My economics teacher in high school told us that we needed to shift people’s mindsets so that an assistant manager in a McDonalds had the same kind of pay & just as importantly status as a shop steward in a factory or a boilermaker, he said only unions could provide this and organising the service sector was what unions should be focused on
He said this is Melbourne (Australia’s manufacturing hub) in 1994, right in the teeth of the rapid offshoring of manufacturing jobs & the tail end of the early 90s recession
I think about the fact my school teacher was more farsighted than Australian Union leadership a lot
I mostly agree, but the bit about Amazon truckers peeing in bottles has always felt disingenuous to me. ALL truckers tend to pee in bottles, in part because the federal government limits their driving hours in ways that incentivize them to do this.
Amazon warehouse employees do not pee in bottles, and the company’s “admission” otherwise was just acknowledging the de facto working conditions of all truckers.
Beyond that semi-slanderous anecdote, I’ve never had anyone explain to me why Amazon was worse than equivalent jobs. My own family’s experience with Amazon, as well as that of all those I’ve spoken to who worked there, is that it’s a job with shit hours but decent pay, and which requires no resume to get the position. Frankly, that’s better than most “Mom and Pop” stores, where pay is worse and there’s no HR to protect you from abuse.
I think what gave the Amazon-drivers-peeing-in-bottles thing extra zip was that Amazon initially denied it falsely. They could've just "acknowledg[ed] the de facto working conditions of all truckers" in the first place and it would've been less damaging, but they tried to be wily!
> Beyond that semi-slanderous anecdote, I’ve never had anyone explain to me why Amazon was worse than equivalent jobs.
I've been thinking about the characteristics that make unions good or bad for a while and this is a really good clarifying post. I think maybe another couple of other reasons why unions can be harmful is using their economic power for explicitly politcal purposes, for instance I think it would be bad if massive strikes were called whenever a right wing politician won an election, as sort of happened in the UK.
The flipside to this of course, and actually the biggest reason I'm pro unions is that unions, along with religious organisations, seem uniquely good at solving co-ordination problems for politcal action among the mass of the people. In this way I see them sort of as a hedge against authoritarianism, with the hope being that in response to a Trump attempt to nullify an election unions would be best placed to carry out a vast general strike and co-ordinate a campaign of civil disobedience.
An interesting note - $35K per year is essentially the average wage in the UK. Really shows how the US is 20% ish richer.
I encountered a TikTok video in which a young man was discussing his experience as a barista, when a customer told him that he (the barista) should find a better job if he wanted better working conditions. His response was, "if you believe that baristas are something that society should have, but you don't believe it should be a job worthy of a living wage, respect, and decent working conditions, then you're advocating a permanent underclass. I believe that any job worth doing deserves a living wage, respect, and decent working conditions."
I can't understand why this is a controversial opinion. We can argue over which jobs are worth doing, but the market is a fine mechanism for making that decision. If unions are the way to make sure that jobs worth doing get a living wage, respect, and decent working conditions, then I'm all for it (and if paying higher wages means that Jeff Bezos will simply be a multi-millionaire instead of a centi-billionaire, that's a very small price for society, indeed).
Amazon is already paying the highest wages in America for warehouse workers - and their profit margins are razor thin. Where do you propose the extra money comes from to significantly increase warehouse worker salaries?
If Amazon can't pay a living wage, it should be shut down and the assets redistributed to entrepreneurs who can create a company that actually creates net economic value.
I once saw a tweet that put it beautifully:
"Being asked to work below living wage is theft. If an employer only profits by underpaying workers, they're profiting on workers, not product, and aren't viable. If employees take less than living wage to help get started, they're investors owed equity."
Amazon already pays a *minimum* of $15/hour, with good health insurance, vacation time, and college stipends. Its literally one the highest paying employer for people without a degree. If you want to shut down Amazon on account of low wages, you'll have to shut down 90% of American companies first that pay ever lower wages.
> If you want to shut down Amazon on account of low wages, you'll have to shut down 90% of American companies first that pay ever lower wages.
In practice, the vast majority of companies react to a minimum wage by either (1) not caring because they already pay more than minimum wage or (2) grumbling a lot and then...raising wages to the minimum wage. So, no, you wouldn't "have to shut down 90% of American companies" in reality.
Also, I'm not just talking a minimum wage, I'm talking a living wage. Shareholders should be the first to sacrifice (in accounting, they're even referred to as the "residual claimants" on a corporation's earnings--the original idea is that they only get to share in the pie once everyone else is taken care of).
Look, a living wage is the true cost of a "human asset." Any part of that living wage that isn't born by the company is going to be born by the community through our tax dollars.
Human assets are unusual in that they are the only asset that negotiates what they're paid for using them. Most humans are poor negotiators. Also, a human's need to eat means that when they don't have the power in a negotiation, they will accept less than a living wage because it's still better than nothing.
If you're asking, would I rather have NO Amazon than an Amazon that pays beneath living wage, the answer is a resounding "Yes!"
I would rather have a country criss-crossed by bookstores and retail shops, all employing people at a living wage with thinner margins for the owners, than next-day delivery from a company that underpays workers and foists all of the attendant problems on society at large.
(I still stand by the earlier comment that a company that profits by underpaying labor is a net destroyer of societal value.)
You may feel differently, which of course is really easy to do when you aren't one of the people working below a living wage.
What's the net societal benefit derived from same-day shipping being available vs. net happiness derived from "criss-crossed by bookstores and retail shops, all employing people at a living wage with thinner margins for the owners"? You can't ignore the benefit Amazon brings to society - if it didn't bring any value, it wouldn't be one of the largest companies in the world.
Its a blatant hit piece by the NYT. I know actual people working in Amazon Fulfillment Centers in Seattle and that's not what they're telling me. 99.99% of their workers are not "stiffed".
