When Employees are Suckers

June 15, 2021

Why Amazon's approach to labor relations is wrong for the food industry.

Amazon doesn’t get a lot of my professional attention. It sells plenty of food products, but those products are all made by others, and food isn’t really Amazon’s main line.

But even I had to sit up when I came across this New York Times article about life in an Amazon warehouse. What made my eyes pop was the revelation that Jeff Bezos doesn’t want his warehouse employees sticking around too long.

In Amazon world, turnover is actively encouraged. If hourly employees stay on for several years, you see, they get raises. They lose some of their initial enthusiasm for the job. Some of them might even get to thinking that they’re entitled to things, like adequate bathroom breaks or not being ordered in to work when they’re sick.

So Amazon cuts off automatic raises after three years, pays bonuses to workers who quit, and hires managers from outside more often than they promote. As a result, Amazon warehouse workers have an average turnover rate of 150%.

Apparently keeping turnover that high works, in terms of getting Amazon the performance they want from warehouse workers – so far. It probably also helped a lot with Amazon’s successful attempt to beat back a unionization effort in Alabama.

For many people in the business press and elsewhere, Amazon’s nearly unprecedented success is enough to justify anything Jeff Bezos does. He has always gotten plenty of fawning coverage, especially in the business press, despite (because of?) looking like a comic-book supervillain. One jackass editor even proclaimed him “The Most Trusted Man in America.”

It’s enough to make me afraid that the Amazon approach to turnover will become the norm for the food industry. If not all manufacturing.

When automation started to make serious inroads in the food industry in the 1990s, one of the concerns was that it would wipe out the industry’s “institutional memory” – the knowledge of all those older folks who had been working at the plant for 20 or 30 years and knew just how to tweak the steam knob to make the jelly taste like it should. Many observers, myself among them, responded that relying on institutional memory was a bad idea long-term, because sooner or later Old Joe was going to retire or die, taking his memories with him. Automation can standardize the process and ensure the consistency that is vital for food or any other CPG product to stay in existence.

Process standardization is necessary for large-scale food production. Part of standardization means ensuring that every task on a production line can be performed the same way, with the same efficacy, by just about anyone. But it would be wrongheaded, even tragic, to use standardization as an excuse to treat employees as Amazon treats warehouse workers – as things to be used up and discarded before they have a chance to burn out.

Amazon gets away with its attitude toward turnover because it pays relatively high wages: a minimum of $18.25 an hour at JFK8, the warehouse the Times profiled. Food plants, too, often pay considerably higher than other local sources of labor – and in many locations, there are few other local sources of labor.

But you have to wonder how sustainable that model is. It’s doubtful that anyone who has been through the Amazon wringer will want to go back, if she even could. How many workers can Amazon cycle through before they start running out of suckers? One former executive told the Times that deliberately churning through workers was like using fossil fuels: “We keep using them even though we know we’re slowly cooking ourselves.”

More to the point for our purposes, how many workers could a food plant churn through, especially if it’s in a rural area without a big labor pool?

I’m sure anyone reading this who’s in a position to set hiring policy probably knows that turnover is not something to be encouraged. But for anyone who might be tempted by the Bezos approach, consider one last fact:

Amazon doesn’t really make anything.