I can understand some of the frustration, especially for those making just shy of $15 before the raise, but even if the raise is only from $14 to $15, that still is around $2,000/yr (assuming 40 hour work week) that is guaranteed the way a bonus generally isn't.
I would almost always prefer a raise over a one-time bonus for that exact reason. In my experiences, I can't always count on my company giving me a yearly bonus.
And the Amazon statement in the article says "more than compensates for the phase out of incentive pay and future RSU grants."
The conflict is probably due to the fact that RSU grants were very lucrative over the last few years. If you assume that the stock is going to quadruple in the next 3 years, then yes, a RSU bonus is probably better than a raise, but I don't think Amazon will be a 4 trillion dollar company in 3 years time...
> The conflict is probably due to the fact that RSU grants were very lucrative over the last few years.
The conflict is probably due to the fact that Amazon publicly and loudly announced the raises alone in response to political pressure, to pretend they were giving people the same deal but with higher hourly wage, and the the benefit cuts became known later and separately. It would be a conflict even if there was no question that everyone was getting at least a small net raise, because even if that is true everyone is also getting a smaller net raise than Amazon tried to get public credit for. Being caught in a lie, including a lie of omission, by people concerned with the issue about which you are being deceptive, produces (or exacerbates) conflict.
correct. For companies with heavy RSU based compensation they assume a certain % of growth every year. Say 10%. Let's say Amazon did 50% year over year. You did better than you expected. However, next year you will get less RSUs since you made a lot more than planned in the previous year.
Having a very good year, as I imagine most Amazon employees did, does not mean you should get the same windfall money next year. I'm sure that is not properly understood.
Not properly understood? No, the bonuses were taken away and the pay rate was raised instead. However, Amazon said people were just getting a raise because of the poor pay they've been getting. They weren't promised a different way of getting paid. They were promised a raise
I think the article misunderstood how the raise works. It's an increase in base pay plus existing multipliers. So if your base was 10 and you worked nights, for example, bringing you up to 15, your base will now be 15 and your multiplier brings your pay up to 22.5.
They repeatedly said that nobody was getting a pay cut
From the article:
> “Again, all hourly operations and customer service employees will see an increase in their base pay, as well as in their total compensation,” Amazon SVP Jay Carney said in the letter, obtained by the Jeff Bezos-owned Washington Post.
This is also good for workers in that most compensation conversations in my experience (professional agency recruiter for 2 years now), start with the employer asking "how much did you make in your last role"
Anyone answering that question would be including bonuses. Or maybe you use a question like that to determine who the suckers are? How does one’s compensation at their previous company have any bearing whatsoever on how much value they can provide to a new employer, other than trying to low-ball them?
This makes plenty sense but, still, why not keep both when they can clearly afford to? It really doesn't look good. They say the new setup more than compensates for the removal of the old. But how much more? Does it cost amazon 5% more, 20%?
I think even from a PR perspective it might be the right move. In prior news cycles about Amazon's compensation, I don't think we heard about all the people who apparently were already making $15/hr after expected bonuses.
In the past 5 years, Amazon's stock has gone up almost 6X. Anyone who got paid in RSUs almost certainly made out well. But, as Amazon points out in their statement, past results are no guarantee for stock performance going forward. I can pay you $500 in cash or I can give you $500 worth of stock (which vests over a period of time). Generally speaking, the cash (which you get right away) should always be valued more since you can spend it as you want, including using it to purchase stock (which these days can be purchased for nominal trading fees).
Furthermore, salary increases are always worth more than equivalent end-of-year cash bonuses, since you lose out on bonuses if you leave your job mid-year.
They'll be comparing the instantaneous value of the stock with the value of the raise.
So if you previously got pay for the month of let's say $2,000 plus $400 in RSUs (the value of the RSUs at the moment they're assigned), then you might lose the RSUs but get paid $2,500 per month -- a $100/month raise.
If you then feel that Amazon stock is a good investment, you can buy $400 of Amazon stock on the public market, and you'll be where you were before, plus $100 in cash.
