Labor pool empty: Amazon could run out of workers in two years

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High employee turnover at central locations
Reports on the working conditions at the online mail order company
Higher starting wages and more efficient hiring practices could expand the pool of employees

Recode, a US tech blog and subsidiary of Vox, published a report on an internal Amazon memo saying Amazon could not recruit enough workers in the US in two years.

The study from mid-2021 states that the available labor supply for some logistics centers will be exhausted “if we continue as before”. What is meant is the extraordinary staff turnover, because according to the internal report, the turnover rate was 123 percent in 2019, and the year after it even rose to 159 percent. In comparison, turnover rates in the US transportation and warehousing industry are significantly lower overall, at around 46 and 20 percent respectively, according to figures from the US Bureau of Labor Statistics. 59 percent for the years 2019 and 2020.

Fluctuation of replaceable employees vs. “Best place to work in the world”

The study shows how fragile the success of the online giant is and how great the challenges are in maintaining the advertised services, such as Prime deliveries. Due to the Omicron wave in the USA, Amazon is actually overstaffed at some locations: Due to high levels of sick leave, more employees were hired to maintain the logistics chains. With the return of the employees, some positions are now filled twice. However, this should be compensated for by the high fluctuation.

Until now, it has seemed as if turnover was desired from the top, as there were concerns that employees who stayed with the company too long were less motivated. Amazon founder and former CEO Jeff Bezos, in particular, viewed warehouse workers as necessary but interchangeable, as reported by the New York Times.

In his letter to shareholders, Bezos announced his intention to make Amazon “the best employer in the world” and the “safest place to work”. It is clear to him that Amazon needs a better vision for the success of its employees. Now that he is no longer CEO, he can do what he does best as an inventor, realizing new ideas and projects. And that includes Amazon as an employer. At the same time, however, he emphasized in more than one place that the focus on customers would not be diluted as a result.

In stark contrast are reports of working conditions at the online mail order company, which include total computerized surveillance and high injury rates. An article in the Seattle Times, for example, reports a 20 percent increase in the injury rate at Amazon for 2021. The so-called “time off task” scale, in which an employee’s unproductive times are added up and can lead to minus hours relevant to dismissal, is also rated as problematic.

31,000 former Amazon employees were interviewed for the internal study, many of whom judged the working conditions to be significantly worse than those of the competition. It is also not uncommon for employees to be fired automatically by computer systems and without exception for a number of minor violations, despite any positive feedback from supervisors. In the article, Recode writes about the “automatic ax” that hits an employee when he shows up for shift and the key card no longer works, and cites the case of a warehouse worker from the Bronx, New York. According to Amazon policy, an employee terminated in this manner may apply for the position 90 days later.

Possible adjustment screws for solving the labor shortage

In the Phoenix and Inland Emire regions of California in particular, staff could become scarce. Especially at locations in the USA that are central for logistics, the pressure on personnel is particularly high due to the proximity to logistics centers of competitors such as FedEx. There is little leeway for the HR department when it comes to new hires. When selecting new locations, however, the workforce potential in the vicinity of the location could be given more consideration in the future.

Among other things, the income level and the proximity of the place of residence to the current or planned locations of the mail order company were used to calculate the labor force potential. However, the pool calculated in this way is not sufficient to cover the need for workers. The low unemployment rate in some US locations is also reducing the pool. Internal factors such as hiring practices and the lower wage level compared to competitors also play a role. According to the report, Amazon needs an average of 6-7 applicants to fill a storage position. According to the Amazon report, the hiring practice is not efficient due to extensive background checks and, at times, drug tests.

An increase in starting wages is another lever Amazon could turn: According to the internal memo, if wages were increased by $1, at $1.50 an hour more, the pool of potential workers could expand by 7 percent the pool of potential employees could even be expanded to such an extent that the hiring options would be extended by three years.

Editorial office finanzen.net

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