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The Amazon Customers Don’t See

edited June 15 in Other Investing
Worth considering before investing: https://nytimes.com/2021/06/15/briefing/amazon-warehouse-investigation.html
In his drive to create the world’s most efficient company, Jeff Bezos discovered what he thought was another inefficiency worth eliminating: hourly employees who spent years working for the same company.

Longtime employees expected to receive raises. They also became less enthusiastic about the work, Amazon’s data suggested. And they were a potential source of internal discontent.

Bezos came to believe that an entrenched blue-collar work force represented “a march to mediocrity,” as David Niekerk, a former Amazon executive who built the company’s warehouse human resources operations, told The Times, as part of an investigative project being published this morning. “What he would say is that our nature as humans is to expend as little energy as possible to get what we want or need.”

In response, Amazon encouraged employee turnover. After three years on the job, hourly workers no longer received automatic raises, and the company offered bonuses to people who quit. It also offered limited upward mobility for hourly workers, preferring to hire managers from the outside.

As is often the case with one of Amazon’s business strategies, it worked.

Turnover at Amazon is much higher than at many other companies — with an annual rate of roughly 150 percent for warehouse workers, The Times’s story discloses, which means that the number who leave the company over a full year is larger than the level of total warehouse employment. The churn is so high that it’s visible in the government’s statistics on turnover in the entire warehouse industry: When Amazon opens a new fulfillment center, local turnover often surges....
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Comments

  • Very interesting Lewis . Mr. Bezos is apparently a gentleman who is not much a gentleman, the type who wouldn’t mine using slaves if it could make him an extra cent. Too bad we don’t have a Teddy Roosevelt to go after this “Malefactor of Great Wealth.”
  • As a former CPA, I encountered this scenario repeatedly during my career as well as in my colleagues careers. It's up or out: if you don't receive a promotion every two years, start looking for another employer. When I worked for DOD, a number of administrative jobs were contracted out to avoid paying DOD employees higher wages for doing the same work, year after year. Based on the second sentence in your excerpt, Bezos considered experienced employees to be the equivalent of termites or cockroaches, not as an asset but as a pest to be minimized or eradicated !
  • nonsense...amazon provides quality products and low prices. they are an example of success and help provide great choice and a expedited delivery of product with enormous job creation . why does the ny times so consistently attack successful ventures.
  • Did you even read the article? As for expedited delivery, I am a prime member and I can count on less than 2 fingers how many times I've received a shipment within the stated 2-day window. It's one thing to state that's what they are going to do and another thing to actually do it.
  • Here's one part the Times points out about an employee who worked in a Richmond County, NY center: " While Alberto Castillo, a 42-year-old husband, father and Amazon worker, was in the hospital suffering from Covid-related brain damage, the company sent him an email ordering him back to work. “Haven’t they kept track of what happened to him?” his wife, Ann, wondered.
  • edited June 15
    As a loyal customer and (reasonably successful) Amazon reviewer for near 20 years, I agree with Lewis and the article. When push comes to shove they treat you like c***. I can only sympathize with the workers. I’ll never write them another review. I avoid buying there when possible.

    Prime delivery has become a joke as I think @Mark alludes to. The movies alone are worth $120 a year (to me anyways), so I keep the membership. That, however, does not encumber me to purchase their products. Hell, I’ll gladly drive 15-20 miles to the nearest Walmart just to avoid having to buy from Amazon. I know some Wal Mart employees. Generally, they like working there.

    BTW - Many will recall some years ago when Amazon allowed non-profits like MFO to receive a thin slice of the sale proceeds if purchased thru a link on that non-profit’s website. (And, MFO participated.) We all know how that went. Right? Basically, that’s what they do - use you until you no longer serve their interests. Corporate conscience? …
  • If you buy books at Amazon, there are options, if not your local independent bookstore, try "the world's largest independent" (and for my money, I can't imagine a physical bookstore any better, if you're ever in Portland): Powell's City of Books. You may pay a dollar or two more, but there is a certain inherent reward in not feeding the beast ... and instead feeding a long-running, outstanding family business.

    https://www.powells.com/
  • Been in Powell’s and it is a wonderful store, but I can’t afford the baggage fees if I ever go back to buy books. LOL
  • Been in Powell’s and it is a wonderful store, but I can’t afford the baggage fees if I ever go back to buy books. LOL

    Ha! That is a problem. And if you drive, you need to haul a trailer along for the return trip.

