motherboard. “When you talk to Amazon workers, a lot of what the concerns they raise have to do with are the punishing working conditions. The grueling pace, the fact that they’re physically taxed to the point of injury, that they don’t get adequate breaks, that they don’t have a lot of control over their schedule. It’s all of those things that workers raise—this mechanization in a way where they’re treated like robots as the rates they must meet keep rising.”
Workers should get $15 an hour minimum wage, of course, because there’s little to no evidence it actually hurts businesses or the economy. But they should also get a workplace where wages, working conditions, and benefits are not unilaterally decided by their employer. Wages are important but if you are getting paid for dangerous work that might permanently injure you, perhaps the solution requires you get enough power to improve both your wages and working conditions.
“When I say it’s about power, it’s not only the union but also the degree of government interference,” McCartin added. “If they’re paying $15 an hour and supporting that, what they really want is to be able to draw a curtain around their operations and hang on that curtain ‘We’re paying $15 an hour and we support the wage for everybody.’ But what’s really going on behind that curtain? The true cost of working in these places are things that they want to keep from being transparent—something a union would do and subject to negotiation.
Amazon’s push for a $15 minimum wage is a new weapon in the company’s battle against Walmart
Feb 24, 2021, 11:48 AM
Amazon is lobbying for a $15 minimum wage. Rick T. Wilking/Getty Images
- Amazon has been lobbying for a federal $15 minimum wage since raising starting pay to $15 in 2018.
- Experts say that a federal $15 minimum wage would be a blow to Amazon competitors such as Walmart.
- Meanwhile, a $15 federal minimum wage would only help Amazon’s business.
- Visit the Business section of Insider for more stories.
Amazon says that its push for a $15 minimum wage is good business. Experts say it is also a new weapon in the retail giant’s battle against rivals like Walmart.
The company has been lobbying Congress to raise the federal minimum wage since 2018, when Amazon raised its starting wage to at least $15 per hour.
Following the election of President Joe Biden, Amazon has thrown its support behind the Raise the Wage Act, which would bring the federal minimum wage to $15 per hour. The company is running ads in support of the new regulation everywhere from The New York Times to podcasts.
“We believe $15 an hour is the minimum anyone in the U.S. should be paid for an hour of labor,” Jay Carney, Amazon’s senior vice president of global corporate affairs, wrote in a blog post in late January. “We also believe it’s good for business.”
Carney writes in the post that Amazon saw applications for hourly positions more than double when it raised its starting wage and that there was an immediate positive impact on worker morale and retention.
“We were thrilled when several other major companies — including Target, Best Buy, and Costco — also increased wages to at least $15 an hour for their employees,” Carney wrote. “We are hopeful that more follow suit.”
Experts say that Amazon’s advertising campaign and political lobbying around a federal $15 minimum wage is also a strategy that will disadvantage rivals such as Walmart.
“Amazon has already implemented a $15 minimum wage so it has little to fear from this becoming a federal minimum,” GlobalData managing director Neil Saunders told Insider. “In fact, it is to Amazon’s commercial advantage if rival retailers also have to pay more – particularly Walmart.”
An economist explains how Amazon’s push for a $15 minimum wage can be weaponized against Walmart
Walmart’s starting pay is still under $15 per hour. Joe Raedle/Getty Images
Michael Farren, an economist at the right-leaning, generally anti-regulation think tank The Mercatus Center, told Insider that Amazon’s efforts lobbying for a higher minimum wage can be better understood through public choice economics.
“It may sound a little cynical, but it’s probably pretty accurate that Amazon sees this as a tool to help it essentially drive a wedge against competitors — specifically against smaller competitors, but also against Walmart itself, who arguably is Amazon’s largest competitor,” Farren said in a recent interview.
Farren says that Amazon’s efforts around a $15 minimum wage are an example of regulatory capture, in which a company — consciously or unconsciously — pushes for laws in the interest of regulated businesses, as opposed to general welfare.
In this case, a $15 federal minimum wage would not cost Amazon any extra money, since it already pays employees $15. However, it would cost some rivals, including Walmart, a significant amount to raise all workers’ pay to at least $15 per hour.
“Essentially anybody in retail that … isn’t paying $15 an hour already is a competitor with Amazon that would be harmed by a federal mandate of $15 an hour,” Farren said. “Given that Amazon has already built this increased cost into their operations and into the amount that they charge for products, then anybody else that has to build that in — it’s going to drive the cost of their products up.”
“That makes Amazon look better by comparison,” Farren added.
Lobbying for $15 minimum wage offers “social street cred”
Amazon CEO Jeff Bezos has spoken out in support of a $15 minimum wage. Isaiah Downing/Reuters
Amazon has been quick to criticize Walmart for not paying $15 per hour. But, comparing Walmart’s workers and Amazon’s employees is an indirect juxtaposition.
Across the industry, warehouse workers traditionally make more than in-store retail workers. As a result, it likely cost Amazon less to increase its workforce’s minimum wage to $15 per hour than it will ultimately cost Walmart, as Amazon has very, very few stores. All Walmart warehouse workers already make at least $15 per hour, a representative for the company told Insider.
“We will raise our starting wage rate over time, and I think our history proves that,” Walmart CEO Doug McMillon said on a call with investors earlier in February, when the company announced raises for 425,000 workers. “Since 2015 from $9 to $10 to $11, we’re up over 50% in our starting wage rate.”
Lobbying for a higher minimum wage also helps Amazon’s reputation at a time in which the company has been criticized for its opposition to workers’ efforts to unionize.
“Amazon is keen to show that it is treating workers fairly and well,” Saunders said. “The company comes in for a lot of criticism for various things and not all of that criticism is justified. So where it has a worker-friendly policy it is keen to showcase it.”
“Amazon is acting like a rational economic agent and trying to promote something that is relatively cost-less to it, but gives it social street cred, so to speak,” Farren said. “That gives them social capital than to try to push back on something else that would raise their costs elsewhere.”
https://www.vox.com/2018/10/9/17955844/amazon-15-dollar-minimum-wage-some-workers-make-less
Amazon’s pay-raise backlash highlights a reality: People see the worst even when Amazon thinks it’s doing its best
With great power comes …
By Jason Del Rey@DelRey Oct 9, 2018, 3:33pm EDT
Amazon founder and CEO Jeff Bezos Alex Wong / Getty
It’s been just a week since Amazon announced a new $15-an-hour pay minimum for its warehouse and customer service workers, but the backlash is in full force.
In conversations with several media outlets over the last few days — including Wired, the New York Times and Recode — some Amazon warehouse workers believe the new pay change will actually result in a lower total compensation than they earned under the previous pay structure.
“It is a pay raise in minimum wage, but not necessarily a pay raise,” one Amazon employee, who has worked inside company warehouses for five years, wrote to Recode.
In this instance, the upset employee already made $15 an hour, plus between several hundred dollars and a couple of thousand dollars a year in bonuses, partly based on attendance, he said. Amazon also previously granted some workers, including this one, company stock — currently valued at around $1,880 per share.
But with the new increase in minimum pay at Amazon, the company is removing incentive-based bonus pay right before the busy holiday season, where bonus pay used to increase. Amazon will also no longer give away stock grants for hourly workers.
Amazon says that those who already make $15 an hour will see a pay bump of $1 per hour and that, overall, “the compensation will be more immediate and predictable.”
The company also maintains that the “significant increase in hourly cash wages effective November 1 more than compensates for the phase-out of incentive pay and future [stock] grants.” It has not divulged the calculations behind this statement, but it could be banking on Amazon’s stock price growth slowing at some point.
“Some employees have benefited from a bull market and the unusually strong appreciation of Amazon’s stock price in recent years,” Amazon said in a statement. “This is a good outcome for those employees, but such stock price appreciation is by no means guaranteed to continue.”
This is Amazon’s reality: Even when the company believes it is doing something good, many people — from politicians to employees — will seek out the holes in the story.
Some of this simply comes from the position Amazon finds itself in as the most powerful online retail company in the Western hemisphere — if not the world — run by the richest businessman on earth.
But this reality is also, at least in part, self-made. No one told Amazon, for example, to turn its search for a second U.S. headquarters into the partly brilliant, partly off-putting media spectacle known as HQ2.
Now when Amazon does announce its city of choice — perhaps as soon as later this month — you can bet there will be more intense scrutiny on the tax incentives and other perks that the company garners than there would have been if Amazon had chosen not to flaunt its power.
https://www.nytimes.com/2021/03/05/business/economy/amazon-wage-effect.html
When Amazon Raises Its Minimum Wage, Local Companies Follow Suit
New research suggests that when big companies increase wages, they drive up pay in the places where they operate — without a notable loss in jobs.