Not to mention that owning stock in the company you work for is not a very diversified portfolio. If Amazon crashed and filed for bankruptcy for some reason, you would lose both your job and your savings. That doesn't seem very likely given Amazon's size, but look at Sears.
"Bezos is no fool. He will reduce his headcount, and step up his automation effort to eliminate as many low-skilled jobs from Amazon. Then he will lobby Congress to increase the minimum wage for his competitors that still employ lower-skilled workers. As these competitors will lack the resources to automate, they will be driven out of business, and all their workers will lose their jobs. Less competition will make it easier for Amazon to raise prices." - Peter Schiff
I'm all for voluntarily raising wages for your employees; that's a great thing. But if we see that Amazon is backing efforts to raise the minimum wage, we'll know Schiff was right.
The problem I have with this argument is that it sets up Amazon in a caricature that always makes them look evil and anti-labor:
1) Don't support lowering the minimum wage = Democrats + labor groups hate on you for not paying workers, even if you can hire more of them = anti-labor
2) Support the minimum wage nationally + across their international workforce = "This is an automation ploy + competitive advantage = anti-labor
There seems like no ideal approach for low-skilled labor here that won't seem anti-labor in the short-to-medium term
Bingo! This debate is almost entirely predicated on all sides claiming to know the unknowable, and predict the future outcomes of policy changes where not only is the evidence and data very mixed, but where we aren't really sure what outcome we want. This is terrifying to me, because we have smart people with zero skin in the game playing with the poorest, most vulnerable people's lives in an ideological shouting match.
On what outcome we want, I think people are confused about the actual affect minimum wage has. Some people will lose their jobs when minimum wages increase. That is just inevitable, and not something anyone really argues against. The most positive response is that job losses will be small, and/or those jobs are usually not very pleasant anyway.
If we assume someone on an unlivable wage can either have their wage increased to livable, stay the same - i.e. minimum goes up, hours go down, actual pay is ballpark the same - or lose their job and become unemployed, what population level outcome is acceptable?
In the most simplistic case, what split of people losing jobs and becoming unemployed is acceptable if everyone else gets a livable wage? 60 (made unemployed) vs 40 (employed)? 50-50? 40-60?
What if the the group that works for unlivable wages stays almost static, and it is 10% job loss, 70% no change, 20% increase? Is that the success or failure?
These examples ignore people outside this group, and it is possible that some people who currently make livable wages today could have their hours cut or accelerated automation catches them as well. Even with the most simplistic outcomes, I don't know what numbers society wants to optimise for. How can we judge if a policy works if we don't know what we want to achieve?
It also ignores the economic diversity of the USA. Prices will rise a LOT in some places if Seattle/SF minimum wages are applied to less economically strong states, and the results could be disastrous. AFAIK (data is a few years old) there are a few states with median wages less than $15 in the USA - see https://www.washingtonpost.com/opinions/free-lunches-like-th... A blanket $15 is troublesome, while maybe ineffective (if it works) in some other states.
So it seems to me we have no clear objectives, no outcomes we are excited by, but what we do have are people for whom minimum wage laws are an article of faith. Any attempts to actually measure the affects of any of this will be fought vociferously by all sides, usually with competing BS studies. You just have to see what happened in Seattle, where a long term, detailed but ultimately negative study was countered with a hastily written pro-report for ideological reasons.
Terrifying certainty in an uncertain domain combined with unclear goals and a determined effort to not measure? Nah, nothing could possibligh go bad here...
I kind of think Amazon botched this from a PR perspective. It could have been a total win for them. Instead, it looks like a scam. Even if it isn't a scam, and employees will truly be better off (which is probably true), it at the very least failed to capitalize on the opportunity to look like a progressive company that cares about its employees.
This sort of hand wringing seems like a distraction from the likelihood that Amazon has moved up the date* in which these jobs will be eliminated. Whether employees are netting out the same or not is going to be moot. If it's similar though then that really doesn't seem like a good deal longer term.