"Source? I don't see Amazon mentioned on pages like"
Source = $18/hour starting pay with no experience/degree: https://www.cbsnews.com/news/amazon-18-dollars-hour-starting-pay-wage/. You can get higher wages in Whole Foods (also owned by Amazon) but unlike warehouses most of those are located in downtown areas with high commute/living costs, so its not an apples-to-apples comparison.
"In practice, the vast majority of companies react to a minimum wage by either "
Amazon would absolutely love a $25/hour minimum wage as this would destroy a huge chunk of their competition, I agree. The biggest companies always profit the most from restrictive regulations.
I'm afraid I have to give more weight to an NYT report, citing multiple named sources, over an anonymous blog commenter handwaving about who they know in Seattle and making a bald assertion about "99.99%" of Amazon's workers.
The CBS article points out that the $18 hourly wage is regional (i.e. not available to Amazon's warehouse workers in general) and does not claim that Amazon's warehouse wages are unusually high compared to other warehouse hirers.
And your "I agree" mischaracterizes what I wrote about the minimum wage. Nice try!
Amazon would not "love" a $25/hour raise. Jeff Bezos is still the chairman. Every $1/hr raise that Amazon gives warehouse workers directly reduces Jeff Bezos's net worth by several billion-with-a-B dollars(*). He is well aware of that math. I'm pretty convinced that his "leadership" in setting a $15/hr minimum was a calculated risk intended to head off legislation that might have required a higher minimum.
(Jeff owns 11% of Amazon. Amazon is trading at 44 P/E. Assuming 1 million warehouse workers [an underestimate] working 2000 hours/year, a $1 increase in warehouse worker wages reduces earnings by $2Bn, which reduces enterprise value by $88Bn, which reduces Bezos net worth by $8Bn.)
“Economic value is when you increase demand for labor” is a very Great Recession understanding. In a period of inflation and tight labor markets, goods and services are back in style! And a living wage is relative to supply. Broad pay increases cannot, for example, help more people fit into a static housing supply or afford services which have themselves become more expensive to match.
> Where do you propose the extra money comes from to significantly increase warehouse worker salaries?
How about those "razor thin" margins? Amazon's 2021 net income was $33364M, for a 7.1% net margin (https://www.wsj.com/market-data/quotes/AMZN/financials/annual/income-statement) and it has ~ 1M US employees. Split half of that margin with the employees and you could give each employee an extra $8.34 an hour (assuming a 2000-hour work year) — more if you only give a raise to the warehouse employees — while leaving Amazon with a respectable margin compared to, say, Walmart.
> has Amazon making "a net margin of around 7%", more than Best Buy's and Walmart's.
That's their overall margin as a company, not the margin of the retail business where they have warehouses. If you look at their full report you can see that they're now back to unprofitability in the retail part for 2022: https://s2.q4cdn.com/299287126/files/doc_financials/2022/q1/Q1-2022-Amazon-Earnings-Release.pdf. Most of their profits are made on AWS, which barely employs any minimum wage workers.
Objection, non-responsive. You wrote that Amazon's warehouse wages were the highest in America; Indeed reports that Amazon pays $17 on average and up to $26, whereas (for example) Keurig Dr Pepper pays $27 on average and up to $44, so (if Indeed is right) Amazon's wages are simply not the highest in America.
Comparing Amazon's wage to the American average (or 25th percentile) is not relevant; you would have to compare Amazon's wage to the American (non-Amazon) maximum instead. (Never mind that the CBS article says Amazon's $18 wage applies to "regions where labor markets are tight, while the company will continue to pay a minimum wage of $15" — and that the BLS gives the American mean as $16, not $15.)
> That's their overall margin as a company, not the margin of the retail business where they have warehouses. If you look at their full report you can see that they're now back to unprofitability in the retail part for 2022 [...] Most of their profits are made on AWS
So AWS is already cross-subsidizing the retail operation, and raising the wages on the retail side would merely deepen the existing cross-subsidization. There's no Rubicon being crossed.
Okay, they're not "the highest", they're just in the 25% percentile. So we have the bottom 75% of warehouses unionize first and then move on to Amazon, right?
That's a non sequitur (I haven't claimed or suggested that unionization has to start with the lowest-wage warehouses) and even if it weren't it'd be wrong (you're confusing "the 25% percentile" and the 75th percentile).
Their quarterly reports: https://s2.q4cdn.com/299287126/files/doc_financials/2022/q1/Q1-2022-Amazon-Earnings-Release.pdf. Page 12. Sales in North America are a net loss. Sales in International market are a net loss too. Their business is made sustainable by huge profits on AWS - but AWS barely hires anyone making minimum wage, so they wouldn't be affected by unionization efforts.
2021 was profitable for the Goods sales side of the business but only because of the pandemic - in years prior they were constantly losing money.
It’s clearly bad when people who are looking for solid family-supporting careers can’t find them. It’s not clear whether having more casual supplemental-income kind of work available is to blame, or simply nearby. It’s tempting to say that the bad jobs are cannibalizing what could be good jobs, but in many cases I suspect they are actually increasing the size of the pie.
I loved the apocryphal quote from Walter Reuther (a union organizer), supposedly to Henry Ford (though that is doubtful).
Henry Ford pointed out the new robots in the factory and said “ Walter, how will you get your union dues from these robots”. And the reply was “ Henry, how will you get the robots to buy your cars”.
May 17, 2022·edited May 18, 2022Liked by Noah Smith
Unions seem strong in societies that already have a good social safety net. In the U.S context, it just seems to be mean to the unemployed, who now have an even harder time getting jobs, and don't have nearly the length of rope with which to hang themselves that their rich EU (that is to say, the rich countries of the EU) compatriots do.
Just from personal experience, the UPS driver union was pretty brutal to UPS package sorter guys who were trying to get in on the driving game. (I didn't want to become a package driver, but it was really hard to become one for the ones who did!).
People forget that it is the unemployed who are on the bottom of the totem pole, not the waiter or the UPS driver.
