My friends over at Left Voice (a newspaper published by a Marxist group of NYC college professors, grad students, and assorted failed academics) have finally found some real workers to champion--Amazon warehouse employees. These workers actually earn an honest paycheck, unlike the teachers, professors, and grad students who just mooch off taxpayers and are the typical topics of Left Voice journalism.
The article, entitled Grassroots Unionism: Lessons from the Victory at Amazon, written by Tatiana Cozzarelli (grad student, Urban Education) and James Dennis Hoff (English Prof, CUNY), is a comprehensive review of the successful unionization effort at an Amazon warehouse on Staten Island. The authors are competent reporters and good writers--the piece is worth your time.
What always astonishes me is how such intelligent, well-educated academics can be so hopelessly ignorant about basic economics. Here is a lede paragraph (links in original):
Amazon, the second-biggest employer in the United States and the third-largest corporation in the world, has made record profits off the backs of its more than 1.5 million employees, many of whom work in unsafe, sweatshop conditions in warehouses where they are treated like human machines. In 2021 Amazon raked in an astounding $33.6 billion in profits, yet it still pays its warehouse workers on average less than the living wage. Meanwhile, the company spent more than $4.3 million last year alone on anti-union lawyers in an attempt to kill organizing efforts at warehouses across the country, including Bessemer, Alabama, and Staten Island. After all, demands put forward by a union, including the end of forced overtime and a higher wage, would significantly hurt the profits made off hyperexploited workers.
Let's give credit to our authors for linking to sources--most other pages on my Beat don't do that. Accordingly their facts are largely correct--but incomplete because Amazon is really several, mostly independent, businesses. There is the retail business, which produces by far the largest revenue, but which is barely profitable. It competes directly against Walmart and Target, stores which have margins on the order of 3%--it's hard to imagine Amazon's margin is any bigger.
Then there is Amazon Prime, which is mostly in the entertainment business, competing against Netflix and Hulu, etc. I don't believe this is earning much money.
Finally is Amazon Web Services (AWS), competing against Microsoft Azure and the Google Cloud, providing basic infrastructure software and hardware for large and small enterprises around the world. AWS is hugely profitable.
Take, for example, the 4th quarter of 2021. During that quarter Amazon had a net operating profit of $3.5 billion. Of that, AWS alone generated $5.3 billion in operating profits, meaning that all other Amazon businesses lost $1.8 billion. In the Q1, 2022, it seems the retail business is barely breaking even.
So unlike what Academicians Cozzarelli and Hoff claim, Mr. Bezos is doing a shit-lousy job of hyperexploiting those poor warehouse workers. Apparently they can't even cover their own salaries and need to be subsidized by the folks over at AWS. If that continues then obviously the retail business will gradually be shut down.
One way to return Amazon retail back to profitability would be to lower the salaries of their employees. If you take our Left Voice friends literally, then Amazon could do that quite arbitrarily--after all, the workers have absolutely no choice but to work at Amazon "where they are treated like human machines." So why doesn't the company do that? There is only one reason--the workers (who are not slaves) will quit. In order to have a work force large enough to get the job done, Amazon has to pay enough in wages and benefits to make it worthwhile for them to come to work. This is effectively the market rate.
The new union now established at a Staten Island warehouse is claiming that Amazon could without penalty raise wages to $30/hour. But naturally there is a penalty--Amazon would have to raise prices to consumers. It costs me $30 to have 24 rolls of toilet paper delivered to my door. I'm willing to pay a little more than Walmart since at my age the home delivery is a real advantage. But if the price were to go up to $45 or $60 then I'd buy toilet paper at Walmart instead (or Target or Aldi or wherever).
Amazon retail is in a very competitive business--they can't arbitrarily raise prices. Now inflation forces them to raise prices--but their competitors are under the same pressure and they all have to do it in together.
Here's the rub that Ms. Cozzarelli and Mr. Hoff don't understand. Jeff Bezos doesn't pay his employees anything--not one solitary dime. The people who pay the employees are the consumers--people like me. It's all fine and dandy when out of sympathy I think warehouse workers should get a raise, but when that cost is inevitably passed on to me I'm gonna jump ship and buy my toilet paper someplace else.
So what's wrong with a union? If all the union did was advertise the plight of warehouse workers and plead for me to pay more for my toilet paper, then there's nothing wrong with the union. But that's not what a union does. An example will illustrate.
There's a guy who mows my lawn for me, and every time he does that I pay him $40. He's running his own business and I pay him directly--there is no company and certainly no union involved.
Ideally I'd do that with the Amazon driver who delivers my package--she drops off the toilet paper and I give her $30. But of course it's not that simple. Probably half that money has to go to the manufacturer, and the other half is spread amongst a whole lot of people. Not only is there the delivery driver, but there are truck drivers, warehousemen, forklift operators, packing & shipping people, etc. It wouldn't surprise me if a couple hundred people touched my box of toilet paper en route from the factory to my house. All of them need to get paid for their services.
I have no way of knowing who any of those people are, and even if I did I have no way of apportioning my $30 between them. So I hire somebody to do that accounting for me--his name is Jeff Bezos. His job (insofar as he has a job beyond building his yacht and cavorting with his girlfriends) is to make sure everybody gets paid their share.
Or, put more generally, that's what management does. Obviously management has to be kept as small and efficient as possible--otherwise it costs me money, and/or the workers I want to pay won't get paid.
The problem with the union is that it inserts another layer of management that I have to pay for. They want control over how overtime is distributed, how long and how many breaks workers get, what the specific job descriptions are, etc. This is just inefficient, and the money will come from me, or more likely it will come out of the workers' hides. Or the AWS employees will have to pay for it, which is also unfair.
I think most Amazon workers understand this. The company's employees in Alabama voted down the union, as did workers at a second warehouse on Staten Island. It is only at the JFK8 warehouse that voted in the union. Ms. Cozzarelli and Mr. Hoff do a good job explaining why that happened--the union had a charismatic champion in the person of Chris Smalls, and management behaved rather stupidly. Without disputing their account, I think it's probably a bit one-sided--one would like to hear the company's side of the story, too.
But Cozzarelli and Hoff do appear to be substantially correct--Amazon has fired several managers from the JFK8 warehouse because they obviously blew it.
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