Saturday, October 6, 2018

CEO Jeff Bezos Announces Amazon Increasing Warehouse Workers' Pay to Minimum of $15 an Hour, While Actually Paying Them Less

No one is more brilliant at public relations than Amazon's Jeff Bezos.

As founder and CEO of Amazon, Bezos has managed to make himself the richest man in the world, all the while running a business that rarely sees a profitable quarter.  Bezos does it by continually coming up with new ideas, getting massive publicity for those ideas, and then having people throw money at his company.  Of course, those ideas rarely translate into a profit, but never fear, Bezos is on to another idea to keep the money coming in.  Ponzi anyone?

Bezos' PR genius reached new heights this week.

He announced that Amazon is raising the minimum pay at its warehouses to $15 an hour.  In conjunction with that increase, Bezos indicated he would urge that Congress increase the minimum
Jeff Bezos
wage to $15 an hour. Bezos was lauded by Vermont Senator (and socialist) Bernie Sanders who had previously introduced legislation aimed at forcing Amazon and other companies to offer workers higher pay so they didn't have to seek out government benefits.  Senator Sanders praised Bezos for the move.

Apparently, it doesn't take much to dupe Senator Sanders.  But, to be fair, plenty of media types were duped as well as they, without investigation, reported the move as beneficial to Amazon employees.

To begin with, most Amazon warehouse employees were already near $15 an hour, an almost mandatory rate to get decent employees in the current competitive job market.  Most Amazon employees will see a $1 or $2 increase in their hourly pay.  But here is the kicker.  In conjunction with the raise, Amazon will no longer give employees stock and will cut out monthly bonuses known as variable compensation pay, commonly referred to as VCP.

Having worked at Amazon, I know how lucrative VCP can be.  VCP is based on attendance and the performance of the building.  Show up for work and if the building does well, an Amazon employee can earn up to 8% of his monthly paycheck in the form of the VCP bonus.  During the several month peak season, this bonus doubles to as much as 16%.  The monthly bonus I received ranged from $100 to $500, or more, depending on the month.  I would estimate that, over the course of a year, I earned about $3,000 in VCP, quite likely more.

Do the math.  If my pay goes up $1 an hour, that is an extra $2,080 in my paycheck over the course of a year.  If VCP earned over the course of a year is $3,000 while a single share of stock is $2,000, pray tell how does an extra $2,080 puts me ahead?   Amazon responds that the extra $1 or $2 is more certain.  But VCP was certain too.  You simply had to show up for work as scheduled, and you were going to receive at the very least the attendance portion of the bonus.

Jeff Bezos' announcement is not about helping Amazon workers.  It is about garnering positive press coverage while trying to force his competitors to pay more for their workers via a government-imposed mandatory minimum wage.  Bezos is doing all this while scoring positive coverage from a compliant media accustomed to simply reprinting unquestioningly anything he has to say.

The Bernie Sanders of the world are focusing on the wrong issue. Amazon's pay and benefits have always been better than average when it comes to warehouse work.  The problem with Amazon is the horrific, often inhumane working conditions at their facilities that have been detailed in scores of media accounts.  The fact is Bezos, a card-carrying liberal, treats his workers like he is running a 19th century sweat shop.  If Bezos truly wants to do right by his workers (and stop the excessive turnover rampant at Amazon facilities), he might try treating them with respect and dignity.  After all, aren't liberals like Bezos supposed to be about standing up for the workers?

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