An Amazon fulfillment center in Kent, Wash. The company lifted starting pay to $15 an hour three years ago.Credit…Ruth Fremson/The New York Times
By Ben Casselman and Jim Tankersley
Published March 5, 2021Updated March 10, 2021
Amazon has embarked on an advertising blitz this winter, urging Congress to follow the company’s lead and raise the federal minimum wage to $15 an hour. American workers “simply can’t wait” for higher pay, the company said in a recent blog post.
In the areas where Amazon operates, though, low-wage workers at other businesses have seen significant wage growth since 2018, beyond what they otherwise might have expected, and not because of new minimum-wage laws. The gains are a direct result of Amazon’s corporate decision to increase starting pay to $15 an hour three years ago, which appears to have lifted pay for low-wage workers in other local companies as well, according to new research from economists at the University of California, Berkeley, and Brandeis University.
The findings have broad implications for the battle over the federal minimum wage, which has stayed at $7.25 an hour for more than a decade, and which Democrats are trying to raise to $15 by 2025. For one, the research illustrates how difficult it can be for low-wage workers to command higher pay in the modern American economy — until a powerful outside actor, like a large employer or a government, intervenes.
Most directly, there is little evidence in the paper that raising the minimum wage would lead to significant job loss, even in low-cost rural areas, a finding consistent with several recent studies. Other research, including a recent report from the Congressional Budget Office, has found a larger negative effect on jobs, although still smaller than many economists believed in the past.
The authors of the latest study — Ellora Derenoncourt of Berkeley and Clemens Noelke and David Weil of Brandeis — studied Amazon, Walmart and Target, which operate in areas where wages tend to be low. But even in those places, the researchers found, wage increases by the large corporate employers appear to drive up wages without driving down employment.
“When you have major changes in the wage policies of large actors in the labor market, this has ripple effects,” Dr. Derenoncourt said in an interview.
At the same time, Dr. Weil added, “the sky doesn’t fall.”
The researchers used the federal government’s Current Population Survey, supplemented by evidence from the online job posting site Glassdoor and the software company Burning Glass Technologies, to estimate what happened in communities where Amazon, Target or Walmart operate after those companies increased entry-level wages in recent years. What they found in many ways confounds traditional economic models: Raising pay did not put the large companies at a disadvantage. Instead, it gave local workers a reason to push their own employers for a raise.
At Mooyah Burgers, Fries and Shakes, a chain with 87 locations in 21 states, the Amazon effect is clear. Employees routinely go to their managers and point out that Amazon is hiring at a significant pay increase.
“When you have those corporations paying that much, it just puts pressure on the smaller business owners,” said Tony Darden, Mooyah’s president. Franchisees can try to have good relationships with their employees, he said, but there is only so far that can go.
“At some point, it always comes down to money,” he said. “And so if there’s an employee who has the ability to make two or three or four or five bucks an hour more at another location, they go directly to the owner or to their manager.”
Many restaurants will grant the pay increase, Mr. Darden said, but at the cost of giving workers fewer hours or hiring fewer employees — a common contention among small-business owners. But while that may be true in individual cases, the Berkeley and Brandeis researchers found little evidence of broad-based job cuts as wages rose. A 10 percent increase in the base wage at a company like Amazon, they found, translated into a 1.7 percent loss in local jobs — and a 0.4 percent loss in jobs for low-wage workers.
On raising wages, an Amazon executive said, “We knew that by doing it, we would encourage other employers to do the same.”Credit…Gabriella Demczuk for The New York Times
A mounting body of research in recent years suggests that labor markets don’t work in practice the way they do in some economic models. Employees often have less information about their worth than employers, or face greater risks to changing jobs, or can’t readily move between employers the way a pure market assumes. These “frictions,” in economic jargon, often benefit employers over employees, pushing down wages below where supply and demand suggest they should be.
But that leaves room for other forces — in the form of political pressure, organized bargaining or a minimum wage — to push wages up.
“In a very simple supply-and-demand, competitive market, firms are just paying the market wage,” said Arindrajit Dube, a University of Massachusetts economist who has studied the minimum wage. In reality, he said, wages “are shaped by market forces but also by norms, pressure as well as policies.”
Dr. Dube said that in the 1980s, the spread of Walmart and other national retailers helped push down wages, as they displaced smaller, often unionized local chains. Now big national retailers seem to be helping to push wages up.
Many small-business owners do not welcome the pressure.
Tad Mollnhauer, who runs two printing and shipping retail stores near Orlando, Fla., said entry-level workers typically earned about $10 to $12 an hour. But these days, anyone paying that rate risks losing workers to Amazon. (The state’s minimum wage is under $9 an hour but will rise to $10 this year under a referendum approved by voters in November. The minimum will rise a dollar a year after that, hitting $15 an hour in 2026.)
Mr. Mollnhauer said it was hard for small companies like his to match Amazon’s pay.
“Their network and their resources are spread out around the country,” allowing Amazon to pay above-market wages in some places, he said. “For me, as two stores, I can’t do that.”
Jay Carney, a senior vice president for Amazon, said the company was conscious of the impact its policy might have on other employers. “We knew that by doing it, we would encourage other employers to do the same, and if that happened then it would put upward pressure on wages in general, which would be good,” he said.
But he rejected suggestions that Amazon is using its political power to hurt its rivals. “We have no power to force anybody to do this, only Congress does,” he said.
Jared Bernstein, a member of the White House Council of Economic Advisers, said the paper showed both the potential spillover effects for workers from raising the federal minimum wage — which studies suggest would help workers who earn more than the minimum also get raises — and the limits of private company efforts.
“There’s just no way to be sure to reach the tens of millions of hardworking but poorly paid workers without significantly raising the national minimum wage,” he said.
No Republican senator supports the $15-an-hour bill that Amazon has endorsed, and several Democrats have reservations about it. Given those headwinds and an adverse ruling from the Senate parliamentarian, the provision will almost certainly not make it into the final version of President Biden’s relief package.
But the researchers’ findings suggest that there are other ways to raise pay for low-wage workers. Political pressure on big companies can lift pay not just for their direct employees but also for other workers in the same area. Other policies could mimic that effect: If the federal government requires its contractors to pay more, as Mr. Biden has directed by executive order, it could help increase wages throughout the private sector.
Many people are skeptical of Amazon’s motives in pushing the federal $15-an-hour effort, noting that the company faces scrutiny from Democrats over its treatment of workers, accusations that it has stifled competition and its moves to fight unionization.
Other business groups accused Amazon of using its scale and political influence to squeeze smaller competitors.
A Walmart in Charlottesville, Va. Minimum-wage increases in major cities have spread to other areas through companies like Walmart.Credit…Eze Amos for The New York Times
“Amazon is clearly doing very well in the current economy,” said Misty Chally, executive director of the Coalition of Franchisee Associations, which represents franchise owners. But gyms, hair salons and many other businesses that compete with Amazon are “all struggling to stay in business right now,” she said.
Mr. Dube said he had concerns about the power of companies like Amazon and Walmart. But the upward pressure they put on wages, he said, wasn’t one of them.
The “Amazon effect” on wages comes as no surprise to organizers of the Fight for $15 campaign. From
The two fed each other, said Mary Kay Henry, president of the Service Employees International Union, which has backed the campaign: Minimum-wage increases in big cities encouraged companies like Walmart and Target to raise pay nationwide, which in turn prompted more minimum-wage increases and helped fuel the effort to raise the federal wage floor.
Policies like Amazon’s are particularly significant in places where the minimum-wage argument has never gained much of a foothold, like the South.
“It shifts the politics of minimum wage in those corners of the country,” Ms. Henry said. “It busts the myth it can’t happen here.”
How Amazon spins the $15 raise
https://www.aboutamazon.com/news/workplace/amazon-raises-minimum-wage-to-15-for-all-u-s-employees
Amazon Raises Minimum Wage to $15 for All U.S. Employees
October 02, 2018
New $15 minimum wage is effective beginning this November 1
New $15 minimum wage includes associates employed by temp agencies
More than 250,000 Amazon employees, as well as more than 100,000 seasonal holiday employees, and their families will benefit from the new, higher pay
Amazon today announced it is increasing its minimum wage to $15 for all full-time, part-time, temporary (including those hired by agencies), and seasonal employees across the U.S.—effective November 1. The new Amazon $15 minimum wage will benefit more than 250,000 Amazon employees, as well as over 100,000 seasonal employees who will be hired at Amazon sites across the country this holiday.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon Founder and CEO. “We’re excited about this change and encourage our competitors and other large employers to join us.”
