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Amazon Workers Split as Company Raises Minimum Wage

Amazon Workers Split as Company Raises Minimum Wage

By Heather Long, The Washington Post | Updated: 8 October 2018 16:12 IST

Almost no workers clapped this week at the all-hands meeting after lunch at this Amazon fulfilment centre outside Nashville when a plant manager announced that the company's minimum wage was climbing to $15 (roughly Rs. 1,100) an hour.

Instead of celebrating, many workers put their hands up to ask questions and express deep frustration, according to five employees at the facility. They asked why people who had been toiling in the company's warehouse for years would now be paid similarly to new employees and temporary holiday help, according to the workers.

"People seemed really bummed out because now [seasonal] workers are making $15 an hour," said Chip Litchfield, who is thrilled that his pay will jump from $11.50 an hour in a program called Amazon CamperForce, which brings people who live in RVs to work in certain fulfilment centres during the holiday season. "We're just a bunch of old people who they bring in a few months a year."

Amazon's decision to raise its minimum wage received widespread praise as a victory for workers and a model for other big US corporations, even drawing plaudits from people as varied as Sen. Bernie Sanders, I-Vt., who had previously railed against the company's treatment of workers, and Larry Kudlow, President Donald Trump's top economic adviser.

But within 24 hours, questions started to surface about how generous the move really is. Amazon also announced that it would cut bonuses and stock grants, and some veteran employees say they are being devalued and fear they might end up with less money than they get now.

It's impossible to know how magnanimous Amazon's action is - the company said it would incur an expense but did not say how big it would be. But the divided reaction among some of the 250,000 full-time employees and 100,000 seasonal staffers underscores one of the biggest tensions of Amazon's massive growth. It's likely that no company has hired more people in recent years than Amazon, which has opened fulfilment centres with breathtaking speed.

Yet even as it seeks to maintain a satisfied workforce and fend off critics who say the company doesn't treat employees well, Amazon must minimize costs and maximise the efficiency of its warehouses so it can continue to grow its formidable position in online commerce, delivering products in as little as an hour.

"Raising their minimum wage to $15 was the easy first step," said Paul Sonn, state policy director of the National Employment Law Project. "Amazon is torn: They don't want to be known as a bad employer, but they are an aggressive cost cutter."

Today Amazon is America's second-largest employer, and the bulk of its jobs are creations of the e-commerce era. Rather than engage in the type of extreme automation that many fear will lead to the destruction of jobs, the company has relied on a new kind of work -the "pickers" and "packers," as they're called, at vast warehouses who hunt down goods at warp speed, guided by a handheld computer, and box them for delivery.

The jobs are something between retail and traditional blue-collar factory work. And the pay reflects that.

Among all Amazon workers, the median pay is $28,446 a year ($13.68 an hour), a figure the company revealed this year for the first time because of a new regulatory requirement. That's a worldwide figure that includes full and part-time workers. Glassdoor, an employment site, says average pay at U.S. fulfilment centres has been $13 an hour, according to nearly 900 people who submitted their data to the site.

Amazon's pay is significantly above the $10.28 an hour that the typical retail worker makes, but it's less than the $15.53 that a median warehouse employee is paid, according to Labor Department data.

Amazon chief executive Jeff Bezos, who also owns The Washington Post, cast the decision to increase Amazon's minimum wage to $15 as a bold move to "encourage our competitors and other large employers" to join him. But economists point out that Amazon is doing it at a time when nearly every company complains that it can't recruit enough workers; the unemployment rate is the lowest since 1969.

Higher starting pay should help Amazon lure laborers to its doors, but it's not as clear how veteran workers will fare and what will happen to retention.

"To me it seems like a publicity stunt on Bezos's part. The big headline sounds nice, until you realize we are losing significant benefits," said a full-time worker at Amazon's Murfreesboro facility who spoke on the condition of anonymity out of fear of retribution.

Amazon spokeswoman Ashley Robinson said in an email that all workers will see a "cash pay increase," with employees who currently earn $14.01 or more receiving a dollar raise. She couldn't guarantee that every worker would be better off, but she said that "our intent is certainly for employees to see an increase in compensation."

Longtime employees say they should get a $3 raise so their pay is closer to $18 an hour, especially since Amazon is eliminating bonuses, which often added 8 percent a month to their earnings.

Jobs at Amazon's warehouses can be grueling, physically and mentally. Nearly every one of the 18 past and present workers interviewed for this article said they take Advil after work or soak or rub their feet at night, and many said they refer to workers who have been there for a few months as "Amazombies" because they develop a zoned-out look from the monotonous labor.