> In the U.S context, it just seems to be mean to the unemployed, who now have an even harder time getting jobs, and don't have nearly the length of rope with which to hang themselves
What's the approximate size of this alleged effect, quantitatively?
In E.U, even if the above were true it's not so bad, one can credibly tell the underemployed to get an education or something. In the USA thats a little bit harder.
Thanks! I've tended to default to skepticism when people suggest that putatively pro-worker policies actually hurt workers, ever since economists basically did an about face on modest minimum-wage increases triggering significant unemployment. So it's good to have a reference for this.
And the central estimate of the effect does seem non-negligible in that paper. If I have it right, the key numbers are in the appendix tables, and probably the best estimate is from the first table. According to that, an extra percentage point of workers in a union comes with the log relative chance of a high-risk worker being in competitive employment falling by 0.0111 ± 0.0067. If one accepts that as causal, going from the lowest union density (4.5%) to the highest (68.4%) across the studies in the meta-analysis would halve the employment of high-risk workers.
I don't actually trust that estimate because, while theoretically practically significant, it's statistically insignificant (wide error bar), and it's a study-level correlation rather than an individual-level study with a research design that credibly isolates causality. It's nonetheless interesting that the meta-analysis came up with a pretty big number.
Worth noting that the Amazon union generally eschewed the fringe political issues that white collar unions take on. There was a minor kerfuffle when Smalls went on Tucker Carlson's show by the upper middle class moral panic demographic, but it doesn't seem to have hurt Smalls.
Also worth nothing: "59% of the American labor force and 63% of potential union members say that they would prefer for their employers to stay out of social justice issues."
Given the environment this occurred in, it'll be to Smalls' credit if he keeps the union from just becoming another Dem organization.
Working conditions are a big part of this. Some of my son's friends have 2 or 3 jobs to make ends meet. Once I ran into one at the mall and asked him what he was up to. He said he was waiting there because he was had a shift later and *he didn't know when he would start yet*. Even the day he was supposed to work he hadn't been given a schedule!
Since then California has passed some laws restricting that particular form of employee abuse, but that it happened gives some indication how bad things are for lower-end retail employees.
The idea that competition is a check on union excess is only valid if there are non-union competitors. That is true for now, but with union mania and everything from Starbucks to Apple stores to Google trying to unionize, there is a possibility of excessive success. If all the coffee chains are unionized, they can in fact all block useful automation. I’ve been to a robot coffee shop and drank a robot latte and that is clearly the future - much better than dealing with a human manually pushing buttons on my behalf.
What I don’t understand is why employers don’t preempt unions and just treat employers better. I realize my experience is somewhat unique, but my first job was bagging groceries for Market Basket - a family owned company with competitive prices. They gave every employee - including myself - a bonus whenever a new store opened, which was quite frequently at the time. For adults who made a career there (managers, butchers, bakery staff, etc), my understanding is that it was a decent middle class wage. I even got a scholarship for college after working only a few years as a teen.
So maybe my experience with business is unusually positive. I don’t understand the impulse to run a business and treat employees like shit. I think Amazon could do even better in terms of working conditions, and so too could other businesses. What happened to employee happiness being something you can market?
> That is true for now, but with union mania and everything from Starbucks to Apple stores to Google trying to unionize, there is a possibility of excessive success.
But for the foreseeable future that possibility is purely theoretical. Noah's chart shows that even back in the '60s fewer than 1 in 3 employed workers was in a union, and the uptick in 2020 was tiny.
> If all the coffee chains are unionized, they can in fact all block useful automation. I’ve been to a robot coffee shop
They could block it, but they'd have to want to (unlike the Swedish unions Noah mentions). And coffee shops already drag their feet about automation sans unions; I've been to many coffee shops and none were robotic! This ties into your observation that corporations "don't preempt unions" by simply "treat[ing] employers better" — they'd evidently rather cut corners by squeezing humans harder instead of just buying the damn robots.
Amazon pays more money to employees than pretty much any other warehouse in America. And they provide college scholarships just like Market Basket in your example. They *are* treating employees really well even without a union.
If they were treating their employees really well without a union, the union wouldn't be winning elections and Amazon wouldn't be spending so much money trying to stop the effort.
There are things that the people employed by Amazon think are serious enough that they are willing to form a union (and pay the dues) to negotiate for them.
People vote to join unions for all kinds of reasons:
1) They might be really well off compared to the average American employee, but they might think they could do even better despite all odds. Humans just always want more.
2) They might want to support the union movement in general or pro-union politicians
3) They might indeed have a bad job and need a union to protect them
In other words, just because they're voting to join the union doesn't tell us anything about their working condition.
"The idea that competition is a check on union excess is only valid if there are non-union competitors."
This speaks to my primary concern about private sector unionization, which is government placing a thumb on the scale in favor of over-unionization. Arms-length collective bargaining is completely unobjectionable in a competitive market, but too often DOL and its subcomponents undermine the "arms-length" part through both explicit and implicit policy in a highly distortionary way.
Thanks for the article. I think many non-management service jobs focus on primarily entry-level or part-time employment options. I will concede that for many workers these have become full-time jobs but I do not think they were intended to function as career employment.
To change this mindset service jobs could benefit from a kind of gradation that you find in the trades or crafts. For example, you have a “Journeyman Plumber,” a “Craftsman Carpenter,” a “Master Welder” and so forth. The gradations provide a standard across various industries to denote the level and artifice of a worker in the trades. The idea being that a worker starts their career as an “Apprentice” which is the entry-level position with commensurate pay and responsibilities. From there they build on their skills and capabilities through a graded system of career progression that (theoretically) boasts recognition across state and corporate borders. As they progress they are able to charge more for their per hour labor. This added a measure of professionalization to the trades and manufacturing laborers and I think it gave them more cache with the general public.
To use a crude translation there could theoretically be industry standards for baristas. Entry-level workers would start a formal barista apprenticeship course and progress all the way to a “Master Barista” with commensurate pay and benefits as they upskill themselves. The technologies for plumbers and electricians changed markedly over the past 100 years. However, the trades’ quality standards evolved with technological advances. I think a similar mindset would be helpful for service employees by employing the correct level of nuance in crafting work standards for these new “trades.”