Amazon’s public policy team will also begin advocating for an increase in the federal minimum wage.
“We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago,” said Jay Carney, Senior Vice President of Amazon Global Corporate Affairs. “We intend to advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.”
- Employees will continue to receive Amazon’s industry-leading benefits, including:
- Comprehensive healthcare, including medical, dental, and vision coverage
- Up to 20 weeks of paid parental leave
- 401k matching
- Career Choice, which pre-pays 95% of associates’ tuition for courses in high-demand fields, whether those jobs are at Amazon or another company
- Career Skills, which trains hourly associates in critical job skills like resume writing, how to communicate effectively, and computer basics
With more than 575,000 employees worldwide, Amazon was named #1 on LinkedIn’s 2018 Top Companies list, ranks #1 on The Harris Poll’s Corporate Reputation survey, and #2 in Fortune’s World Most Admired Companies. Learn more about working at Amazon.
Does this apply to Whole Foods and your other subsidiaries?
Yes. The new Amazon $15 minimum wage applies to all U.S. employees at Amazon and its subsidiaries.
How are you going to work with Congress to raise the federal minimum wage?
Our public policy team will work with policymakers in Washington, D.C., to advocate for a higher federal minimum wage.
What do you want the federal minimum wage to be raised to?
We believe $7.25 is too low. We would look to Congress to decide the parameters of a new, higher federal minimum wage.
Is anything changing with Amazon’s RSU program?
Yes, we’ve heard from our hourly fulfillment and customer service employees that they prefer the predictability and immediacy of cash to RSUs. We will be phasing out the RSU grant program for stock which would vest in 2020 and 2021 for this group of employees. Before the end of 2019, we plan on announcing a Direct Stock Purchase Program. The net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability.
Is it required to hit any incentive targets in order to get the $15 minimum wage?
No, we are phasing out the incentive pay component and the $15 will be a simple minimum with no targets required.
Are any health care or other benefits also changing?
No, Amazon’s industry-leading benefits package is not changing. We will continue to provide comprehensive healthcare on day 1, company-paid life and disability insurance, up to 20 weeks of paid parental leave, 401k matching, and Career Choice, which pre-pays 95% of associates’ tuition for courses in high-demand fields, whether those jobs are at Amazon or another company.
What about Amazon’s hourly Operations and Customer Service employees who are already making $15? Will they see an increase?
All of Amazon’s hourly Operations and Customer Service employees will see an increase, including those who are already making $15.
Will this be reflected in your quarterly earnings report?
Yes – the effect of this additional expense will be incorporated into our earnings guidance.
https://www.americanexperiment.org/why-did-amazon-raise-its-minimum-wage-to-15/
Written by John Phelan | October 5, 2018
Why did Amazon raise its minimum wage to $15?
This week, Amazon announced that, as of next month, all its U.S. employees will be paid a wage of at least $15 an hour. As CNBC reported,
“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.”
Do Amazon’s workers really owe this raise to the munificence of Jeff Bezos? As long ago as 1776, the economist Adam Smith advised that “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” What goes for the butcher, brewer, and baker goes for the tech magnate.
There are, after all, good reasons for Bezos to find this move in his interest. This week also brought news from the Bureau of Labor Statistics that the unemployment rate declined to 3.7% in September, the lowest level since 1969. As the economy grows, we can expect labor demand to keep rising relative to labor supply. This should raise the price of labor, wages. Indeed, as CNBC also noted,
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.
Other retailers have recently reacted in the same way as Amazon.
Retail rival Target announced in its holiday hiring release it would raise minimum hourly wage to $15 by 2020. Walmart announced plans in January to raise its minimum wage to $11.
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.
So, which story is more plausible? That the bosses of Target, Wal Mart, and now Amazon, have all suddenly been struck with a bout of generosity? Or that they are reacting as you would expect when they find a resource they need – labor – to be increasingly scarce?
https://www.quora.com/Why-did-Amazon-raise-its-minimum-wage-to-15-How-does-this-affect-the-business
Why did Amazon raise its minimum wage to $15? How does this affect the business?
, lived in Gettysburg, PA
First, let’s look at what Amazon raising its minimum wage to $15/hr really means: VERY LITTLE.
Do you think it benefited the software engineers? They made way more than that to begin with. Do you think it benefited, the office staffs? I would bet no.
One of Amazon’s largest groups of employees are the warehouse workers. They may have seen a pay increase, and that is great for them, but it’s not like those workers were making the federal minimum wage of $7.25/hr and suddenly got a 100%+ pay increase. There may be some other jobs within the company that have benefited more from the $15/hr minimum, but on the whole, I don’t think it would have amounted to much in the grand scheme of things for Amazon. The good press for being so “great to their workforce” would have been worth the extra expenditure. This looks great on paper. Would you be impressed if a hospital said, the minimum salary for a Doctor is now going to be $100,000/year. Probably not. Amazon did not ‘give up’ much by creating their own $15/hr minimum wage. If McDonald’s or some large grocery store chain instituted a company-wide $15/hr minimum wage, then I would be impressed.
But wait, Amazon-owned Whole Foods grocery stores also had to raise the minimum wage to $15/hr. Unfortunately, many of their workers have reported fewer hours, the stores have been understaffed, and the employees are expected to get more done in less time. Time will tell if the wage increase really works out for the employees, the customers, and the share-holders.
To answer the question directly, It looks good when they can claim this higher internal minimum wage, but it would barely touch the bottom line like it would in other industries.
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Amazon upping wages to $15/hour, but cuts stock awards, incentive pay
SAN FRANCISCO — A new minimum wage in its fulfillment centers wasn’t the only change Amazon made Tuesday. The company is also taking away stock awards and incentive pay for hourly warehouse workers and customer service employees.
The e-tailing giant said Tuesday it would increase its minimum wage on Nov. 1 to $15 an hour for all U.S. full-time, part-time, seasonal and temporary employees. Employees who already make $15 or more an hour will get a raise of $1 an hour, Amazon said.
Incentive pay, which could add significantly to an employee’s pay, was often tied to productivity measures such as items picked or boxes packed.
Amazon told USA TODAY that its hourly fulfillment and customer service employees preferred the predictability and immediacy of cash to stock awards and incentives.
Hourly workers had to spend two years with the company before they were eligible to receive stock under the program. At that point, they got one share of Amazon stock each year. A share was worth $1,952.76 on Wednesday.
Instead, employees will be able to purchase stock through a direct purchase program, the company said. The plan will become available before the end of 2019 but the exact details of how it is being set up haven’t yet been finalized.
Amazon’s swampy lobbying for $15 minimum wage proves the little guy really loses
by Brad Polumbo
Top of Form
If liberals were right that a federal $15 minimum wage would empower workers at the expense of Big Business’s profit margins, giant corporations such as Amazon probably wouldn’t be on their side, but they are.
A top Amazon executive, Jay Carney, recently wrote a letter on the company’s behalf endorsing the Democratic push to more than double the minimum wage nationwide. And Amazon is actively lobbying for the change by running digital ads.
“We believe $15 an hour is the minimum anyone in the U.S. should be paid for an hour of labor,” Carney wrote. “We also believe it’s good for business.”
This should be a giant red flag. Amazon has already paid its hourly workers $15 or more since 2018. What it’s really doing is lobbying the federal government to hike its competitors’ costs and help it replace more small businesses.
Obviously, it’s not actually Big Business that loses from minimum wage hikes, or it wouldn’t be in Amazon’s self-interest to pursue this lobbying campaign. In fact, established, large corporations are often able to pass the entire cost of a minimum wage hike on to consumers. For example, research by a Princeton economist found that McDonald’s passed on almost all the costs incurred by higher minimum wages by hiking prices on its top-menu items, such as Big Macs.
Because low-income people are disproportionately consumers of fast food, this could mean that their true wages, wages relative to buying power, don’t improve as a result of a minimum wage hike as much as you’d expect.
There’s also only a minimal loss to big corporations if they’re able to pass most of the costs on to consumers via price hikes. And for corporations such as Amazon and McDonald’s, there’s a major, swampy upside to minimum wage hikes: They crush these businesses’ competition by bankrupting small businesses. The Amazons of the world have enormous resources to weather a large wage hike. But mom and pop stores, even in the best of times, do not.