*Robots will be able to do the jobs for $15 hour sooner than they'll be able to for $7 an hour. The math will accelerate the move to automation.
I don't buy this argument. The problem usually isn't that robots are too expensive to do the human jobs, it's that robots can't do the human jobs, period. If something can be done by machine, it is done by machine, and that's been true since the beginning of the industrial era. Entire job classifications get wiped out by new automation, all the time.
At this point, the jobs that are still done by humans are jobs that require judgment and intuition. Those things are very, very difficult to emulate in software, unlike repetitive motions and data lookups.
The Amazon of China, Jingdong, has a fulfillment center that handles hundreds of thousands of packages a day and employs just five people: https://youtu.be/RFV8IkY52iY
Amazon used humans because the investment to build full automation was too expensive and take too long to build out compared to spinning up human labor. However now the logistics of the fulfillment center are well understood and they can be rebuilt with full automation.
It was clearly a matter of time and money, not “these jobs are impractical hard to do with automation”
Automation doesn't work for everything. Like when the product being shipping is of varying size and shape. Like clothing, books, pouches all in one box. Or stacking the boxes in a truck. Or look at something like car assembly. Tesla still uses people to route wiring harnesses through the car body because robots can't do it well. Many simple things can get automated but there is still a lot not yet possible.
Why does it matter if automation doesn't work for everything. There is a particular breaking point in unskilled labor where doing enough means lots of unemployed with little chance of being reeducated for the necessary jobs the future demands.
How many human beings do you need? Web search lists 90,000 fulfillment center employees at 25 fulfillment centers, so let's assume 3600 employees per warehouse. Amazon ships about 1million packages a day, so let's estimate 40,000 per fulfillment center per day. So that's 11 packages shipped per employee.
Now, let's assume a 0.1% (probably very high) item drop. So about 40 packages will be dropped a day. How many people do we need to run out and get 40 dropped packages? Certainly not more than 40. So at this failure rate, I can reduce the number of employees by a factor of 3600/40 = 90x!
Clearly, handling failure cases is a much lower workload and needs far fewer people in the pipeline. Like I said, Jingdong has a fulfillment center that does 250,000 packages a day they claim, and they say only 5 people are needed to babysit its operation.
The thing is, Amazon's warehouses are still designed around human beings. Stowing, picking and counting in bins with random assortments and arrangements of items requires visual, spatial reasoning and fine motor skills that are still difficult to automate. The Jingdong factory doesn't appear to be using random item placement and appears designed entirely around automation.
I don't think Amazon can easily automate its existing warehouses beyond a certain point (I don't know what that is, they probably haven't reached it yet) because so much effort has been put into optimizing them for a human workforce. Obviously, Amazon is going to automate away as many jobs as it can, but it's not clear that full or close to full automation would necessarily be cost effective.
BTW, if you look at the Jingdong video, they're not doing Kiva. Kiva was designed for human packers to bring human-sized shelves to the packager.
Jingdong is doing what Musk talked about: A 3D space filling factory. They've build a Voxel-like 3D positioning system of shelves. The entire warehouse space seems to be used, stacking stuff up to the ceiling. Robot sleds seem to be able to address any X/Y/Z coordinate in this space, moving down to where a robot arm unloads a palette.
So basically, it's Kiva bots, but on 3D degrees of freedom.
They do have Kiva-style bots for the final part that loads the wrapped packages onto the Jingdong delivery trucks.
Not yet, but one self driving takes off, delivery drones are probably one of the first use cases to be used. Hell, they don't even have the 'unrestricted left turn' problem that cars have, because UPS already restricts its drivers to right turns only or restricted left turns only. You just need a self-driving UPS truck, and for a certain subset of packages in a certain weight class, just a self-propelled dolly that comes out of a ramp in the back of the truck.
I'm guessing no more than 20 years before all of this is automated. And then what for low skilled labor?
But they are being replaced with engineers, salesmen, and customer support, not with warehouse employees. Different skill sets and likely, a net loss of jobs for the poorest and a net increase of white collar positions.