"they were intended to function as career employment".
Really, who does the intending here? The companies keeping these jobs part time to keep salaries down? All jobs are career jobs, or do you mean the person working should do work as a favor to these companies? They should work for less and be grateful? Hat in hand?
This is a typical American right wing slogan and it's DUMB.
I did. Maybe I was overreacting. But I'm seriously tired of the childish level this (and so much else) is discussed in the US, and those type of memes.
The broad thrust of my argument is that as a worker you are disadvantaged because you are trying to market your labor. It can be difficult to quantify the value of your labor. I think having a kind of certification process like the trades and crafts would allow service workers to present an “industry standard” for labor cost—one much higher than presently exists.
I used to be fairly indifferent towards unions. Why? Well, growing up in the South I didn’t know many people in unions and the ones I did know were more “professional blue collar” class (ship captains/engineers) who didn’t seem like it mattered much for their jobs.
My own father grew up poor in Massachusetts the son of a laid-off railroad worker after the war, and he ended up after his military service in the 70s working as a welder for Union Carbide in a union in the TN/KY area. But he has always told me the union rules made him feel like he was cattle. He said a bell would go off at certain times and he was forced to stop what he was doing and take a break. He didn’t like the rigidity of the rules like that. He left that job and has done fine in other non-union jobs the rest of his life, though ironically towards the end of his career has just joined a union again (he’s an F-16 flight simulator tech).
But mostly after reading *you* over the years I’ve softened to unions a bit, mostly because I do think service workers need more respect in our society, and if they want unions giving them what they want is a form of respect imo. I do think the practical benefits may not be as large as hoped (compared to, say, public sector unions) for the workers, but any improvement in working conditions is better than nothing. I still come back to the respect thing. I realize there may be downsides I’m not considering, but I just keep coming back to how we can somehow provide more respect to people. And I think more service unions is worth a try at least.
I tend to the view that unions work best when (like most governance) they are close to the people they serve, and building rigid centralised rules is a response to the negotiations being done by union bosses and management bosses at way too many steps away from the workforce on the ground.
I've never understood why there is so much focus on votes to unionize. The votes just seem so superficial.
If you have enough support and organization that you can win concessions by credibly threatening a strike if your demands for wages and conditions go unfulfilled, then you are doing the union even if you lost some vote to unionize. By the same token, if you don't have the backing to credibly threaten to strike, then you really aren't doing the union even if you "won" the vote.
In the case of retail and Amazon warehouses, the proof of concept for automation is already very strong. And frankly the appetite for paying even higher prices for coffee (or anything these days) will be limited. I wouldn’t expect unionization to have any other effect than job losses.
There seems to be a cultural 'preference' for 'makers' i.e. artisans/factory workers are seen as better/more useful than people with similar pay in other occupations (say, farming or lodging or fishing). I attribute that in part to the fact that, by making the objects we rely on for our comfy lifestyles, we could see their value very clearly.
OTOH, we live in a capitalistic system and it's true that your paycheck is responsible for a lot of the value you get attributed to by others. I used to be a broker for a while. The skillset is not very different from a waiter (I got to handle several phones at once, they got to handle several plates at once, we both got to remember orders, relay them correctly and we both can have bouts of high activity creating a fair bit of stress/fun). Yet there were no doubts that brokers were more respected than waiters.
So maybe baristas or Amazon warehouse workers with a bigger paycheck will get valued on par with artisans and mechanics? It'll be interesting to find out.
Factory workers in the nineteenth century weren't seen as "makers" in the way that artisans were. This was the whole Marxist concept of "alienation from labor".
I think there's a pretty solid case that being paid more both increased the cultural valuation of their work and reduced or broke the alienation from their labor - in part just because they could afford to buy what they made.
I bet that baristas get seen as more creative if they are paid more.
My economics teacher in high school told us that we needed to shift people’s mindsets so that an assistant manager in a McDonalds had the same kind of pay & just as importantly status as a shop steward in a factory or a boilermaker, he said only unions could provide this and organising the service sector was what unions should be focused on
He said this is Melbourne (Australia’s manufacturing hub) in 1994, right in the teeth of the rapid offshoring of manufacturing jobs & the tail end of the early 90s recession
I think about the fact my school teacher was more farsighted than Australian Union leadership a lot
I mostly agree, but the bit about Amazon truckers peeing in bottles has always felt disingenuous to me. ALL truckers tend to pee in bottles, in part because the federal government limits their driving hours in ways that incentivize them to do this.
Amazon warehouse employees do not pee in bottles, and the company’s “admission” otherwise was just acknowledging the de facto working conditions of all truckers.
Beyond that semi-slanderous anecdote, I’ve never had anyone explain to me why Amazon was worse than equivalent jobs. My own family’s experience with Amazon, as well as that of all those I’ve spoken to who worked there, is that it’s a job with shit hours but decent pay, and which requires no resume to get the position. Frankly, that’s better than most “Mom and Pop” stores, where pay is worse and there’s no HR to protect you from abuse.
Unionization is still fine though.
I think what gave the Amazon-drivers-peeing-in-bottles thing extra zip was that Amazon initially denied it falsely. They could've just "acknowledg[ed] the de facto working conditions of all truckers" in the first place and it would've been less damaging, but they tried to be wily!
> Beyond that semi-slanderous anecdote, I’ve never had anyone explain to me why Amazon was worse than equivalent jobs.
I recall finding these numbers striking: https://www.forbes.com/sites/niallmccarthy/2021/06/08/amazon-warehouse-injuries-significantly-higher-than-competitors-infographic/
Truckers are paid way more than Amazon warehouse workers though. And it's not like driving a truck is this high skilled job either.