And now is most certainly not the best of times. Between COVID-19 and crushing government lockdown restrictions, 100,000 small businesses went bust last year. Meanwhile, polling reveals that 60% of entrepreneurs worry their small businesses won’t survive through June 2021.
On top of all this current financial distress, a huge artificial spike in labor costs would put many of these struggling small businesses over the edge.
“Big business may be fine with a dramatic increase of the federal minimum wage … as they’ve been thriving during the pandemic,” the National Federation of Independent Business said in a statement. “But small businesses know these policies will make it even harder for them to compete against their larger competitors.”
Olin Business School finance professor Radhakrishnan Gopalan, whose research focuses on this area, warned that raising the minimum wage now would “spell a death knell” for small businesses.
Of course, eliminating competitors and passing on the costs to consumers is great news for Amazon’s bottom line. But no matter how many ads the corporation runs, a $15 minimum wage still won’t be good news for average people.
OCT. 2, 2018
Why Amazon Raised Its Minimum Wage to $15
Jeff Bezos once wrote that he expects all of Amazon’s employees “to wake up every morning terrified.” His company’s highly profitable web services business relies on an unregulated, digital labor-market where the median wage is around $2 an hour. In late May of 2011, the temperature inside Amazon’s warehouse in Allentown, Pennsylvania, regularly pushed 100 degrees, and workers started collapsing from the heat. The company responded by stationing ambulances and paramedics just outside the workplace — and sanctioning laborers who insubordinately succumbed to unconsciousness with “disciplinary points.” So many Amazon workers ended up in the local emergency room with heat-related ailments, a physician eventually reported the warehouse to the Occupational Safety and Health Administration.
All of which is to say: Jeff Bezos did not just raise his company’s entry-level wage to $15 an hour out of a long-standing, heartfelt commitment to workers’ rights.
Nor, for that matter, is the Amazon CEO claiming as much. On Tuesday morning, Bezos announced that his firm will pay all of its 350,000 employees $15 an hour for their labors (including part-time, seasonal, and Whole Foods workers), and lobby Congress to raise the minimum wage for all of America’s workers.
“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Bezos wrote in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
Thus, Amazon’s official explanation is, ostensibly, “Bernie Sanders (and our striking workers, and the Whole Foods employees who’ve been trying to unionize, and their allies in the liberal media) made us do it.”
Last month, the Vermont senator introduced the “Bezos Act” — a bill designed to punish corporations that don’t pay their workers a living wage by making them pay a dollar in tax for each and every dollar of food stamps and means-tested health-care benefits that their employees rely on. This was a god-awful proposal in substantive terms. But it now looks like a smashing success in political ones.
That said, it’s a little hard to believe that Sanders bill — and the broader organizing among Amazon workers that inspired it — forced Bezos to make a change that he had no other reason to implement. Amazon has not been paralyzed by any extended, nationwide strikes. Sanders’s bill never had any plausible path to becoming law. The pressure they brought to bear might have been necessary to trigger the wage hike, but it probably wasn’t sufficient.
There’s reason to think labor market conditions influenced Bezos’s calculus. With the unemployment rate sitting below 4 percent, and the holiday season on the horizon, U.S. retailers are in fierce competition for staff. Amazon plans to hire 100,000 seasonal employees — as does UPS, while FedEx is looking for 55,000. Meanwhile, Amazon’s retail competitors have been lifting their starting wages — with Target’s recently rising to $15, Costco’s to $14, and Walmart’s to $11.
Still, it’s unlikely that market conditions required Bezos to establish a $15, nationwide wage floor for every type of Amazon worker. The average wage for retail salespeople in the U.S. is currently $13.20 (which means that a great number of such workers earn far less than that).
Thus, Bezos likely concluded that his company stood to benefit from exploiting its workers a little less than the American labor market would let him get away with. And it’s not hard to see how he might arrive at that view.
The vast scale and scope of Amazon’s business allows it to post razor-thin profit margins — or even lose money — and retain easy access to capital. Most of its competitors do not have that luxury. Therefore, if Amazon can bid up labor costs across the retail and shipping sector, it just might force its competitors to shrink their businesses. Which is to say: The $15 wage hike could be a bid to trade short-term profitability for long-term market-share (which is, after all, Amazon’s entire ethos).
And then, of course, there are publicity benefits.
— Malcolm Harris (@BigMeanInternet) October 2, 2018
All this said: Even if his own mercenary interests played bigger a role in Bezos’s decision than his own statement suggests, that doesn’t mean that Amazon’s workers and critics weren’t instrumental in today’s good news. Corporations do not automatically (or even usually) sacrifice short-term profitability to their own enlightened, long-term financial interest. If bidding up wages across the retail sector makes business sense for Amazon today, then it made sense for the company a year ago. In between, the company’s workers and their political allies raised the costs of a low-wage business model. Now, they’ve earned themselves a higher paycheck.
https://thebrownandwhite.com/2019/01/30/amazons-minimum-wage-increase/
Amazon’s minimum wage increase raises questions
BY LEIDY MARY — ; PUBLISHED JANUARY 30, 2019, 11:49 PM ; UPDATED MARCH 27, 2021, 6:32 PMNEWS
Last October, Amazon raised its minimum wage to $15 an hour in hopes of serving as a role model for other industries. Walmart will increase its minimum wage to $11 an hour, and Target is working toward $15 an hour by 2020, according to its corporate website.
Amazon hopes that the federal minimum wage will follow suit and implement similar changes.
Gregg Potter, Lehigh Valley’s Labor Council AFL-CIO, said he believes Amazon could be doing a lot better.
“Fifteen dollars an hour wage — that’s a drop in the bucket,” Potter said. “In the True Value Distribution Center, they start their folks with over $20 an hour with real benefits. In a manufacturing distribution situation like Ocean Spray, they also start at higher wages and better benefits, and Sam Adams is the same thing.”
However, employees that have been working for longer periods of time aren’t going to see a drastic increase in pay. Amazon also aims to phase out of its variable compensation pay and restricted stock units program to help pay for the increase. Employees are worried that the loss of stock rewards and monthly bonuses are not worth the wage raise.
Alan Jennings, head of the Community Action Committee of the Lehigh Valley, said there shouldn’t be a need to cut bonuses.
“Jeff Bezos is the wealthiest man in the world,” he said. “He can afford this.”
Jennings said he thinks that Amazon is creating a beneficial shift in the industry, however. He said workers in warehouses all over Lehigh Valley aren’t making $15 an hour, so the pressure Amazon is putting on wages is positive.
“Complaining about a $15 an hour minimum wage is a mistake,” Jennings said.
Jennings’ organization runs the Second Harvest Food Bank, which distributes 9 million pounds of food annually. The food bank has already had to increase wages as a result of the pressure from Amazon’s increase.
Tony Iannelli, president and CEO of the Lehigh Valley Chamber of Commerce, agrees that the increase is positive for workers.
Moreover, Amazon’s wage increase doesn’t eliminate the working conditions that employees have to deal with. Jennings said he has heard the working conditions are not comfortable and dangerous.
“There were some issues relative to working conditions in the past, we’ve heard less concerns most recently,” Iannelli said. “We’re hoping the general sense is that it has improved just on the fact that we haven’t heard as much.”
Potter said that the only way to improve Amazon’s conditions is by implementing stricter workplace regulations.
“Until someone is forced to do something, until you’re forced to maintain clean waters around your facility, until you’re forced to contain the harmful emissions that go into the air that we breathe, people don’t do what you expect,” Potter said. “They do what you inspect.”
He also mentioned his concern with Amazon’s future goals. Potter said he feared the company’s partnership with U.S. Postal Service, UPS and FedEx because Amazon will be able to get their delivery
AM on JANUARY 31, 2019 1:45 AM
$15/hr isn’t even $29K a year, assuming workers get enough hours to call themselves fulltime. The only people who can live on that are single people in tiny apartments. You can’t pay school debt on that money, can’t keep a decent car running. You certainly can’t take care of a child, you’d be on welfare, and your kid would have to go to Head Start.
