Amazon fears it could run out of US warehouse workers by 2024
Internal research says the hiring pool has already dried up in a number of locations stateside
Jeff Bezos once believed that Amazon's low-skill worker churn was a good thing as a long-term workforce would mean a "march to mediocrity." He may have to eat his words if an internal memo is accurate.
First reported by Recode, the company's 2021 research rather bluntly says: "If we continue business as usual, Amazon will deplete the available labor supply in the US network by 2024."
Some locations will be hit much earlier, with the Phoenix metro area in Arizona expected to exhaust its available labor pool by the end of 2021. The Inland Empire region of California could reach breaking point by the close of this year, according to the research.
The problem is that the average warehouse worker only lasts about eight months with Amazon. The annual attrition rate is somewhere around 150 percent, more than double that of the comparable retail and logistics industries in the US.
The report also suggests that when companies like Walmart are offering experienced warehouse staff $25 an hour, and Amazon's average starting wage is $18, the choice is clear cut.
And this is without mentioning Amazon's storied history when it comes to working conditions. One of six staff killed when a tornado destroyed an Amazon warehouse last year wrote to his partner: "Amazon won't let me leave until after the storm blows over." Now the company is being accused of obstructing the investigation into the warehouse's collapse.
Then there are the 140,000-plus delivery drivers who were compensated for $60 million after claiming Amazon diddled them out of their tips between 2016 and 2019, the AI-powered cameras installed into UK drivers' vans to keep tabs on them, and (away from the front line) the engineer who is suing Amazon for refusing to cover the costs of working from home through the pandemic.
These are only very recent examples, but it's no wonder a movement to unionize is surging among Amazon's warehouse staff. Amazon is highly resistant to the idea.
Many workers cite the company's absurd productivity quotas and inflexibility. Speaking to The Guardian, Matt Littrell, a 22-year-old Amazon picker in Kentucky, blasted the "time off task" metric, where employees can be terminated if this number gets too high.
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"Each one of those instances where I was taking too long to find an item counted against me, and that is all added up and then they count that as your total time off. And it doesn't matter if you were doing your job – you were not meeting the expectation."
Jose Pagan, a 35-year-old former warehouse employee in The Bronx, New York, told Recode he was automatically fired after he took two days off to have an infected tooth removed because he only had seven hours of unpaid time off but missed 20 hours of work. He had enough vacation time to cover the absence but Amazon did not use it because it had to be booked in advance. His doctor's note was also refused. A week of shifts following the procedure went by before his employee badge stopped working.
"They're gonna lose a good worker for nothing," he said.
Amazon is aware that paying its workers more is a good idea, with the research estimating that the labor pool grows by 7 percent for every dollar added to the salary. Raising the hourly rate by $1.50 could be enough to push that 2024 crisis out by three years.
Yet it is only a sticking plaster. The document also said hiring efficiency had to improve, with the company taking 6.7 applicants to fill one warehouse vacancy. About 9 percent of applicants are rejected because they were former employees, failed a drugs test or had an unsatisfactory background check.
For a workforce that worked a little more than 27 hours a week in 2020, it was said that by increasing this by 10 percent would reduce the need for 118,000 new hires.
Automation could also help fill the gap. The report said Amazon aimed to increase warehouse productivity through automation by the end of 2024 by 25 per cent.
Another option could be to let Amazon's HR division play a greater role in selecting the location for new warehouses in order to maximize the labor pool. "Our longer-term strategy... is to apply labor forecasts to future site selection," the report read.
The proposals all have trade-offs that Amazon's leadership may not like. All the same, the fate of the company may now lie in how it treats its frontline workers. Otherwise the days of one-click ordering and next-day deliveries could be under threat. ®