I've been thinking about the characteristics that make unions good or bad for a while and this is a really good clarifying post. I think maybe another couple of other reasons why unions can be harmful is using their economic power for explicitly politcal purposes, for instance I think it would be bad if massive strikes were called whenever a right wing politician won an election, as sort of happened in the UK.
The flipside to this of course, and actually the biggest reason I'm pro unions is that unions, along with religious organisations, seem uniquely good at solving co-ordination problems for politcal action among the mass of the people. In this way I see them sort of as a hedge against authoritarianism, with the hope being that in response to a Trump attempt to nullify an election unions would be best placed to carry out a vast general strike and co-ordinate a campaign of civil disobedience.
An interesting note - $35K per year is essentially the average wage in the UK. Really shows how the US is 20% ish richer.
I encountered a TikTok video in which a young man was discussing his experience as a barista, when a customer told him that he (the barista) should find a better job if he wanted better working conditions. His response was, "if you believe that baristas are something that society should have, but you don't believe it should be a job worthy of a living wage, respect, and decent working conditions, then you're advocating a permanent underclass. I believe that any job worth doing deserves a living wage, respect, and decent working conditions."
I can't understand why this is a controversial opinion. We can argue over which jobs are worth doing, but the market is a fine mechanism for making that decision. If unions are the way to make sure that jobs worth doing get a living wage, respect, and decent working conditions, then I'm all for it (and if paying higher wages means that Jeff Bezos will simply be a multi-millionaire instead of a centi-billionaire, that's a very small price for society, indeed).
Amazon is already paying the highest wages in America for warehouse workers - and their profit margins are razor thin. Where do you propose the extra money comes from to significantly increase warehouse worker salaries?
The workers might want things other than higher pay.
If Amazon can't pay a living wage, it should be shut down and the assets redistributed to entrepreneurs who can create a company that actually creates net economic value.
I once saw a tweet that put it beautifully:
"Being asked to work below living wage is theft. If an employer only profits by underpaying workers, they're profiting on workers, not product, and aren't viable. If employees take less than living wage to help get started, they're investors owed equity."
Amazon already pays a *minimum* of $15/hour, with good health insurance, vacation time, and college stipends. Its literally one the highest paying employer for people without a degree. If you want to shut down Amazon on account of low wages, you'll have to shut down 90% of American companies first that pay ever lower wages.
> Amazon already pays a *minimum* of $15/hour, with good health insurance, vacation time, and college stipends.
Less impressive when one remembers that Amazon stiffs its employees on wages and leave: https://www.nytimes.com/2021/10/24/technology/amazon-employee-leave-errors.html
> Its literally one the highest paying employer for people without a degree.
Source? I don't see Amazon mentioned on pages like https://www.glassdoor.com/blog/no-degree-required/.
> If you want to shut down Amazon on account of low wages, you'll have to shut down 90% of American companies first that pay ever lower wages.
In practice, the vast majority of companies react to a minimum wage by either (1) not caring because they already pay more than minimum wage or (2) grumbling a lot and then...raising wages to the minimum wage. So, no, you wouldn't "have to shut down 90% of American companies" in reality.
Also, I'm not just talking a minimum wage, I'm talking a living wage. Shareholders should be the first to sacrifice (in accounting, they're even referred to as the "residual claimants" on a corporation's earnings--the original idea is that they only get to share in the pie once everyone else is taken care of).
Look, a living wage is the true cost of a "human asset." Any part of that living wage that isn't born by the company is going to be born by the community through our tax dollars.
Human assets are unusual in that they are the only asset that negotiates what they're paid for using them. Most humans are poor negotiators. Also, a human's need to eat means that when they don't have the power in a negotiation, they will accept less than a living wage because it's still better than nothing.
If you're asking, would I rather have NO Amazon than an Amazon that pays beneath living wage, the answer is a resounding "Yes!"
I would rather have a country criss-crossed by bookstores and retail shops, all employing people at a living wage with thinner margins for the owners, than next-day delivery from a company that underpays workers and foists all of the attendant problems on society at large.
(I still stand by the earlier comment that a company that profits by underpaying labor is a net destroyer of societal value.)
You may feel differently, which of course is really easy to do when you aren't one of the people working below a living wage.
What's the net societal benefit derived from same-day shipping being available vs. net happiness derived from "criss-crossed by bookstores and retail shops, all employing people at a living wage with thinner margins for the owners"? You can't ignore the benefit Amazon brings to society - if it didn't bring any value, it wouldn't be one of the largest companies in the world.
"Amazon stiffs its employees on wages and leave:"
Its a blatant hit piece by the NYT. I know actual people working in Amazon Fulfillment Centers in Seattle and that's not what they're telling me. 99.99% of their workers are not "stiffed".
"Source? I don't see Amazon mentioned on pages like"
Source = $18/hour starting pay with no experience/degree: https://www.cbsnews.com/news/amazon-18-dollars-hour-starting-pay-wage/. You can get higher wages in Whole Foods (also owned by Amazon) but unlike warehouses most of those are located in downtown areas with high commute/living costs, so its not an apples-to-apples comparison.
"In practice, the vast majority of companies react to a minimum wage by either "
Amazon would absolutely love a $25/hour minimum wage as this would destroy a huge chunk of their competition, I agree. The biggest companies always profit the most from restrictive regulations.
I'm afraid I have to give more weight to an NYT report, citing multiple named sources, over an anonymous blog commenter handwaving about who they know in Seattle and making a bald assertion about "99.99%" of Amazon's workers.
The CBS article points out that the $18 hourly wage is regional (i.e. not available to Amazon's warehouse workers in general) and does not claim that Amazon's warehouse wages are unusually high compared to other warehouse hirers.
And your "I agree" mischaracterizes what I wrote about the minimum wage. Nice try!
Amazon would not "love" a $25/hour raise. Jeff Bezos is still the chairman. Every $1/hr raise that Amazon gives warehouse workers directly reduces Jeff Bezos's net worth by several billion-with-a-B dollars(*). He is well aware of that math. I'm pretty convinced that his "leadership" in setting a $15/hr minimum was a calculated risk intended to head off legislation that might have required a higher minimum.