Forget a 70% top marginal rate: if employers are walking around rich and refusing to pay the people who make the money for them enough to live on reasonably, go full Carter on them, bump it to 90%. If they want nicer tax brackets they can consider rejoining the human race.
https://thecounter.org/amazon-advertising-15-minimum-wage-warehousing-industry/
Costco to raise minimum wage to $16 per hour, above Amazon, Target
Boost to $16 an hour starting next week puts Costco’s starting wages above Target, Amazon
Costco will raise its minimum wage to $16 an hour starting next week, CEO Craig Jelinek said during a Senate Budget Committee hearing on Thursday.
“Since Costco’s inception, the company has been committed to paying the employees very competitive retail wages and providing them broad and affordable health care benefits,” Jelinek said. “Two years ago, we moved our starting hourly wage to $15 everywhere in the U.S. Effective next week, the starting wage will go to $16.”
“It’s important to us that Costco employees have opportunities to make more than just $15 or $16 an hour. Costco employees receive regular increases for hours worked,” he said.
The $16 an hour boost puts its starting wages above Target’s and Amazon’s. Target implemented a $15 per hour minimum wage in July, while Amazon raised its minimum wage to $15 in 2018.
Sen. Bernie Sanders, I-Vt., chaired the Senate Budget Committee hearing, titled “Should Taxpayers Subsidize Poverty Wages at Large Profitable Corporations?” He said he invited Walmart CEO Doug McMillon to testify but he declined.
| Ticker | Security | Last | Change | Change % |
| COST | COSTCO WHOLESALE CORP. | 371.73 | +2.18 | +0.59% |
| AMZN | AMAZON.COM, INC. | 3,334.69 | -37.32 | -1.11% |
| TGT | TARGET CORP. | 207.27 | -1.38 | -0.66% |
“Why should working people be subsidizing some of the wealthiest families and largest corporations in America because of the starvation wages they pay their workers?” Sanders said, adding praise for Target and Costco for raising their starting wages. “If Walmart thinks they’re going to avoid answering that question because they didn’t show up today, they’re deeply mistaken.”
Walmart’s starting wage is $11 per hour.
“We feel the experience level and loyalty of our employees is a significant advantage for our company,” Jelinek said. “Costco is what I know. I’m not an economist, a regulator or a legislator, and I don’t pretend to know the methods or models that are right for any other large or small companies in any other industries.”
Senate Budget Committee ranking member Sen. Lindsey Graham, R-S.C., compared multibillion-dollar company Costco’s situation to that of small businesses.
“My concern is not really about Costco … because you can absorb some increase in cost. I’m worrying about the small business owner who is struggling because COVID has reduced their ability to earn a living. Do you understand where I’m coming from?” he asked Jelinek. “Can you understand why an increase mandate from the government in terms of cost would be a devastating blow?”
“No, I can’t understand why it would be a devastating blow,” the CEO responded.
“You can understand why a restaurant in South Carolina who has got half seating capacity because of COVID, barely hanging on, it would be devastating to them to increase their costs in terms of doubling the minimum wage?” Graham said.
https://www.marketplace.org/2020/06/17/why-target-is-raising-its-minimum-wage-to-15/
Jun 17, 2020
Target has announced it’s permanently raising its minimum wage from $13 to $15 an hour
starting July 5 and giving hourly workers a one-time $200 bonus. Since the COVID-19 crisis began, the retailer has been giving all employees an extra $2 an hour in hazard pay on a temporary basis.
Target has steadily increased wages over the past three years, raising its hourly minimum to $11 in 2017 and $13 last year. In 2017, the company also stated it aimed to raise the minimum wage to $15 by the end of 2020, which puts the retailer several months ahead of its goal.
A Target spokesperson told Marketplace back then that the increase to $11 was aimed at retaining its team members and recruiting additional employees. The new minimum wage puts the company in line with Amazon and Costco, which both provide a minimum wage of $15, and ahead of Walmart, which pays a minimum wage of $11 an hour.
“Workers are going to be looking around for jobs. And if they can get a job at Target over Walmart, they’re going to choose to do so,” said Erin Hatton, an associate professor at the University of Buffalo who researches the sociology of work.
Daniel Zhao, a senior economist with Glassdoor, said that prior to the crisis, a lot of retailers and larger companies had raised their minimum wages to compete in a very tight labor market. This move reveals how Target sees the economic conditions ahead.
“Companies don’t change their pay scales on a whim. It’s definitely been a well-thought-out, thoroughly debated decision,” Zhao said. “If they expect spending to tick back up, and the recovery to continue, then trying to attract workers now is a good forward-looking move in order to get ahead of the competition once the economy fully reopens.”
During the crisis, retailers have been hit with backlash for paying frontline workers — many of them Black and Latino — hazard pay for only a limited time. As the economy began to reopen, companies like Amazon and Kroger have scaled back this compensation, despite the continued spread of the pandemic.
Hatton said she thinks Target’s decision to raise wages ahead of the initial deadline may be a way of generating good publicity for the company.
“I suspect they’ve done so to capitalize on this current moment of crisis — both from the coronavirus, and the economic crisis that has kind of brought on, as well as the very real and important protests around the Black Lives Matter movement,” Hatton said.
Although some states set their own minimum wages, the federal hourly minimum wage currently stands at $7.25 and hasn’t budged in more than a decade.
Political movements like the Fight for $15 are pushing for a federal increase, while Democrats have supported the $15 minimum wage through measures like the Raise the Wage Act. The Economic Policy Institute has outlined several points about this specific amount, stating that by 2024, a single adult without children will need $15 an hour in full-time income to “achieve a modest but adequate standard of living.”
“On the one hand, we shouldn’t leave it up to the beneficence of corporations to raise the minimum wage,” Hatton said. “But it is positive to see such a large and pretty important corporation and service provider in the U.S. try to take the lead.”
Zhao says some companies might follow suit, while others won’t.
“Some companies just fundamentally will not have the cash in order to support an increase in wages,” he noted. “On the other hand, you might have larger companies who have more cash reserves and more cash flow to actually make this move and try to beat out their competition.”
Target is also providing new and extended COVID-19 benefits, including paid leave for employees 65 and older, free counseling and free access to health care through virtual doctor visits.
While Target is moving in the right direction, Hatton said, workers not only need decent, sustainable wages, they also need to be “protected from undue danger and exposure.”
CORONAVIRUS WORRY TRIGGERS MOST SURGICAL MASK, SANITIZER PRICES TO SPIKE AT LEAST 50% ON AMAZON
Massive online retailer should be held responsible for price gouging
WEDNESDAY, MARCH 11, 2020
PHILADELPHIA— Amazon may monitor its marketplace for price gouging, but a new analysis by U.S. PIRG Education Fund has revealed that these checks don’t always succeed in preventing significant price hikes. With so many people worried about Coronavirus, the consumer advocacy organization looked at the prices for two types of increasingly popular products: hand sanitizers and surgical masks.
Researchers compared the average price for those items over three months to the high price on Amazon since the World Health Organization declared a global health emergency on January 30. As the outbreak became more widespread, the price of most of the sanitizers and masks rose at least 50 percent higher than the 90-day average. Even one in six products sold directly by Amazon — not third-party vendors using the online marketplace — saw prices rise at least 50 percent higher in February, as Americans became more aware of the Coronavirus.
“When people need something to stay healthy and prevent the spread of a potentially-deadly virus, merchants should follow the Golden Rule, not the money,” said U.S. PIRG Education Fund Consumer Watchdog Adam Garber.
Thousands of Americans have signed an online petition asking Amazon’s CEO Jeff Bezos to set hard price protections that prevent gouging before it happens, not play whack-a-mole with businesses trying to take advantage of an emergency.
The U.S. Surgeon General recently implored Americans to stop purchasing surgical masks because they don’t protect people from Coronavirus. Despite that expert advice, people concerned about the outbreak are still buying masks, and sellers are taking advantage of the situation.
The pricing analysis was based on dozens of items featured in Amazon searches for “surgical masks,” “surgical masks antiviral disposable,” and “hand sanitizer”. Findings include:
- The prices for more than half the examined products spiked by at least 50% compared to the average price. At times, the cost of these products would spike 2.3 times higher than the 90-day average and in total the 30-day average climbed 18.5 percent since the WHO declaration.
- These products’ average high price was 220% higher than their 90 day average. The same class of Amazon products saw a smaller, but still significant, increase for these products averaging 65 percent greater than the 90-day average.
- The average lowest available price over 30 days for new versions of the reviewed products increased by 18 percent over the 90-day average.
- While these higher prices impacted surgical masks and hand sanitizers, the former saw more significant price increases. The average high price of surgical masks was 166% higher than the 90-day average price.