That replaced mostly manual labor with mostly manual labor. The millions of people involved in the horse industry supply chain, went to cities and they and their descendants worked in factories. A horse required a lot of non-mass-produced infrastructure to support, the feed, the shoes, the buggy, the saddle. There were millions employed in this industry.
That was replaced by cars. And while industrial machines automated a lot of what used to be manual blacksmith/tradeskills work, cars were made from thousands of parts, which required a massive new supply chain.
Software automation is completely different, it scales and replicates in ways that don't require new replacement labor. WhatsApp serviced 1 billion users with 33 employees. That's scale.
So when self driving trucks kill 8 million trucking supply chain jobs and self driving cars do reduce the need for car ownership, for parking attendants, valets, meter maids, traffic cops, uber drivers, etc, low skilled people won't suddenly find those millions of jobs replaced with similar jobs with similar skill levels in another vertical. They'll just be....GONE.
And keep in mind, the "gig" economy largely replaced good, reliable, jobs with temporary, inconsistent, jobs. The industrial era, with it's big centralized unions, who regularized pay, the work week, benefits, pensions, et al, was not re-invented for the new service and gig industry.
The idea that technological advancement doesn't create structural unemployment is largely an article of faith. What it means to have a middle class, blue collar, skilled position with predictable work/life balance, income, and benefits has largely evaporated for a good chunk of the country. What comes next after automated logistics, automated factory assembly, automated deliver and self-driving vehicles? Hell, Google Duplex even shows you a lot of the frontdesk services can be reduced along with concierge services to only those instances that go off the rails.
We better start thinking about these problems and stop with dogmatic faith that something big will come along to employ all the displaced people. I'm talking about either universal basic income, government make-work, or something no one's thought of yet.
Yes, I'm well aware of all this, and thinking about it a lot. I don't think the 20th century "jobs" model will work for much longer. But I don't like the "We can't do anything, everyone is doomed" attitude, either. The transition from a farming economy to an industrial one wasn't just about new jobs. Our standard of living changed massively. We've gone from a world where 90% were illiterate and living in extreme poverty to one where 9% are illiterate and living in extreme poverty. We live in a world now where "not actually in poverty" represents near-universal access to wealth that didn't even exist for the richest people on earth - cars and planes, the internet, etc.
The next step, I think, is cheap universal energy, solar/wind + storage creating an energy supply that is cheaper and doesn't cause geopolitical resource conflicts. Near-free energy and near-free information is an extraordinary combination that makes amazing things possible.
> Robots will be able to do the jobs for $15 hour sooner than they'll be able to for $7 an hour
This doesn't make sense. Increasing workers wages doesn't change the rate a which automation technology becomes available. The bottle neck is the availablity of capable automation systems which is unrelated to workers wages.
Even if there was a technology available that cost $15 an hour and worker wages were $7, increasing the workers wages doesn't decrease cost of the technology.
>Increasing workers wages doesn't change the rate a which automation technology becomes available.
Sure it does. If your current costs increase significantly, the math on funding research to automate the process changes. Not simply because you may fund research to fix your increase in cost, but also because there is now a more viable market for others to do the same.
Lets say there is an industrial machine that TCO is $50,000 per year to operate.
Lets say a human doing the same task, same quantity, and same outcome, for low pay only costs $20,000.
It would be crazy not to use humans. Trying to drop the cost of the machine is likely going to be very difficult because there will be no demand.
Now, give the humans a raise and insurance. Lets say that brings up the total human cost to $48,000. We'll, it is actually worth getting the machines now. Seems counter intuitive even when the machine is $2000 more. But it is almost granted the cost of the machines will drop now there is a mass market for them.
Raising the wages of humans so they are the same cost as machines doesn't make the machines cheaper. Amazon could keep workers wages low and still buy machines and create the market. One doesn't necessitate the other.
Amazon is correct. Equity is an inherently risky asset and is something better suited for those who can accept the risk.
