Sunday, November 11, 2012

Is Amazon a worse employer than Wal-Mart ?

A note about Amazon and the warehouse industry

I keep seeing persistent stories about Amazon warehouses being a tough place to work.  I think Amazon may be a high profile case in a very tough industry.  The fulfillment industry is a very competitive industry with low margins.  The industry is benefiting from a huge surplus of low-skilled unemployed workers in the US and over capacity. Amazon is just applying it's big company know how to squeeze the workers a little more.

Warehousing is a lot tougher now than when I worked in one during a summer in Atlanta.  I regularly worked in 90 degree heat until I found a better job.  Working in a warehouse used to be a "good" job.  The staff was mostly women "pickers" and mostly male equipment operators. The jobs has some good points: you were inside when it rained; we had a break room, you could take items that were damaged or not and there were forklifts for heavy lifting. The work was not that hard.  You got breaks.  The downside was always pay.  It was not much money, but better pay than fast food or retail.

My job was to pick up the printout and walk around picking items from the shelves and put them in a giant laundry cart. I didn't think the work was that bad; just hot. After I left, I discovered the real reason the work was not hard:  The boss did not ask us to pick very many items.

Now, in a modern warehouse everything is measured. Everything is check against "best practice." The work is a lot tougher.  The work can only be done by the young and physically fit. Warehousing has traditionally paid more than retail work.  But the working conditions are so difficult than many people move back to retail jobs when they get tired or injured. Turnover are high.  Many warehouses outsource their personnel need to bogus temporary agencies to skirt pay and benefit regulations.

In many other posts, I have detailed, the number one issue I have with retail sales: low pay and poor benefits.  However, working conditions are decent because I believe, they have contact with the public.  Retail companies do not want disgruntled employees dealing with the public. When I visit retail stores in my area, the workers seem to treat each other with friendship and respect. In a modern warehouse you seem to get low pay and no respect.

Why are warehouse such a bad place to work ?

Warehouse are bad places to work because warehouse productivity is do easy to measure.  You measure the number of "moves" and "picks" per hour. Information technology (like RFID) lets you track everything inside the warehouse.  In warehousing, there is no extra "stuff" to confuse the productivity issue. No customer interaction (some places forbid talking to co-workers). None of this: "Did the person great me with a smile and look me in the eye ?" subjective BS stuff.  Just cold hard facts such as "error free pick rate" or "packages shipped per shift"

And, worse if you can measure productivity, you can increase it. Amazon is large enough and sophisticated with computers and business processes to try and do just that.  The issue is that this increased productivity creates poorer quality jobs for the workers. Note: many of the practices Amazon uses are common in the industry, it just looks like Amazon squeezes a little harder.

There are several physical limits to improving productivity: Physics, Time and People.  1) Physics. People and machines can not move faster than a certain rate without jeopardizing warehouse safety or breaking the laws of physics.  For example, there is a maximum speed a fork lift can travel around a corner. Or a limit to how fast you can pick items in a bulky coat inside a refrigerator. 2) Time.  Everything in the warehouse takes time: travel time, reach (pick) time, sort time, receiving and put-away time. Handling X number of goods takes Y time.  And the time is fixed. 3) People.  People can only work so hard before that make mistakes or won't do the job.

Amazon, using information technology, has optimized the use of all three resources.  The issue is that Amazon has invested enormous amounts of money on warehouses and wants to get a productivity return.  And the only place that can come from is by leaning on the workers.


Loyal readers know we always put in our two cents and propose some solutions.. That is why writing a blog is so good, you can mix fact and opinion.

Standard solutions

Raise the minimum wage. Support living wages in warehouse communities.
Get rid of "sham" subcontractors. Encourage full time work, pay and benefits.
Actively enforce warehouse building code, health and safety laws.
Name and shame: make Amazon warehouse working conditions more visible
Don't buy from Amazon.
Get better terms from Amazon when they locate in a community.  Cut down on the tax breaks.
Convince Amazon that that warehouse "profit centers" can have a lower rate of return than other lines of business.


Here are some resources from the internet related to Amazon and warehousing.

Amazon promotes warehouse jobs at Amazon Fulfillment Careers.
Mother Jones has a story on poor conditions warehouse workers face.
NJ.Com has a story on Amazon planning to open two NJ warehouses including one in Robbinsville, NJ.  Here. Local businesses are complaining about Amazon not collecting state sales taxes and receving location subsidies.
Allentown,PA morning call has another story here.

Fulfillment Center Definition:

Hey when did a warehouse become a fulfillment center ?  Fulfillment centers provide more than just warehousing, order picking and shipping.  These new centers also provide customer service, packaging and relabeling and light manufacturing. They service multiple retailers while a standard were is own by the company. They also operate as separate profit centers as opposed to traditionally being part of the cost of goods sold.


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