While state laws vary widely, they generally look at the average price for needed commodities prior to the state of emergency and high prices offered during it. Many statutes allow for price increases to address shortages, some of which limit those increases to 10%-30% above prices prior to the emergency.
Pennsylvania, Florida, San Francisco, and other regions have declared states of emergency as Coronavirus cases have appeared in those areas. Price gouging protections generally go into effect in a state of emergency, but it’s often tough for local authorities to enforce such statutes with so many products for sale online.
Amazon has its own standard, called the Fair Pricing Policy. The retail marketplace monitors products sold on its website for violations, including setting a price “that is significantly higher than recent prices offered on or off Amazon.” The company recently removed more than 1 million products for violating its policies. But even the company’s own products are seeing prices increase and spike, suggesting the company needs to improve its controls.
“A trillion dollar company with such advanced technology surely can better figure out how to cap price increases during international emergencies such as the Coronavirus outbreak,” finished Garber. “Elected officials shouldn’t wait for another panic to investigate how online platforms may be enabling price gouging.”
Amazon reveals what typical U.S. worker makes after its minimum-wage bump
April 11, 2019 at 12:17 pm Updated April 11, 2019 at 4:06 pm
The median pay of Amazon employees in the U.S. was just over $35,000 last year, the company disclosed for the first time in its 2019 proxy statement Thursday.
The statement includes a dozen shareholder proposals — all of which are opposed by the company’s board of directors — as well as disclosures of the company’s executive compensation, changes coming to its board and more.
In an accompanying letter to shareholders, Amazon chairman and chief executive Jeff Bezos challenges other major employers to match or exceed the company’s new $15-an-hour pay floor.
Median pay, CEO ratio
The median total compensation, meaning half were paid more and half were paid less, for Amazon employees worldwide in 2018 was $28,836, up $390 from 2017, according to the proxy statement.
In the U.S., where Amazon’s new $15-an-hour minimum wage took effect Nov. 1, the median was $35,096 — a new metric reported for 2019. The company said the new wage floor would benefit more than 250,000 Amazon full- and part-time employees and more than 100,000 seasonal workers.
The filing notes that Amazon also provides medical benefits starting the first day on the job, retirement contributions, parental leave for mothers and fathers and career-development programs — benefits that are not included in total compensation calculations.
Bezos’ compensation in 2018 was unchanged. The world’s wealthiest person collected a salary of $81,840 and the company spent $1.6 million on personal security arrangements.
Neither the shareholder letter nor the proxy statement made reference to Bezos’ divorce from MacKenzie Bezos, which will diminish his ownership stake but not his voting rights.
Jeff Bezos owns 16% of Amazon as of Feb. 25. When the divorce is finalized, MacKenzie Bezos is expected to own 4%, which would make her the fourth-largest owner of Amazon behind Jeff Bezos, The Vanguard Group and BlackRock.
Amazon’s CEO pay ratio — a required disclosure of the top executive’s pay compared to that of the median employee — was 1-to-58 in 2018. It was 1-to-59 in 2017.
Other senior Amazon executives receive much more than Bezos, mostly in the form of stock awards. The CEOs of Amazon’s two biggest business units — Andy Jassy of Amazon Web Services and Jeff Wilke of the worldwide consumer business— each received total compensation of over $19.7 million.
Senior vice president Jeff Blackburn received $10.4 million and chief financial officer Brian Olsavsky received $6.9 million.
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The CEO pay ratio for Wilke, whose organization includes the warehouses and logistics operations where Amazon’s lowest-paid employees work, works out to about 1-to-684.
A barrage of proposals
Amazon faced an unprecedented barrage of shareholder proposals related to environmental, social and corporate governance issues as part of a coordinated strategy by activist investors affiliated with the Interfaith Center on Corporate Responsibility. Of the 15 proposals, 12 were included in the company’s 2019 proxy statement and will come up for a vote.
The board of directors recommends votes against all of them. The proposals, in brief, call for:
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- An annual report on environmental and social impacts of food waste from the company’s operations.
- An amendment to the corporate bylaws to allow shareholders of 20 percent of Amazon stock to call a special meeting. The present threshold is 30 percent.
- A prohibition on sales of facial-recognition technology to government agencies unless the board concludes after a review using independent evidence that the technology “does not cause or contribute to actual or potential violations of civil and human rights.”
- An independent study of the privacy and civil-rights implications of Amazon’s facial-recognition technology, Rekognition.
- A report on Amazon’s efforts to address hate speech and sale of offensive products.
- An independent chair of the board of directors. Bezos is presently board chair and CEO.
- A management review of sexual-harassment policies and assessment of whether additional policies are needed.
- A public report describing Amazon’s plans for disruptions caused by climate change and reductions in its companywide dependence on fossil fuels.
- A description of minimum qualifications to be a board member and disclosure of each board nominee’s “skills, ideological perspectives, and experience presented in a chart or matrix form.”
- A report on Amazon’s “global median gender-pay gap,” including risks related to recruiting and retaining women employees.
- A report assessing the feasibility of including sustainability metrics such as social and environmental considerations, and diversity of senior executives, into senior executive compensation plans.
- An end to “formula swapping” — the Amazon practice of counting shareholder votes differently for management proposals than for shareholder proposals. Instead, all nonbinding matters would be decided by a simple majority of votes cast for or against an item.
Alberg steps down after 22 years
Tom Alberg, a co-founder of Seattle venture-capital firm Madrona Venture Group and Amazon’s longest-tenured board member apart from Bezos, will not stand for re-election at the annual meeting, Amazon disclosed in the proxy.
Alberg, 79, placed an early bet on Bezos and his plan to sell books on the internet in 1995. “I was very skeptical,” he told The Seattle Times in a 2015 interview. “I mean, I like bookstores.”
Alberg recounted being impressed with Bezos and his “very coherent business plan.” He backed the company as part of an initial $1 million funding round.
Bezos praised Alberg on social media, writing, “I’ll miss his sound judgment, deep well of business & life experience, and his quick wit. He’s a smart business person and even better human.”
Alberg’s departure leaves Patricia Stonesifer as Amazon’s longest-tenured board member besides Bezos. Stonesifer, 62, joined Amazon’s board in February 1997.
Nine other board members, including new appointees Indra Nooyi, the former top PepsiCo executive, and Rosalind Brewer, chief operating officer of Starbucks and a former Walmart executive, are standing for election at Amazon’s annual meeting of shareholders. If the full slate is elected, Amazon’s 10-person board would have five women.
Amazon PR piece from the Amazon PR department. Notice the twists. It feeds these to media outlets who publish the statement verbatim.
Amazon Announces First Robotics Fulfillment Center in Louisiana
May 7, 2021 TechDecisions Staff
New 650,000 square-foot site to create over 1,000 new, full-time jobs
SEATTLE–(BUSINESS WIRE)–Amazon.com, Inc. (NASDAQ: AMZN) plans to open its first robotics fulfillment center in the state of Louisiana. The new operations facility in Shreveport will create over 1,000 new, full-time jobs and provide employees with at least $15 per hour and comprehensive benefits. Amazon jobs support Louisiana communities of all sizes, from larger metro areas like Shreveport to smaller communities like Carencro.
In the new 650,000 square-foot fulfillment center, Amazon employees will pick, pack, and ship smaller customer items such as books, toys, electronics and other household items.
On top of Amazon’s industry-leading minimum starting wage of $15 per hour, full-time employees receive comprehensive benefits, including full medical, vision and dental insurance as well as a 401(k) with 50 percent company match. Amazon prioritizes the safety of all its employees and supports them with paid leave so they can take time off without having to worry about missing a paycheck. The company also offers up to 20 weeks of maternal and parental paid leave and innovative benefits such as Leave Share and Ramp Back, which give new parents flexibility to support their growing families.
Amazon is committed to the long-term development of its employees. The company’s employees have access to innovative programs like Career Choice, where Amazon will pay up to 95 percent of tuition for courses related to in-demand fields, regardless of whether the skills are relevant to a career at Amazon. Since the program’s launch, more than 25,000 employees across the globe have pursued degrees in a range of fields, including game design and visual communications, nursing, IT programming and radiology.
Amazon in Louisiana:
- From 2010-2019, Amazon has invested more than $250 million in Louisiana, including infrastructure and compensation to employees in the state.
- Amazon’s investments in the state contributed an additional $220 million into the state’s economy over that same period.
- Using methodology developed by the U.S. Bureau of Economic Analysis, Amazon estimates its investments have created an additional 750+ indirect jobs on top of the company’s current 2,000+ full- and part-time direct hires.