  • Been in Powell’s and it is a wonderful store, but I can’t afford the baggage fees if I ever go back to buy books. LOL

    That made me smile and laugh. Thanks for that. :-)
    The baggage fees! When visiting Portland I've always left Powell's poorer than when I went in. Great store.
  • edited June 17
    Often we spent 3-4 hours in Powell and leave with many books. Much prefer Powell than Amazon for books. The ability to scan few pages of the book is much better than reading the review on Amazon. The faked review on Amazon products are really disappointing.
  • Not surprised by any of this. It's called capitalism. Capitalism owns no conscience. Capitalism does not care about people, only profit. Capitalism, well-oiled, maximizes profit. But PEOPLE ought to possess consciences, and care about other PEOPLE more than squeezing a nickel until the buffalo shits. Bezos is vomitus. I have never EVER used Amazon for ANYTHING.
  • edited June 18
    “Bezos is vomitus”

    I harbor no ill-will against Bezos. Amazon today isn’t the customer-friendly firm he founded and nurtured for many years. I doubt he’s calling many of the shots today. Interestingly, their cloud computing business has grown larger than the retail side, including some lucrative government contracts.

    Back to Bezos … on a (media) personal level I find him intelligent and engaging. Like Musk he’s a first-rate visionary. Remember how laughable it seemed when he went on 60 minutes a decade ago to announce they were looking at airborn drones for delivery some day? Today that’s nearing reality.

    None of this excuses the abuses Amazon inflicts on its employees, other merchants or its customers. I’m pretty good at “compartmentalizing” most everything - including how I view people’s different qualities. So, I can usually see both sides of an individual. But, on the other hand, I’m sure many are hoping that that upcoming Blue Origin flight just keep going … and going … and going …

    (Far out.):)
  • My problem is with American Capitalism, or as Larry Krudlow calls it, "free market capitalism." I much prefer Democratic Socialist Capitalism, as enacted by the leading EU nations, Nordic nations and Canada and Australia-capitalism with a safety net, and I would gladly pay more taxes for this form of capitalism. Today's Supreme Court decision, that the ACA has been upheld, for the third time, would be incomprehensible in any of the other advanced social democracies!
  • carew388 said:

    My problem is with American Capitalism, or as Larry Krudlow calls it, "free market capitalism." I much prefer Democratic Socialist Capitalism, as enacted by the leading EU nations, Nordic nations and Canada and Australia-capitalism with a safety net, and I would gladly pay more taxes for this form of capitalism. Today's Supreme Court decision, that the ACA has been upheld, for the third time, would be incomprehensible in any of the other advanced social democracies!

    +1. But you're making too much sense! No one in the USA will ever go for it, agree with you, or acknowledge that you are utterly correct. And no good deed ever goes unpunished. Provide a REAL safety net? "Get outa Dodge!"
  • @hank - I would love to take a Blue Origin space trip but it's roughly $17, 990,000 out of my price range based on the winning auction bid of $18M.
  • edited June 17
    Mark said:

    I would love to take a Blue Origin space trip but it's roughly $17, 990,000 out of my price range based on the winning auction bid of $18M.

    Don’t sweat it @Mark. The company up in first-class isn’t usually that great anyway. Suggest you save your $$ and wait until they offer “tourist class” or “coach” seating.

    ISTM ….. The entire trip is only about 15 minutes. Imagine the “buyer’s remorse” you’d feel the next morning having spent your whole wad on a 15 minute ride?

  • msf
    edited June 17
    If I'm reading comments correctly, @crash is positing that by the nature of capitalism employers must maximize profits to the exclusion of all else. @carew388 doesn't seem to be disagreeing with this premise. Rather he is adding the observation that governments provide some measure of support (safety net) for workers.

    That safety net if measured by public social spending as a percentage of GDP is actually lower in Australia and Canada than in the US, though all are below the OECD average.
    https://data.oecd.org/chart/6pfS

    The chart below is a little old (it only goes up to 2012), but it highlights just how low Australia ranks historically. Again, social spending as pct of GDP.
    image

    A full picture involves much more than safety nets. The graph comes from this 2014 paper on Australia that provides both historical context and a much more expansive picture including minimum wages, social inclusion, and so on.
    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4246053/

    Returning to the initial premise - that under capitalism companies must maximize profit to the exclusion of all else, thus leaving workers to fend for themselves. This characterizes the way companies operate in liberal market economies (LMEs). These include the US, UK, Canada and Australia.

