Amazon Is Worth $1 Trillion. Its Workers Are on Food Stamps.
Employees, members of Congress, and academics are beginning to agree that Jeff Bezos’ company is too rich and too powerful.
Amazon just hit a $1 trillion valuation, but some of its workers feel poorer than ever.
Jeff Bezos’s tech giant is the second U.S. company to be worth thirteen-digits on the stock market, following Apple, which hit $1 trillion in August. That’s all well and good for Bezos, whose net worth exceeds $150 billion. But workers at the growing network of Amazon-owned companies say they aren’t seeing the money and Senator Bernie Sanders rolled out a new bill that would penalize Amazon for leaving workers dependent on public assistance. The next day, The Wall Street Journal reported that employees at Whole Foods, a grocery chain recently acquired by Amazon, were seeking to unionize. This is on top of criticism from academics, who say Amazon’s size has warped the economy.
Amazon’s come a long way from its origins as an online bookseller founded in 1994. Through a series of expansions and mergers, the company now functions as an all-encompassing digital marketplace, a Netflix competitor, a gadget manufacturer, a web services provider, and, since 2017 and its purchase of Whole Foods, a high-end grocery chain.
But while Amazon expands, Whole Foods staff say they’re facing layoffs.
“In the last three years we have experienced layoffs, job consolidations, reduced labor budgets, poor wage growth, and constantly being asked to do more with less resources and now with less compensation,” Whole Foods workers in a pro-union group wrote in a letter to colleagues, which was shared with The Daily Beast.
The letter took aim at Amazon CEO Bezos, describing “majority of his workers” as living “paycheck to paycheck.”
Prior to the Amazon acquisition, all full-time Whole Foods workers received company stock options. But after the merger, only store managers and executives received the options, the workers claimed in their letter. “The clandestine nature of Amazon offering stock options to Store Leadership without informing TMs [team members] is beyond problematic,” the group wrote. “It is insulting and unethical.”
Sometimes paycheck-to-paycheck isn’t enough for Amazon employees. Two years after Amazon opened fulfilment centers in Ohio in 2015, approximately one in ten of its Ohio employees appeared to be receiving public assistance through the Supplemental Nutrition Assistance Program benefits program, The Daily Beast previously reported. SNAP benefits are available to individuals and families living below the poverty line.
Workers at Amazon fulfillment centers elsewhere have complained of dangerously hot facilities and impossible deadlines that left employees peeing into garbage cans and water bottles to avoid taking bathroom breaks. White-collar Amazon workers complained of a similar ethos at their desk jobs. In a 2015 New York Times report, corporate employees complained of punishing workloads and saw “nearly every person” crying at their desk, 80-hour work weeks, and a competitive work environment that encouraged employees to sabotage their colleagues.
An April report by the nonprofit news outlet New Food Economy surveyed five states and found that Amazon ranked among the top 20 companies with SNAP-dependent workers in four of those states. Meanwhile, since 2014, Ohio has given the company more than $125 million in tax breaks and cash grants in exchange for opening new facilities.
Sanders, the democratic socialist from Vermont, took aim at the issue last week, unveiling the Stop Bad Employers by Zeroing Out Subsidies Act (Stop BEZOS Act). The bill would penalize large employers for every dollar of public assistance their workers receive. Sanders, who drafted the bill after polling Amazon employees on their pay and work conditions, said the legislation could save the U.S. $150 billion annually.
Sanders cited Amazon employees who reported wages as low as $11 an hour, which is less than the $15 an hour typically considered a living wage. Amazon pushed back, claiming (as they have before) that most of their SNAP-receiving employees only worked part time.
Other politicians are less Amazon-skeptical than Sanders. When Amazon announced last year that it planned to open a second headquarters somewhere in the U.S., local and state officials prostrated themselves before the tech giant, offering it massive subsidies to open“HQ2” in their areas. For example, New Jersey politicians offered the company $7 billion in subsidies to open in Newark, while other cities offered to rename themselves “Amazon” if chosen.
Those politicians are banking on Amazon creating new jobs, but Amazon’s staggering size might be helping depress wages.
Economists have taken issue with mass-mergers like Amazon’s, which some say have led to the disproportionate market power of a few, oversized companies. Alan Krueger, a Princeton University economist and former chair of the Council of Economic Advisers under Barack Obama, described the merging companies as a kind of “monopsony,” a market in which one company controls a disproportionate buying power (in Amazon’s case, labor).
In an August presentation to Federal Reserve leaders, Krueger argued that “annual wage growth is 1 to 1.5 [percent] below what one would expect today,” due in part to the rise of oversized employers.
While large employers have probably always existed in some capacity, “the forces that traditionally counterbalanced monopsony power and boosted worker bargaining power have eroded in recent decades,” he said, citing union membership, which has fallen by over half since 1980.
“And the effect of this trend on wages is even broader because of what is known as the ‘union threat effect,’” Krueger said. “Unlike in the past, few employers today preemptively raise pay to head off a possible union drive.”
Whole Foods workers have previously tried to unionize and faced stiff opposition from their pre-Amazon owners. In 2013, the grocery chain tried to stem pro-union sentiment by distributing pamphlets titled “Beyond Unions,” AlterNet reported.
The company’s then-CEO John Mackey previously stated that “the union is like having herpes. It doesn't kill you, but it's unpleasant and inconvenient, and it stops a lot of people from becoming your lover."
The new, fledgling Whole Foods effort is organizing with the Retail, Wholesale and Department Store Union, which represents workers at stores like Macy’s and Bloomingdale’s.
“Amazon is raising a generation of precarious workers and that is against everything our union stands for,” Stuart Appelbaum, president of the RWDSU, told The Daily Beast in a statement. “We will not back down until Amazon workers are treated with dignity and respect.”
Whole Foods said it was receptive to employee concerns—but emphasized those rights on an individual, not a collective basis.
“We respect the individual rights of our team members and have an open-door policy that encourages team members to bring their comments, questions and concerns directly to their team leaders,” Whole Foods told The Daily Beast in a statement. “We believe this direct connection is the most effective way to understand and respond to the needs of our workforce and creates an atmosphere that fosters open communication and empowerment. We offer competitive wages and benefits and are committed to the growth and success of our team members.”
Amazon sent a similar version of the statement.
Some Amazon skeptics argue the only way to break the company’s power over its workers is to break up the company. Legal scholar Lina Khan became one of Amazon’s best-known critics last year with an article arguing that Amazon had managed to avoid antitrust laws to become a monopoly, the likes of which America hasn’t seen since 19th-cenutry railroad empires.
Amazon “has evaded government scrutiny in part through fervently devoting its business strategy and rhetoric to reducing prices for consumers,” Khan wrote in her January 2017 paper. “Amazon’s closest encounter with antitrust authorities was when the Justice Department sued other companies for teaming up against Amazon.”Much like Krueger, who argued that massive companies were changing the economy by buying an outsized share of labor and keeping wages down, Khan argued that Amazon had become an unconventional monopoly by buying up all the online and physical stores (like Whole Foods), pressuring other companies to use Amazon services even as they try to compete with Amazon.
“It is as if Bezos charted the company’s growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them,” Khan wrote. “With its missionary zeal for consumers, Amazon has marched toward monopoly by singing the tune of contemporary antitrust.”