If you're making $12/hr, adding Amazon stock on top is a feast or famine situation and would almost certainly cause issues in the next few years. We're on the end of a 10 year bull market, and the most likely situation is trending down.
As the saying goes, a bird in the hand is worth two in the bush.
While it is targeted at bezos I think the name is more of a joke if anything. After all even in the document that you linked it lists several other countries.
With that said I don’t think Bezos’ move is based on Bernie. In the current political climate there is no way a bill like that would ever pass. I would guess this is based off of public pressure but I’m not 100% sure what this move if for.
I'm not convinced the bill, or the political climate in general, led to this. I think the unemployment rate did. Amazon is looking at their holiday season staffing needs, and wondering how to compete against all the other businesses fighting over that limited labor pool. A big "$15!" splashy headline looks great then.
Then business does business, and attaches a bunch of cost-saving measures to it, and then it looks bad. No different than the normal corporate development cycle. Not enough leadership, a bunch of people doing what's best for their department rather than the whole company. Sad.
For someone who worked at one of these jobs at Amazon for 3 years
Basic wage: X
Bonus Wage: Y
Under the new system
Basic Wage: X+Y
Bonus Wage: 0
Total Wage: X+Y
The net effect is zero but principly the value of the bonus has been reduced to nothing, after the loyalty of rhe employee and the benefits that come with that, have already been collected by the employer.
Seems somewhat unfair from that perspective, but they can do what they want I guess.
This is the problem with media. It starts with the media focusing on how many Amazon workers aren't making enough money. Political pressure mounts and Amazon increases everyone's salary to minimum $15/hr.
The media then changes focus to those that feel slighted by their loss in bonus. They stop focusing on the people who are now happy and keep focusing on the small percentage of people who are unhappy, and seem to revel in creating a narrative where Amazon is STILL doing something wrong.
This is the fake news culture that is driving people like me away from actually believing the news.
OK slow the heck down here. I'm not convinced that what you're describing is a new phenomenon or just a natural outcome of the fact that the news needs ad revenue and thrives on clicks/views.
There was a point in time where "fake news" meant news that was completely invented and had no grounding in reality at all with the express purpose of misinforming people. I think it's really important that we don't (continue to) conflate this concept with the concept of clickbait.
I don’t know if I would call it “fake news,” but it is certainly derived from the 24 hour news cycle. When a new story is constantly needs recycling a old one is cheaper than finding a new one. This is’nt fake just a rehashing with a different attitude.
Unbiased point: Amazon can raise wages to $15/hr (or higher!) and STILL do something wrong related to how they compensate their workers. Pay/compensation structures for many workers are more complex than just "how many dollars are you given gross by your employer". If their compensation isn't actually better, then there's reason to draw attention to it.
As someone below said: If past(bonus + base pay) = current (base pay + bonus) it doesn't matter what the numbers are for base and bonus, they're still the same. And if things are still the same, there will still be people who are upset with their compensation.
The outrage machine climbing ever higher toward peak nuttery. We already seem to be a point where the majority of the media output is focused on spurring outrage in a given story, talking about something we're all supposed to be outraged about, or trying to spark outrage where there shouldn't be any. Then it hands off to social media, where the consumers compete to see who can be the most outraged, for social tribe points.
The cash bonuses were monthly. I used to work in those warehouses. They definitely helped. Amazon and Bezos could definitely afford to keep all those programs and still give those employees a raise they deserve. The working conditions there are terrible.
That's true for shares, but NPR had interviews with Amazon warehouse workers that indicated the cash bonuses are monthly. One of the interviewees indicated his bonuses would sometimes equal his salary during busy periods like the holidays.
It depends on whether your entire building exceeds productivity by a certain amount, which isn't guaranteed. Also, employees lose half or all of their bonus for the month using UPT, which puts them one flat tire or traffic jam away from potentially losing out even if they would otherwise get VCP that month.
When it works, it works, the problem is you can't predict it, and since you can't predict it, you can't depend on it.