    Then there are coordinated market economies (CMEs)
    exemplified by the economies of Germany and Japan. ... CMEs tend to be characterized by relatively long-term relations between economic actors that are also relatively cooperative. ... CMEs tend to have high levels of job security, a good record on training and development, institutionalized forms of worker participation, based on works councils, and relatively cooperative relations between trade unions and employers' associations.
    https://www.oxfordreference.com/view/10.1093/oi/authority.20110803095637561

    LMEs and CMEs are just different varieties of capitalism.
    https://en.wikipedia.org/wiki/Varieties_of_Capitalism
    https://scholar.harvard.edu/files/hall/files/vofcintro.pdf

    None of this is to say that Amazon couldn't do much better, but it does suggest that there are limits to what any company can do within the particular form of capitalism in operates. And there are no "pure" economies, just matters of degree and emphasis.
  • ISTR that Milton Friedman popularized the concept that the only purpose of a corporation was to maximize profits,whereas before, corporations were supposed to optimize profits while balancing the interest of various stakeholder classes. If we agree(we may not) that LMEs are closer to the notion of laissez faire economics than CME's, I would argue that in the US , the status of safety net benefits like Health Insurance, Unemployment Income ,Welfare(TANF) and Food Security is more tenuous than in almost any other major developed nation.
  • edited June 17
    +1...... And now, THIS: dated August, 2019. It is pertinent. I mention this because my other citizenship is in Ireland. Generally the reporter claims that Ireland is stingy, not generous, compared to other EU States. Which runs counter to the "myths" he specifies near the end of the piece.

    I do happen to know that when it comes to health care, Ireland's system provides diabetics anything and everything they need, for free to the individual. Of course, taxpayers ultimately "foot the bill." No surprise there. And I don't have the figure memorized, but there is an income limit in order to be eligible for the medical health care card. But even if someone is not eligible, I have to believe costs are much lower than they are in the States. That would make the social safety net more effective from the get-go.
    https://www.rte.ie/brainstorm/2019/0415/1042763-how-irelands-spending-on-welfare-compares-to-the-rest-of-europe/
  • msf
    edited June 18
    " Capitalism does not care about people, only profit. Capitalism, well-oiled, maximizes profit."

    Just two words, and they aren't "Milton Friedman". Hobby Lobby. A company is free to act on its religious beliefs. Didn't you know that companies have beliefs? They're people too.

    So if a company feels that paying workers a decent wage and treating them with dignity and respect is required by its religious beliefs, it's free to do so. Or if it wants to tithe 10% of its profits to the Church instead of giving the money to its shareholders, who's to say it can't?

    I was gobsmacked in reading Australia given as an example of a "Democratic Socialist Capitalist" country. And again when it was implied that its safety net benefits were any more secure than those of the US.

    For much of its history, Australia has been, shall we say, parsimonious.
    [T]he first colonial pension schemes ... reproduced the distinction between the deserving and undeserving poor. Payments were means-tested and subject to a character test. People had to prove they had led ‘a sober and respectable life’. ...

    [W]hen the Commonwealth scheme came into effect in July 1909, all non-white residents, even those already naturalised before the racist Naturalisation Act 1903, were formally made ineligible for benefits reserved for white settlers. ...

    From 1907, following the Harvester Judgement, employers were bound to pay a male worker a ‘fair and reasonable wage’, sufficient to sustain himself, his wife and their children in ‘a condition of frugal comfort’. The basic male wage became the centrepiece of what has been described as the ‘wage earners’ welfare state’..., but thereafter—in spite of challenging times like the 1930s Great Depression—attempts to extend social protection to those outside the labour market failed.

    [Through two world wars and beyond] [t]he basic male wage remained the foundation of social security policy and the Unemployment Benefits resembled a dole more than an earned social entitlement.

    The Whitlam government (1972–1975) sought to reform the system along social democratic principles. Social security would no longer be merely a safety net, but a precondition for economic justice. Economic justice demanded that social security should be provided according to need, in recognition of the innate value of every citizen, not an assessment of character. ...

    The Poverty Inquiry chaired by Professor Ronald Henderson [in this period] highlighted many systemic problems in the design of social security and put forward a concrete proposal for a basic income scheme , but poor timing meant its recommendations were never realised.

    The last forty years of social security reform mark a steady retreat from the principle of universalism and a return to older notions of ’deservingness’.