- Amazon’s worldwide fulfillment network supports businesses of all sizes through its Fulfillment by Amazon offering, and many of those local businesses are based in Louisiana. There are more than 14,500 independent authors and small and medium-sized businesses in the state are growing their businesses and reaching new customers with Amazon.
Amazon Regional Director of Operations, William Hicks
“Amazon may be a global business, but it’s made up of small businesses and communities. From the local jobs we bring, to the local people we employ, train, and upskill—our business is made up of people from communities like Shreveport,” said William Hicks, Regional Director of Operations at Amazon. “We’re thrilled to be able to expand our operations in Northwest Louisiana and we look forward to becoming part of the fabric of the local community.”
Governor John Bel Edwards
“This new Amazon project is a major advancement for the Shreveport-Bossier City metro area and for Louisiana’s economy,” said Governor Edwards. “In addition to providing strong benefits, Amazon will pay workers double the minimum wage or more in a state-of-the-art technology environment. Only a year ago, we dedicated Hunter Industrial Park as one site in a growing inventory of LED Certified Sites that now numbers 126 statewide. Through partnerships with our elected officials, economic development allies and utility partners, we are proving that great things are possible in Louisiana when we make smart plans for the future.”
Shreveport Mayor Adrian Perkins
“The City of Shreveport is committed to developing a diverse business community,” Mayor Adrian Perkins said. “We are excited to be the new home for a state-of-the-art distribution center. This will be a valuable asset to our community and will provide employment opportunities to hundreds of our residents. This project could change the life trajectory for many of our citizens who are still dealing with the financial fallout from the ongoing pandemic.”
Caddo Parish Commission President Lyndon B. Johnson
“Great things are happening in Caddo Parish, and we are delighted to welcome Amazon into our parish and region,” said Caddo Parish Commission President Lyndon B. Johnson. “The arrival of such a large and multidimensional distribution center to Caddo Parish will undoubtedly have a significant impact on our area’s economy. The ability to utilize over 1,000 members of our community’s diverse and talented workforce will enhance the quality of life for our residents, and is a result of the strong collaboration between our governing bodies and community partners to create a winning opportunity for Amazon and the parish.”
Chairman Chap Breard of the North Louisiana Economic Partnership
“We are thrilled to have Amazon become a new major employer in North Louisiana,” said Chairman Chap Breard of the North Louisiana Economic Partnership. “Their decision to locate in Shreveport confirms that North Louisiana’s competitive strategic location, strong stakeholder partnerships and project-ready industrial sites are critical for success in economic development.”
About Amazon
Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Amazon strives to be Earth’s Most Customer-Centric Company, Earth’s Best Employer, and Earth’s Safest Place to Work. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Career Choice, Fire tablets, Fire TV, Amazon Echo, Alexa, Just Walk Out technology, Amazon Studios, and The Climate Pledge are some of the things pioneered by Amazon. For more information, visit amazon.com/about and follow @AmazonNews.
Contacts
Amazon.com, Inc.
Media Hotline
Amazon-pr@amazon.com
www.amazon.com/pr
Amazon Announces First Robotics Fulfillment Center in Louisiana
New 650,000 square-foot site to create over 1,000 new, full-time jobs
SEATTLE–(BUSINESS WIRE)– Amazon.com, Inc. (NASDAQ: AMZN) plans to open its first robotics fulfillment center in the state of Louisiana. The new operations facility in Shreveport will create over 1,000 new, full-time jobs and provide employees with at least $15 per hour and comprehensive benefits. Amazon jobs support Louisiana communities of all sizes, from larger metro areas like Shreveport to smaller communities like Carencro.
In the new 650,000 square-foot fulfillment center, Amazon employees will pick, pack, and ship smaller customer items such as books, toys, electronics and other household items.
On top of Amazon’s industry-leading minimum starting wage of $15 per hour, full-time employees receive comprehensive benefits, including full medical, vision and dental insurance as well as a 401(k) with 50 percent company match. Amazon prioritizes the safety of all its employees and supports them with paid leave so they can take time off without having to worry about missing a paycheck. The company also offers up to 20 weeks of maternal and parental paid leave and innovative benefits such as Leave Share and Ramp Back, which give new parents flexibility to support their growing families.
Amazon is committed to the long-term development of its employees. The company’s employees have access to innovative programs like Career Choice, where Amazon will pay up to 95 percent of tuition for courses related to in-demand fields, regardless of whether the skills are relevant to a career at Amazon. Since the program’s launch, more than 25,000 employees across the globe have pursued degrees in a range of fields, including game design and visual communications, nursing, IT programming and radiology.
Amazon in Louisiana:
- From 2010-2019, Amazon has invested more than $250 million in Louisiana, including infrastructure and compensation to employees in the state.
- Amazon’s investments in the state contributed an additional $220 million into the state’s economy over that same period.
- Using methodology developed by the U.S. Bureau of Economic Analysis, Amazon estimates its investments have created an additional 750+ indirect jobs on top of the company’s current 2,000+ full- and part-time direct hires.
- Amazon’s worldwide fulfillment network supports businesses of all sizes through its Fulfillment by Amazon offering, and many of those local businesses are based in Louisiana. There are more than 14,500 independent authors and small and medium-sized businesses in the state are growing their businesses and reaching new customers with Amazon.
Amazon Regional Director of Operations, William Hicks
“Amazon may be a global business, but it’s made up of small businesses and communities. From the local jobs we bring, to the local people we employ, train, and upskill—our business is made up of people from communities like Shreveport,” said William Hicks, Regional Director of Operations at Amazon. “We’re thrilled to be able to expand our operations in Northwest Louisiana and we look forward to becoming part of the fabric of the local community.”
Governor John Bel Edwards
“This new Amazon project is a major advancement for the Shreveport-Bossier City metro area and for Louisiana’s economy,” said Governor Edwards. “In addition to providing strong benefits, Amazon will pay workers double the minimum wage or more in a state-of-the-art technology environment. Only a year ago, we dedicated Hunter Industrial Park as one site in a growing inventory of LED Certified Sites that now numbers 126 statewide. Through partnerships with our elected officials, economic development allies and utility partners, we are proving that great things are possible in Louisiana when we make smart plans for the future.”
Shreveport Mayor Adrian Perkins
“The City of Shreveport is committed to developing a diverse business community,” Mayor Adrian Perkins said. “We are excited to be the new home for a state-of-the-art distribution center. This will be a valuable asset to our community and will provide employment opportunities to hundreds of our residents. This project could change the life trajectory for many of our citizens who are still dealing with the financial fallout from the ongoing pandemic.”
Caddo Parish Commission President Lyndon B. Johnson
“Great things are happening in Caddo Parish, and we are delighted to welcome Amazon into our parish and region,” said Caddo Parish Commission President Lyndon B. Johnson. “The arrival of such a large and multidimensional distribution center to Caddo Parish will undoubtedly have a significant impact on our area’s economy. The ability to utilize over 1,000 members of our community’s diverse and talented workforce will enhance the quality of life for our residents, and is a result of the strong collaboration between our governing bodies and community partners to create a winning opportunity for Amazon and the parish.”
Chairman Chap Breard of the North Louisiana Economic Partnership
“We are thrilled to have Amazon become a new major employer in North Louisiana,” said Chairman Chap Breard of the North Louisiana Economic Partnership. “Their decision to locate in Shreveport confirms that North Louisiana’s competitive strategic location, strong stakeholder partnerships and project-ready industrial sites are critical for success in economic development.”
About Amazon
Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Amazon strives to be Earth’s Most Customer-Centric Company, Earth’s Best Employer, and Earth’s Safest Place to Work. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Career Choice, Fire tablets, Fire TV, Amazon Echo, Alexa, Just Walk Out technology, Amazon Studios, and The Climate Pledge are some of the things pioneered by Amazon. For more information, visit amazon.com/about and follow @AmazonNews.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210507005560/en/
Amazon.com, Inc.
Media Hotline
Amazon-pr@amazon.com
www.amazon.com/pr
Source: Amazon.com, Inc.
Amazon Work Rules Govern Tweets, Body Odor of Contract Drivers
Photo: Bloomberg
May 9, 2021 Bloomberg
The thousands of people driving those ubiquitous Amazon-branded blue vans aren’t employed by the Seattle leviathan. They work for small, independent businesses with contracts to transport packages for Amazon. But that hasn’t stopped the company from dictating the state of their fingernails — and a whole lot more.
