Amazon says wage hike ‘more than compensates’ for loss of bonuses
techcrunch.com
techcrunch.com
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.
edit: If you were making under $15, you could still be bumped higher than $15 as well. They raised the base rate and then there are still modifiers on top of that.
"Those making, say, $14 an hour prior to the increase may only receive a $1 raise, which fails to make up for the loss of benefits."
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 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.
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.
I've been in a situation where I worked for a company where a large portion of my comp was RSUs. We had a really good year and I probably made $30,000K more than they were estimating (assuming the stock grew at x%). The next year and two, I got a ~5% raise. I took home less money those two years since I had a windfall the the first year and then our stock leveled out. So despite performing well, and getting healthy raises, I took home less money.
I would imagine the hourly workers might have just a few RSUs at best at Amazon's share price of $1500-$2000 per stock. Since that is such a large percentage of their annual income and if Amazon was trying to level it out to make it less spikey, people probably thought money was being taken away because Amazon's stock did so well the previous couple years.
Basically, Amazon Employee's got really lucky with RSUs and got paid more than Amazon was planning for. So now Amazon wants to bump them up in "planned/target" compensation -- which may be less than they made previously because the stock did wildly good.
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.
People were comparing this to Henry Ford's livable wage.
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.
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.
"Well" is relative. The price of the stock may have gone up but its value is still much less than that of the income they could have had at $15/hr over the time it takes to vest. No one is really making out like a bandit on their RSUs at that level.
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.
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
You're right that they're damned if they do, damned if they don't though, but let's not pretend they haven't earned that mistrust.
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...
8/9 times when I shop Around Amazon has the best price. If it's close, like a buck or so difference, I still choose Amazon due to reliability, speed, and me having a history of good customer service interactions.
I buy everything I need every month on Subscribe & Save (from tooth, toilet paper, to batteries, air freshener, etc) and the even greater 15% discounts add up as well.
*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.
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.
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”
I take it you haven't seen a single item dropped on the floor result in several Kivas playing bumper cars with each other, necessitating human beings to physically drag them away.
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.
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.
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.
In my area, Amazon has its own trucks delivering packages, for the most part. That's not exactly something that can be automated.
I'm guessing no more than 20 years before all of this is automated. And then what for low skilled labor?
Human labor is both cheap and dependable where automation takes capital and introduces risks. Just look at Tesla who cut back on automation at their factory.
The trend is for companies to do things by hand as they scale, and only automate when it's either required to stay competitive or the business enters a near steady state.
If something can be done by machine, it is done by
machine, and that's been true since the beginning
of the industrial era.
Automating the seasonal jobs would have a payback time 12x longer than automating the non-seasonal jobs. The December robots lock up capital during the 11 months of the year they're idle.
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.
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.
Physical work -> thinking work -> ???
Also, you forgot that many of the Luddites actually starved to death in the streets.
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.
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.
And again, that is where you are wrong.
Economies of scale. Building one machine is expensive. Building 10 is slightly cheaper. Building a thousand lowers the price. A million makes them a commodity.
If the politicians and employees were not complaining they would not have raised wages.
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.
https://www.sanders.senate.gov/download/the-stop-bezos-act-s...
It was a political move, and it worked it got Amazon do respond. But seems a bit childish.
Remembering when I was making $7.50 / hour, bump in salary would have been better than bonuses or RSUs. I think in that salary range, this is still a good move.
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.
¯\_(ツ)_/¯
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
Total: X+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.
Basic wage: X
Bonus Wage: A
Market Appreciation: B
Total: X+A+B
Under the new system
Basic Wage: X+Y
Bonus Wage: 0
Total Wage: X+Y
X+Y > X+A
Sometimes, X+Y+Z > X+A depending on if you keep the RSU. But you can always also take Y (the increase) and invest it and it will always be higher.
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.