(Jeff owns 11% of Amazon. Amazon is trading at 44 P/E. Assuming 1 million warehouse workers [an underestimate] working 2000 hours/year, a $1 increase in warehouse worker wages reduces earnings by $2Bn, which reduces enterprise value by $88Bn, which reduces Bezos net worth by $8Bn.)
Correct.
“Economic value is when you increase demand for labor” is a very Great Recession understanding. In a period of inflation and tight labor markets, goods and services are back in style! And a living wage is relative to supply. Broad pay increases cannot, for example, help more people fit into a static housing supply or afford services which have themselves become more expensive to match.
> Amazon is already paying the highest wages in America for warehouse workers
Source? That's not what I see on, for example, Indeed: https://www.indeed.com/career/warehouse-worker/salaries
> and their profit margins are razor thin.
Source? Investopedia (https://www.investopedia.com/ask/answers/071615/what-profit-margin-usual-company-retail-sector.asp) has Amazon making "a net margin of around 7%", more than Best Buy's and Walmart's.
> Where do you propose the extra money comes from to significantly increase warehouse worker salaries?
How about those "razor thin" margins? Amazon's 2021 net income was $33364M, for a 7.1% net margin (https://www.wsj.com/market-data/quotes/AMZN/financials/annual/income-statement) and it has ~ 1M US employees. Split half of that margin with the employees and you could give each employee an extra $8.34 an hour (assuming a 2000-hour work year) — more if you only give a raise to the warehouse employees — while leaving Amazon with a respectable margin compared to, say, Walmart.
> That's not what I see on, for example, Indeed:
Average in America for equivalent jobs is $15/hour: https://www.bls.gov/oes/current/oes537065.htm. Amazon's starting wage is $18/hour: https://www.cbsnews.com/news/amazon-18-dollars-hour-starting-pay-wage/, definitely above average - putting them into the 25% percentile at the very least.
> has Amazon making "a net margin of around 7%", more than Best Buy's and Walmart's.
That's their overall margin as a company, not the margin of the retail business where they have warehouses. If you look at their full report you can see that they're now back to unprofitability in the retail part for 2022: https://s2.q4cdn.com/299287126/files/doc_financials/2022/q1/Q1-2022-Amazon-Earnings-Release.pdf. Most of their profits are made on AWS, which barely employs any minimum wage workers.
> Average in America for equivalent jobs is $15/hour: https://www.bls.gov/oes/current/oes537065.htm. Amazon's starting wage is $18/hour: https://www.cbsnews.com/news/amazon-18-dollars-hour-starting-pay-wage/, definitely above average - putting them into the 25% percentile at the very least.
Objection, non-responsive. You wrote that Amazon's warehouse wages were the highest in America; Indeed reports that Amazon pays $17 on average and up to $26, whereas (for example) Keurig Dr Pepper pays $27 on average and up to $44, so (if Indeed is right) Amazon's wages are simply not the highest in America.
Comparing Amazon's wage to the American average (or 25th percentile) is not relevant; you would have to compare Amazon's wage to the American (non-Amazon) maximum instead. (Never mind that the CBS article says Amazon's $18 wage applies to "regions where labor markets are tight, while the company will continue to pay a minimum wage of $15" — and that the BLS gives the American mean as $16, not $15.)
> That's their overall margin as a company, not the margin of the retail business where they have warehouses. If you look at their full report you can see that they're now back to unprofitability in the retail part for 2022 [...] Most of their profits are made on AWS
So AWS is already cross-subsidizing the retail operation, and raising the wages on the retail side would merely deepen the existing cross-subsidization. There's no Rubicon being crossed.
Okay, they're not "the highest", they're just in the 25% percentile. So we have the bottom 75% of warehouses unionize first and then move on to Amazon, right?
That's a non sequitur (I haven't claimed or suggested that unionization has to start with the lowest-wage warehouses) and even if it weren't it'd be wrong (you're confusing "the 25% percentile" and the 75th percentile).
Who says the margins are razor thin?
(This is nonsense).
Their quarterly reports: https://s2.q4cdn.com/299287126/files/doc_financials/2022/q1/Q1-2022-Amazon-Earnings-Release.pdf. Page 12. Sales in North America are a net loss. Sales in International market are a net loss too. Their business is made sustainable by huge profits on AWS - but AWS barely hires anyone making minimum wage, so they wouldn't be affected by unionization efforts.
2021 was profitable for the Goods sales side of the business but only because of the pandemic - in years prior they were constantly losing money.
I have a bridge to sell you if you think that's what they really make.
https://www.sec.gov/news/press-release/2021-177
There's a lot of money to be made if you can show that Amazon is lying in their SEC filings. I'm sure you could afford many bridges if you do that!
It's not that they "lie", I'm sure you know this.
And related to the 7% mentioned elsewhere, that is a GOOD margin.
It’s clearly bad when people who are looking for solid family-supporting careers can’t find them. It’s not clear whether having more casual supplemental-income kind of work available is to blame, or simply nearby. It’s tempting to say that the bad jobs are cannibalizing what could be good jobs, but in many cases I suspect they are actually increasing the size of the pie.
I loved the apocryphal quote from Walter Reuther (a union organizer), supposedly to Henry Ford (though that is doubtful).
Henry Ford pointed out the new robots in the factory and said “ Walter, how will you get your union dues from these robots”. And the reply was “ Henry, how will you get the robots to buy your cars”.
https://quoteinvestigator.com/2011/11/16/robots-buy-cars/#:~:text=Henry%20Ford%20II%3A%20Walter%2C%20how,to%20pay%20your%20union%20dues%3F
Unions seem strong in societies that already have a good social safety net. In the U.S context, it just seems to be mean to the unemployed, who now have an even harder time getting jobs, and don't have nearly the length of rope with which to hang themselves that their rich EU (that is to say, the rich countries of the EU) compatriots do.