"Our roles are more comparable to retail positions in the U.S.," Robinson said. "We believe Amazon's fulfillment center jobs are excellent jobs providing a great place to learn skills to start and further develop a career."

The company has faced growing criticism over how it treats its workforce - from reports that some employees need food stamps to get by to articles on warehouse conditions. The company has generally pushed back, saying some criticisms are wrong and exaggerated, while also pledging to take steps to improve.

"As a company, Amazon is constantly creating new jobs and one of the reasons we are able to attract people to join us is that our number one priority is to ensure a positive and safe working environment," Robinson said.

The key issue, said most workers who spoke for this article, is that Amazon sets quotas for how many items they have to pick, sort or pack each day, and it can be difficult to meet that requirement and still find time to hurry across the warehouse floor to the break room or bathroom during a 15-minute break.

Amazon defends its quota system, saying that it is a standard practice and that there are support programs for people who are not meeting expected levels.

Most workers said that Amazon is upfront about what the job entails, and that the company's pay and benefits are good for people without college degrees. Some workers have the same attitude about the minimum-wage hike.

"It's a win-lose for some people, but for others like me, who don't really care that much about the stocks or getting bonuses, getting $15 an hour actually makes a big difference," said a worker in California whose pay will soon rise from $13.15 to $15, and who spoke on the condition of anonymity because he didn't want to get in trouble for talking to the media.

In its statement announcing the increase, Amazon said it found that workers prefer predictable cash payments rather than stock grants or bonuses. All full-time Amazon employees had been eligible for stock grants.

Amazon has increasingly shaped the US job market since it opened its first fulfillment center in 1997. But as employment at Amazon and other e-commerce sites skyrocketed in the 2000s and early 2010s, there was a noticeable decline in average warehouse worker pay at the national level, according to Labor Department data analysed by accounting and consulting firm Grant Thornton.

Average warehouse worker pay fell from $20.85 an hour in 2000 to under $16 in 2013 (both figures are adjusted for inflation and shown in current dollars). The trend has only recently started to reverse, with average warehouse pay hitting $17.50 this year.

"Warehousing and distribution were once higher-skilled jobs than they are today, so the pay has gone down even though the jobs require enormous amounts of effort," said Diane Swonk, senior economist at Grant Thornton. "E-commerce companies don't care about their turnover rates. They consider all workers to be interchangeable, much like Henry Ford did."

Some of the questions about Amazon's labour practices are rooted in the company's efforts to be highly efficient with its workforce.

The company has come to rely on temporary workers and staffing agencies, says Marc Wulfraat, president of MWPVL International, a logistics consulting firm that tracks what Amazon does. The use of seasonal workers has long been a fact of life in retail, especially in the busy Christmas period, but Amazon has embraced it on a larger scale, he said.

"They are trying to keep costs down. That's why they do it," Wulfraat said, noting that Amazon's warehouse capacity is likely to exceed Walmart's for the first time this year. (Amazon says that more than half its seasonal workers in fulfillment centers are employed directly.)

A typical industrial or manufacturing warehouse employs one worker per 1,500 to 3,000 square feet of space, while an e-commerce operation needs one employee per 700 to 1,000 square feet, according to commercial real estate firm JLL.

Workers say items in Amazon's warehouses are not sorted methodically, with, for instance, office supplies in one area and shoes in another. Instead, items are immediately put on whatever shelf is available when they arrive at the warehouse. Pickers rely on handheld monitors that tell them where to locate something, they say.

Here in Murfreesboro, home to one of Amazon's 110 North American fulfilment centres, Integrity Staffing Solutions has been advertising temporary jobs at the centre for $12.25 an hour, with no guarantee of ultimately being hired by Amazon.

The pay is higher than the $8 starting wage for cashiers at the Dollar General just down the street, but it's less than the $16 an hour advertised at Interstate Warehousing, a refrigeration facility across the road.

In addition to traditional temp workers, in 2009, Amazon created a seasonal program known as CamperForce. These workers, often over 55, live full time in RVs while labouring from September or October until Dec. 23 at certain fulfilment centres.

Many CamperForce participants say it's a good deal for them because in a few months, they can earn enough to not have to work much the rest of the year.

Amazon also benefits, getting low-cost migrant workers willing to relocate wherever they're needed.

CamperForce participants don't get benefits, and their pay here has been lower than that of full-time workers, but the company does pick up the tab for campsite costs, including electricity.

"CamperForce benefits them, and it benefits us," said Litchfield, a 59-year-old from Vermont, who's doing the program for the second time with his girlfriend, Penni Brink. They think that with some overtime, they can earn close to $14,000 for their 14-week stint.

"I just hope they have us back next year," he said.

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