    This has coincided with the dismantling of the regulatory frameworks and institutions put in place to curtail both economic volatility and deep inequality. At the same time as deregulation has markedly increased household exposure to risk ..., the social safety net has become less effective.
    Some paragraphs rearranged for continuity.
    http://library.bsl.org.au/jspui/bitstream/1/12232/1/Thornton_etal_Safety_net_to_poverty_trap_2020.pdf

    Many economists subscribe to the theory of path dependence, aka "history matters". It's not sufficient to look at where things are, but how they got there, especially when it comes to stability of social nets. And the history of Australia is not a pretty one. I left out the reference to White Australia in the paper I was excerpting.

    Here's a good paper about much of those last forty years. It compares and contrasts the US and Australia with respect to workfare. Very distinct histories, but with similar outcomes.
    https://scholarworks.wmich.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=3315&context=jssw
    Australia and the U.S. are both liberal welfare states. During the past quarter century, they have begun the transition from a welfare to a workfare state, albeit at different rates and through different paths. Social work developed in each country in ways congruent with the local liberal welfare state, and as such, has been destabilized by the transition to the workfare regime
  • Regarding Australia versus the U.S., this is worth reading: https://healthcarechannel.co/opinion-australian-healthcare-vs-us-healthcare/
  • msf
    edited June 18
    Crash said:


    I do happen to know that when it comes to health care, Ireland's system provides diabetics anything and everything they need, for free to the individual. Of course, taxpayers ultimately "foot the bill." No surprise there. And I don't have the figure memorized, but there is an income limit in order to be eligible for the medical health care card. But even if someone is not eligible, I have to believe costs are much lower than they are in the States. That would make the social safety net more effective from the get-go.
    https://www.rte.ie/brainstorm/2019/0415/1042763-how-irelands-spending-on-welfare-compares-to-the-rest-of-europe/

    Imagine reading a fund's annual report that read: Sure we made less money last year than nearly all of our peers, but look at the killing we made with Tesla. So our returns were better from the get-go. .

    In addition to the Eurostat figures given in the article, you can use the link I gave above for OECD statistics. The numbers are similar.
    https://data.oecd.org/chart/6pfS

    The number for the means-testing threshold is important because that affects perception. If it is low, it stigmatizes people receiving the benefit. Perhaps you recall the brouhaha over "poor doors" - literally separate doors for residents of affordable housing units in condos.

    OTOH, if the threshold is high, so perhaps 5-10% of people are excluded from the benefit or have to pay more, people tend to view that as merely requiring those who can afford it to pay their fair share. IRMAA is an example of that. Somewhere around 7% pay a higher Medicare premium based on income.

    With respect to diabetes, that's handled with a long term illness (LTI) card separate from the medical health care card. There's no means testing for the LTI card. But there are additional conditions. Though you hold Irish citizenship, you would probably not qualify for the card. "To qualify, you must be 'ordinarily resident’ in the Republic of Ireland. This means that you are living here and intend to live here for at least one year. "

    https://www2.hse.ie/services/long-term-illness-scheme/long-term-illness.html

    Of course like most countries, medical coverage in Ireland is not truly universal. The first page that came up when I searched for "safety net Ireland" was this one:
    Safetynet Primary Care is a medical charity that delivers quality care to those marginalized in society without access to healthcare, including homeless people, drug users and migrants.
    https://www.primarycaresafetynet.ie/

    None of this is intended to disparage the safety net benefits that Ireland does provide. The article points out that absent some programs, the fraction of the population at risk of falling into poverty would jump from 15.7% to 43.8%. So the programs are clearly doing a lot of good.

    But they could be better - they could be more universal; the amount spent on them could be brought more in line with the country's EU peers. Or even with the US.
  • edited June 18
    Lewis- Getting back to your original post and considering Amazon in particular, it's surely obvious that they leave a lot to be desired in their corporate personnel policies.

    But, sometimes you just have to take an institution for what it is, both good and bad. In my age cohort all young males were required to perform some degree of military service. The military was hardly known for it's gentle treatment of it's "employees" or it's generosity as an employer. On the other hand, it did serve for many as an introduction to the real world, where some sort of skill was needed to survive. While it did desire to retain a number of the better prospects on a permanent basis, there was certainly no pretense that it offered a working lifetime of job security.