Just from personal experience, the UPS driver union was pretty brutal to UPS package sorter guys who were trying to get in on the driving game. (I didn't want to become a package driver, but it was really hard to become one for the ones who did!).
People forget that it is the unemployed who are on the bottom of the totem pole, not the waiter or the UPS driver.
> In the U.S context, it just seems to be mean to the unemployed, who now have an even harder time getting jobs, and don't have nearly the length of rope with which to hang themselves
What's the approximate size of this alleged effect, quantitatively?
That's an interesting question, I'm sure there are at least some econ papers trying to study that
Implicit in my comment is the belief that
A. Unions restrict supply of labor
B. This makes it harder for unskilled labor to get into union-like jobs.
The approximate size of the effect is well beyond my expertise, but this https://academic.oup.com/schizophreniabulletin/article/44/1/22/4259764?login=true. seems to gesture toward unions making IPS less effective, which presumably reduces unemployment among the american unemployed.
In E.U, even if the above were true it's not so bad, one can credibly tell the underemployed to get an education or something. In the USA thats a little bit harder.
Thanks! I've tended to default to skepticism when people suggest that putatively pro-worker policies actually hurt workers, ever since economists basically did an about face on modest minimum-wage increases triggering significant unemployment. So it's good to have a reference for this.
And the central estimate of the effect does seem non-negligible in that paper. If I have it right, the key numbers are in the appendix tables, and probably the best estimate is from the first table. According to that, an extra percentage point of workers in a union comes with the log relative chance of a high-risk worker being in competitive employment falling by 0.0111 ± 0.0067. If one accepts that as causal, going from the lowest union density (4.5%) to the highest (68.4%) across the studies in the meta-analysis would halve the employment of high-risk workers.
I don't actually trust that estimate because, while theoretically practically significant, it's statistically insignificant (wide error bar), and it's a study-level correlation rather than an individual-level study with a research design that credibly isolates causality. It's nonetheless interesting that the meta-analysis came up with a pretty big number.
Worth noting that the Amazon union generally eschewed the fringe political issues that white collar unions take on. There was a minor kerfuffle when Smalls went on Tucker Carlson's show by the upper middle class moral panic demographic, but it doesn't seem to have hurt Smalls.
Also worth nothing: "59% of the American labor force and 63% of potential union members say that they would prefer for their employers to stay out of social justice issues."
Given the environment this occurred in, it'll be to Smalls' credit if he keeps the union from just becoming another Dem organization.
https://americancompass.org/essays/not-what-they-bargained-for/
I really like his focus on keeping the union focused on representing labor, and staying away from left or right issues.
Amen. A bigger middle class will be a boost to economic growth as all the wages will be spent.
Working conditions are a big part of this. Some of my son's friends have 2 or 3 jobs to make ends meet. Once I ran into one at the mall and asked him what he was up to. He said he was waiting there because he was had a shift later and *he didn't know when he would start yet*. Even the day he was supposed to work he hadn't been given a schedule!
Since then California has passed some laws restricting that particular form of employee abuse, but that it happened gives some indication how bad things are for lower-end retail employees.
The idea that competition is a check on union excess is only valid if there are non-union competitors. That is true for now, but with union mania and everything from Starbucks to Apple stores to Google trying to unionize, there is a possibility of excessive success. If all the coffee chains are unionized, they can in fact all block useful automation. I’ve been to a robot coffee shop and drank a robot latte and that is clearly the future - much better than dealing with a human manually pushing buttons on my behalf.
What I don’t understand is why employers don’t preempt unions and just treat employers better. I realize my experience is somewhat unique, but my first job was bagging groceries for Market Basket - a family owned company with competitive prices. They gave every employee - including myself - a bonus whenever a new store opened, which was quite frequently at the time. For adults who made a career there (managers, butchers, bakery staff, etc), my understanding is that it was a decent middle class wage. I even got a scholarship for college after working only a few years as a teen.
So maybe my experience with business is unusually positive. I don’t understand the impulse to run a business and treat employees like shit. I think Amazon could do even better in terms of working conditions, and so too could other businesses. What happened to employee happiness being something you can market?
> That is true for now, but with union mania and everything from Starbucks to Apple stores to Google trying to unionize, there is a possibility of excessive success.
But for the foreseeable future that possibility is purely theoretical. Noah's chart shows that even back in the '60s fewer than 1 in 3 employed workers was in a union, and the uptick in 2020 was tiny.
> If all the coffee chains are unionized, they can in fact all block useful automation. I’ve been to a robot coffee shop
They could block it, but they'd have to want to (unlike the Swedish unions Noah mentions). And coffee shops already drag their feet about automation sans unions; I've been to many coffee shops and none were robotic! This ties into your observation that corporations "don't preempt unions" by simply "treat[ing] employers better" — they'd evidently rather cut corners by squeezing humans harder instead of just buying the damn robots.
Amazon pays more money to employees than pretty much any other warehouse in America. And they provide college scholarships just like Market Basket in your example. They *are* treating employees really well even without a union.
> Amazon pays more money to employees than pretty much any other warehouse in America.
Source? Indeed suggests that other companies pay warehouse workers higher wages: https://www.indeed.com/career/warehouse-worker/salaries
> They *are* treating employees really well even without a union.
They stiff their employees without a union: http://nytimes.com/2021/10/24/technology/amazon-employee-leave-errors.html
If they were treating their employees really well without a union, the union wouldn't be winning elections and Amazon wouldn't be spending so much money trying to stop the effort.
There are things that the people employed by Amazon think are serious enough that they are willing to form a union (and pay the dues) to negotiate for them.
People vote to join unions for all kinds of reasons:
1) They might be really well off compared to the average American employee, but they might think they could do even better despite all odds. Humans just always want more.
2) They might want to support the union movement in general or pro-union politicians
3) They might indeed have a bad job and need a union to protect them
In other words, just because they're voting to join the union doesn't tell us anything about their working condition.