“Personal grooming must be maintained at an acceptable level, including but not limited to prevention of unpleasant breath or body odor, modest perfume/cologne, and clean teeth, face/ears, fingernails and hair,” Amazon.com Inc. says in a recent version of its policies governing these small delivery companies, or what the company calls Delivery Service Partners. The document, reviewed by Bloomberg, also requires that drivers refrain from “obscene” social-media posts, undergo training programs approved by Amazon, follow instructions from Amazon’s delivery app and be drug tested whenever Amazon representatives ask.
The DSPs are required to adhere to Amazon’s policies, which the company can unilaterally change whenever it wants, according to a recent contract also seen by Bloomberg. They also have to provide Amazon physical access to their premises and all sorts of data the retailer wants, such as geo-locations, speed and movement of drivers — information the company says it has the power to use however it wants.
For several years, Amazon has sought to bring order to its farflung delivery operations, which were plagued by accidents, complaints about thrown packages and infamous incidents such as the time a contract driver relieved herself in a customer’s driveway. But in exerting more control over these workers, legal experts say, the company has created legal risks for itself. Amazon has chosen not to directly employ DSP drivers, an arrangement that shields it from costs and liabilities the work incurs. Amazon’s growing sway over its delivery partners, however, could convince courts and government agencies that the company is actually a “joint employer” or “vicariously liable” party.
“Amazon seems to want to have its cake and eat it too — to have all the control of an employment relationship, without bearing the costs,” said University of Miami law professor Andrew Elmore, who investigated employment cases as a section chief in the New York Attorney General’s Office. “These documents provide an important signal to courts and to government agencies that this is a relationship to look at.”
Amazon is hardly the only company to use such a “fissured” labor model: Franchised, sub-contracted or ostensible contract workers staff most McDonald’s restaurants, have become the majority of Google parent Alphabet’s workforce, are a linchpin of FedEx’s business model and powered Uber’s rise from startup to corporate giant and verb.
But the labor model — and Amazon’s in particular — is expected to get a closer look in President Joe Biden’s Washington. Critics have long argued that the company’s stringent delivery standards exacerbate the risk of accidents that can hurt or kill people. Under their agreement with Amazon, DSPs are obligated to “defend and indemnify” the company in cases involving acts by their drivers, including those involving “death or injury” to any human being. David Weil, the Obama administration’s top wage regulator and the author of a landmark book on the dangers of “fissured” work arrangements, is in line to be nominated for his former post at the U.S. Labor Department, Bloomberg Law reported, citing multiple sources familiar with the process.
Amazon’s labor arrangements have already been challenged in court, both by drivers seeking to hold the company responsible for unpaid wages, and by victims of collisions who charge that Amazon is responsible for their injuries. Earlier this year, the company agreed to pay $8.2 million in a class-action settlement to resolve Seattle-area DSP employees’ claims of missed breaks and overtime pay without admitting wrongdoing. Amazon is facing similar complaints in a handful of other states. In March, California’s Labor Commissioner fined Amazon and Green Messengers Inc., a Southern California DSP, $6.4 million for wage theft. The companies have appealed.
Company spokesperson Rena Lunak said in an email that “the suggestion Amazon is seeking to avoid responsibility for delivery drivers is wrong.” She went on to commend the DSPs for their ability to tap into local communities and hire great drivers while taking advantage of Amazon’s logistics experience, technology and support services. “We’re proud that our program has empowered thousands of small businesses to create tens of thousands of jobs with competitive wages of at least $15 an hour and comprehensive benefits,” Lunak said.
Amazon became the world’s largest online retailer, in part, by promising shoppers quick delivery, handing off items stored at warehouses to United Parcel Service Inc. and the U.S. Postal Service for the trip to customer doorsteps. The company about a decade ago started building its own capacity to move goods in an effort to accommodate its frantic growth and reduce its reliance on other companies. Today, Amazon is its own largest mailman, delivering more than half of its own shipments.
To meet the task, Amazon turns to two groups of drivers: Amazon Flex workers, who like their Uber or Instacart counterparts are classified as independent contractors exempt from U.S. employment laws; and DSP drivers, who are classified as employees of local logistics companies. Amazon started the DSP program in 2018, pitching it as a way to support small entrepreneurs. Previously, the company relied on regional logistics providers, who transported packages with their own fleet of mostly generic delivery trucks. As the new, branded DSP program rolled out, the company cut ties with the regional firms in favor of these new startups that worked almost exclusively for Amazon. The company last year said there were more than 1,300 DSPs across North America and Europe, employing 85,000 people.
“This kind of arrangement basically locks in place a low-wage economy, even as Amazon is incredibly profitable,” said Temple University law professor Brishen Rogers.
Lawmakers have repeatedly expressed concern about Amazon’s delivery operation. In 2019, three Democratic U.S. senators unsuccessfully asked Amazon to disclose the names of companies it contracts with, citing Buzzfeed News, ProPublica and New York Times reports suggesting that Amazon’s pressure on DSPs leads to unsafe driving with potential deadly consequences. In March, more senators contacted Chief Executive Officer Jeff Bezos voicing concerns about CNBC and The Verge reports on Amazon’s installation of surveillance cameras in vehicles, which they said could “place unsafe pressure on drivers, and infringe on individuals’ privacy rights.” Amazon has said the video cameras improved drivers’ safety performance.
As part of an aggressive social-media response to allegations that the company treats its workers poorly, Amazon’s @amazonnews Twitter account in March denied that workers lacked time for bathroom breaks. “You don’t really believe the peeing in bottles thing, do you?” the company said, responding to a tweet from Representative Mark Pocan, Democrat from Wisconsin. The post brought quick rebuttals from drivers on social media and in news articles, with many describing having to relieve themselves in the back of trucks or clean up after others who did. Amazon later walked back the statement and apologized to Pocan, saying the tweet was incorrect and “did not contemplate our large driver population.”
Amazon’s recent DSP contract, and the policy it requires those companies to follow, includes several provisions shielding the retailer from liability or further embarrassment. DSPs are required to have policies on “employment at-will,” the discretion of management to fire workers for almost any reason or with no stated reason at all. DSPs can’t issue press releases about their Amazon work without the company’s permission. DSPs must handle any disputes with Amazon through individual arbitration hearings rather than class-action lawsuits and must require their drivers to do the same. If DSPs get sued, Amazon has a veto over legal settlements and the option to commandeer the companies’ defense. Amazon is specifically indemnified from liability for death or injury. DSPs must make their employees sign non-disclosure agreements and are also obligated to safeguard Amazon’s information. (The DSPs are required to keep the contract itself confidential too.)
The retailer, on the other hand, is contractually guaranteed the data it wants from DSPs and retains the right to physically inspect their premises or make them hand over data — not just while servicing Amazon, but also for another three years after parting ways. DSPs’ data gets used in part to score their performance on metrics such as employee retention and successful deliveries, which Amazon can use to reward some DSPs with bonuses and terminate underperformers. Amazon can also punish DSPs with cancellation fees that it determines and restricts them from terminating their relationship during its busy months of November or December.
The Obama administration adopted broader interpretations of a “joint employer,” a company with sufficient control over a group of workers to be legally liable for their treatment, despite not signing their paychecks. Obama’s National Labor Relations Board general counsel prosecuted McDonald’s as a joint employer in a years-long case about alleged retaliation against “Fight For $15” activists at franchised stores, which Trump appointees later voted to settle without finding the burger chain itself liable. (McDonald’s denied wrongdoing.)
Trump appointees at both the labor board, which enforces organizing rights, and the U.S. Labor Department, which enforces wage laws, issued regulations taking a more business-friendly view, saying that having authority over workers doesn’t make a company a joint employer unless it meets narrower criteria such as setting their specific pay rates. Biden’s Labor Department has already started the process of rescinding Trump’s rule — which was also rejected by a federal district court — and by the fall Democrats are slated to have a majority on the labor board, where they could do the same.
Legal experts said the terms in Amazon’s DSP contract and policies would give plaintiffs and prosecutors a strong case for holding the company responsible under laws governing when a company is “vicariously liable” for harms such as auto accidents as well as deeming the retailer a joint employer under state and federal laws — especially if Biden appointees enact tougher rules.
“The degree of control that Amazon is exerting rivals — if it doesn’t exceed — the degree of control that led to the general counsel under the Obama board issuing a complaint against McDonald’s,” said University of California Berkeley law professor Catherine Fisk.