    While it's a bit of a comparative stretch, a very large business such as Amazon, which employs great numbers of employees possessing marginal business or technical skills, does invite some comparison to the military. It does serve to give young people entering the job market a good entry-level foothold into the world of commerce. It does require them to perform to a degree that they understand the realities of what it's going to take to survive in the real work-world. Once an employee has spent a year or so in the Amazon universe they are likely to be better prepared to leave and find a more promising work environment.

    Amazon is what it is. It's no secret that it isn't the world's most generous or caring employer. To go to work there expecting a lifetime job sinecure is pretty unrealistic. Like the military, Amazon usually meets minimum standards for care of recruits, who after all did sign on voluntarily. Does Amazon hire warehouse workers with the promise of lifetime employment and advances in position? I really doubt that.

    There has been an ongoing effort to unionize the Amazon workers, hopefully to give them more leverage in their efforts to improve their work environment. So far that hasn't proved viable, but the efforts to organize will continue, and hopefully will eventually prove successful.

    In the meantime, like many other situations in the unfortunately real word, we simply see Amazon for what it is, and continue to apply whatever pressure we can to encourage it's improvement.
  • @msf You've done more homework than I did.:) You're right: living in the States, without an address in Ireland, I'd not qualify for the healthcare plan. If I rearranged things and did acquire an address over there, I could still have lots more freedom to move around within the EU. There is a form to be filled-out. They all recognize it amongst themselves, allowing an EU person to live (and work) in a different country, and to transfer their home-country healthcare coverage benefits along with themselves, to the new location. So, it's portable. Medicare isn't portable. But I like it a helluva lot better than the insurance plans I was covered under which were employer-based.... And Amazon workers deserve great healthcare coverage, just like the rest of us. Why? Just because we are here.
  • I agree that the history of Australia with regard to the social safety net is not a pretty picture. However, I would venture that Australia's medical schemes of Medicare plus private insurance covers a higher percentage of non-Indigenous citizens than America's patchwork system. Australia's treatment of its Indigenous population is reprehensible and is a topic better addressed in another thread. In simple terms, here is the basis of my discussions here. I have an ACA policy. In October 2016, I was preparing to buy a condo here in Florida, assuming HRC won the 2016 election. Of course, by 3am on 11/9/2016, my hopes were dashed. Under the Trump administration, the ACA was set to be eliminated, replaced by "trumpcare." I was making plans to move to Massachusetts in order to retain some form of health insurance. Fortunately, John McCain singlehandily saved my ACA coverage. Compare that situation to Australia. When Kevin Rudd-Labor lost to Tony Abbott-Liberal in the 9/7/2013, were any Australians contemplating moving because their Medicare was now at risk due to the incoming Abbott administration? Were Australians living in Perth, WA or Adelaide, SA making plans to move to Victoria, NSW , TAS or ACT to keep their health insurance? Probably not. The same could be said for France, Germany, etc. So I'm looking at health care coverage from a personal pragmatic viewpoint and I should have made that clearer from the start. My apologies since I didn't.
    "
  • edited June 18
    @Old_Joe For what it's worth considering the source: https://military.com/join-armed-forces/military-vs-civilian-benefits-overview.html

    Actually, here's a better article: https://theatlantic.com/business/archive/2015/12/military-versus-private-sector/422124/

    But my impression has always been that the military is tough on new recruits during training but benefits-wise once you make it through that training period, it provides excellent ones for career military people--free housing, healthcare, tuition through ROTC. I think the comparison to Amazon thus isn't apt. The problem with serving in the military if you're a heterosexual white male is singular--the prospect of dying or being injured in a war. If you're female, not heterosexual or a person of color, you can encounter a host of other problems, although again I wonder for minority groups if the military isn't actually a less-racist institution than many private employers. Though I don't have the data, I've heard the military is actually more egalitarian regarding race than other professions.
  • edited June 18
    Lewis- I'm sure that you're correct with respect to the current military environment. But I was comparing the military of my teenage generation to the Amazon of today. Just trying to make a point regarding large institutions involved in introducing innocent young persons to the reality of life in a competitive employment environment. It seems to me to be unexceptional that entry-level jobs with large employers are much less than ideal with respect to employer expectations, benefits, and the work environment that they provide.

    It would seem to me that if Amazon were too far outside that norm then other employers would be cherry-picking Amazon employees right and left, and by offering significantly better work environments, forcing Amazon to improve their operation.
  • @Old_Joe : I knew what you were talking about from the get go. +1
    Enjoy your weekend, Derf
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