"The idea that competition is a check on union excess is only valid if there are non-union competitors."
This speaks to my primary concern about private sector unionization, which is government placing a thumb on the scale in favor of over-unionization. Arms-length collective bargaining is completely unobjectionable in a competitive market, but too often DOL and its subcomponents undermine the "arms-length" part through both explicit and implicit policy in a highly distortionary way.
Noah,
Thanks for the article. I think many non-management service jobs focus on primarily entry-level or part-time employment options. I will concede that for many workers these have become full-time jobs but I do not think they were intended to function as career employment.
To change this mindset service jobs could benefit from a kind of gradation that you find in the trades or crafts. For example, you have a “Journeyman Plumber,” a “Craftsman Carpenter,” a “Master Welder” and so forth. The gradations provide a standard across various industries to denote the level and artifice of a worker in the trades. The idea being that a worker starts their career as an “Apprentice” which is the entry-level position with commensurate pay and responsibilities. From there they build on their skills and capabilities through a graded system of career progression that (theoretically) boasts recognition across state and corporate borders. As they progress they are able to charge more for their per hour labor. This added a measure of professionalization to the trades and manufacturing laborers and I think it gave them more cache with the general public.
To use a crude translation there could theoretically be industry standards for baristas. Entry-level workers would start a formal barista apprenticeship course and progress all the way to a “Master Barista” with commensurate pay and benefits as they upskill themselves. The technologies for plumbers and electricians changed markedly over the past 100 years. However, the trades’ quality standards evolved with technological advances. I think a similar mindset would be helpful for service employees by employing the correct level of nuance in crafting work standards for these new “trades.”
"they were intended to function as career employment".
Really, who does the intending here? The companies keeping these jobs part time to keep salaries down? All jobs are career jobs, or do you mean the person working should do work as a favor to these companies? They should work for less and be grateful? Hat in hand?
This is a typical American right wing slogan and it's DUMB.
Did you get past the third sentence of my comment before hammering away at yours? Read the rest of my post.
I did. Maybe I was overreacting. But I'm seriously tired of the childish level this (and so much else) is discussed in the US, and those type of memes.
The broad thrust of my argument is that as a worker you are disadvantaged because you are trying to market your labor. It can be difficult to quantify the value of your labor. I think having a kind of certification process like the trades and crafts would allow service workers to present an “industry standard” for labor cost—one much higher than presently exists.
I used to be fairly indifferent towards unions. Why? Well, growing up in the South I didn’t know many people in unions and the ones I did know were more “professional blue collar” class (ship captains/engineers) who didn’t seem like it mattered much for their jobs.
My own father grew up poor in Massachusetts the son of a laid-off railroad worker after the war, and he ended up after his military service in the 70s working as a welder for Union Carbide in a union in the TN/KY area. But he has always told me the union rules made him feel like he was cattle. He said a bell would go off at certain times and he was forced to stop what he was doing and take a break. He didn’t like the rigidity of the rules like that. He left that job and has done fine in other non-union jobs the rest of his life, though ironically towards the end of his career has just joined a union again (he’s an F-16 flight simulator tech).
But mostly after reading *you* over the years I’ve softened to unions a bit, mostly because I do think service workers need more respect in our society, and if they want unions giving them what they want is a form of respect imo. I do think the practical benefits may not be as large as hoped (compared to, say, public sector unions) for the workers, but any improvement in working conditions is better than nothing. I still come back to the respect thing. I realize there may be downsides I’m not considering, but I just keep coming back to how we can somehow provide more respect to people. And I think more service unions is worth a try at least.
I tend to the view that unions work best when (like most governance) they are close to the people they serve, and building rigid centralised rules is a response to the negotiations being done by union bosses and management bosses at way too many steps away from the workforce on the ground.
Maybe that's what the reality is in the US, but not anywhere else.
Which leads me to believe it's not true. US unions are very confrontational instead of working with the companies.
I've never understood why there is so much focus on votes to unionize. The votes just seem so superficial.
If you have enough support and organization that you can win concessions by credibly threatening a strike if your demands for wages and conditions go unfulfilled, then you are doing the union even if you lost some vote to unionize. By the same token, if you don't have the backing to credibly threaten to strike, then you really aren't doing the union even if you "won" the vote.
> 1 out of 153 Americans is employed by this company
As a heads up the article you linked to is talking about American *workers* in particular. When we look at all Americans, it's closer to 1/200.
In the case of retail and Amazon warehouses, the proof of concept for automation is already very strong. And frankly the appetite for paying even higher prices for coffee (or anything these days) will be limited. I wouldn’t expect unionization to have any other effect than job losses.
It'd be interesting to see.
There seems to be a cultural 'preference' for 'makers' i.e. artisans/factory workers are seen as better/more useful than people with similar pay in other occupations (say, farming or lodging or fishing). I attribute that in part to the fact that, by making the objects we rely on for our comfy lifestyles, we could see their value very clearly.
OTOH, we live in a capitalistic system and it's true that your paycheck is responsible for a lot of the value you get attributed to by others. I used to be a broker for a while. The skillset is not very different from a waiter (I got to handle several phones at once, they got to handle several plates at once, we both got to remember orders, relay them correctly and we both can have bouts of high activity creating a fair bit of stress/fun). Yet there were no doubts that brokers were more respected than waiters.
So maybe baristas or Amazon warehouse workers with a bigger paycheck will get valued on par with artisans and mechanics? It'll be interesting to find out.
Factory workers in the nineteenth century weren't seen as "makers" in the way that artisans were. This was the whole Marxist concept of "alienation from labor".
I think there's a pretty solid case that being paid more both increased the cultural valuation of their work and reduced or broke the alienation from their labor - in part just because they could afford to buy what they made.
I bet that baristas get seen as more creative if they are paid more.
Baristas certainly qualify as "makers". Not infrequently they even add in latte art.
There are competitions for latte art, too.