Despite a starting wage well above the federal minimum, the company is dragging down pay in the logistics industry and bracing for a fight with unions.
Amazon.com Inc. job ads are everywhere. Plastered on city buses, displayed on career web sites, slotted between songs on classic rock stations. They promise a quick start, $15 an hour and health insurance. In recent weeks, America’s second-largest employer has rolled out videos featuring happy package handlers wearing masks, a pandemic-era twist on its annual holiday season hiring spree.
Amazon’s object is to persuade potential recruits that there’s no better place to work.
The reality is less rosy. Many Amazon warehouse employees struggle to pay the bills, and more than 4,000 employees are on food stamps in nine states studied by the U.S. Government Accountability Office. Only Walmart, McDonald’s and two dollar-store chains have more workers requiring such assistance, according to the report, which said 70% of recipients work full-time. As Amazon opens U.S. warehouses at the rate of about one a day, it’s transforming the logistics industry from a career destination with the promise of middle-class wages into entry-level work that’s just a notch above being a burger flipper or convenience store cashier.
Union workers who make comfortable livelihoods driving delivery trucks and packing boxes consider Amazon an existential threat. While labor tensions have simmered for years, the stakes have risen sharply amid the pandemic, which prompted Amazon to hire more than 250,000 people to keep up with surging demand from home-bound shoppers. Risking infection while toiling in a crowded warehouse for $15 an hour has many Amazon workers asking if they’re getting shortchanged.
A Bloomberg analysis of government labor statistics reveals that in community after community where Amazon sets up shop, warehouse wages tend to fall. In 68 counties where Amazon has opened one of its largest facilities, average industry compensation slips by more than 6% during the facility’s first two years, according to data from the Bureau of Labor Statistics. In many cases, Amazon quickly becomes the largest logistics player in these counties, so its size and lower pay likely pull down the average. Among economists, there’s a debate about whether the company is creating a kind of monopsony, where there’s only one buyer—or in this case one employer.
While Amazon’s arrival coincides with rising pay in some southern and low-wage precincts, the opposite is true in wealthier parts of the country, including the northeast and Midwest. Six years ago, before the company opened a giant fulfillment center in Robbinsville, New Jersey, warehouse workers made $24 an hour on average, according to BLS data. Last year the average hourly wage slipped to $17.50.
Wages often tick higher in subsequent years, but don’t reach their pre-Amazon level till five years after a new facility opens—meaning that industry workers, on average, find themselves no better off half a decade after Amazon’s arrival.
“Bloomberg’s conclusion is false—it violates over 50 years of economic thought, and suspends the law of supply and demand,” a company spokesperson said in an emailed statement. “Hiring more, by paying less, simply does not work. Many of our employees join Amazon from other jobs in retail which tend to be predominantly part-time, reduced benefit jobs with substantially less than our $15 minimum wage. These employees see a big increase in pay per hour, total take-home pay, and overall benefits versus their previous jobs. What surprises us is that we are the focus of a story like this when some of the country’s largest employers, including the largest retailer, have yet to join us in raising the minimum wage to $15.”
Chief Executive Officer Jeff Bezos, whose wealth grew about 65% this year as his company posted record sales and profits, has so far managed to keep unions out of his U.S. operations. Now that’s being challenged. In November, representatives of the Retail, Wholesale and Department Store Union quietly filed paperwork with the National Labor Relations Board, proposing to form a union on behalf of 1,500 workers at Amazon’s Bessemer, Alabama, fulfillment center. On Wednesday, the NLRB gave workers the greenlight to put the proposal to a vote, which promises to be the biggest referendum to date on the retail giant’s fraught relationship with its frontline workers.
“The concern isn’t so much ‘the robots are coming, and they’re going to put everybody out of work,’” says Ben Zipperer, an economist with the Economic Policy Institute. “It’s more that the jobs being created by extremely profitable companies have either poor pay or poor working conditions, or are not the kind of jobs that you would expect an extremely rich country, and rich company, to be able to provide.”
Many many small business sites have excellent eCommerce now. Why default to Amazon? In many cases the prices are higher, some exorbitantly so. And the fakes and deceptions on the site are off the scale. Resist Amazon and support other businesses before it is too late.