Amazon’s Snub of Frontline Workers Could Hurt AMZN Stock

Will Ashworth - Yesterday - InvestorPlace

On the surface, the news that Amazon (NASDAQ:AMZN) is upping its maximum base pay for corporate and tech workers to $350,000 from $160,000 is a win for current and future employees. However, I’m not sure anyone holding AMZN stock should be sold on the move.


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Logistics activity on the Amazon (AMZN) site of Vélizy-Villacoublay in France. Packages are sorted by workers on conveyors.

Here’s why I feel this way.
AMZN Stock and Latest Earnings

There’s no question investors reacted positively to the company’s fourth quarter 2021 earnings report released on Feb. 3. As a result, AMZN stock closed up more than 13.5% the next day, pushing it back over $3,000.

The big driver of growth in the quarter was a 40% jump in revenue at Amazon Web Services (AWS), the company’s highly profitable cloud business. AWS is now generating $71 billion in annualized revenue. In fiscal 2021, AWS generated an operating profit of $18.5 billion on $62.2 billion, good for a 29.7% operating margin.

In addition, its advertising business had annual revenue of $31.2 billion in 2021, considerably higher than in 2020. As a result, the company is undoubtedly diversifying its revenue streams.

“Amazon has evolved into a true platform, as more than 50 per cent of its revenue now comes from areas outside of first-party retailing, such as cloud computing and advertising,” Deren Baker the CEO of Edge, a market research firm, said Thursday after the earnings report per Bloomberg‘s reporting.

It looks like I was wrong about the company’s future.

In March 2018, I said that Amazon.com, Inc. Will Own Your Home Sooner Than You Think. It turns out it will own your office, too.

But not everything was rosy about earnings. Its operating income at its North American e-commerce unit declined 16% year-over-year to $7.27 billion on an 18.4% increase in sales to $279.8 billion. Internationally, it lost $924 million on $127.8 billion in sales.

But, yes, for the most part, it’s hard to complain about the company’s performance in 2021.

If it didn’t have a successful year, there is no way employees would have gotten a sniff at a 119% increase in the base maximum pay.

The Elephant in the Room

While it’s great news if you work at one of Amazon’s corporate offices or are in the process of interviewing for a corporate gig in Seattle or elsewhere, it hardly absolves the company of its complete disregard for its frontline workers.

Sure, the company raised its hourly minimum wage from $15 to $18 in September 2021, but that pales compared to the 119% potential increase for white-collar workers. I say potential because that’s a maximum for base pay. Of course, not everyone will get that significant bump. But enough will, which is why Amazon is doing it. To provide a lucrative carrot for the best and brightest.

It doesn’t matter that the warehouse workers and Amazon drivers do the really heavy lifting at the company — both figuratively and literally.

When you have billions of dollars at your disposal — Amazon had $47.3 billion in net cash at the end of December — it’s easy to paint a pretty picture of your business. But, unfortunately, it’s far from perfect.

Amazon’s Workers Are Struggling

In fact, not only are frontline workers struggling, so too is its leadership. At least, that’s according to reports from Bloomberg contributor Brad Stone.

“According to media reports, the turnover rate inside the company is reaching crisis levels, and a record 50 vice presidents departed last year. ‘Like any company, we’re affected by macro trends, and what we’re seeing is in line with what’s happening across the industry,’ an Amazon spokesperson said in a statement,” Stone wrote on Jan. 24.

I don’t think it’s coincidental that Stone’s words were heard loud and clear in Seattle. Just days after reporting an Amazon “exodus” underway, management doubled the $160,000 cap.

Stone went on to say that the company’s promise to become the “World’s Best Employer” has gone by the wayside. Instead, it continues to push even corporate employees at a punishing rate.

At least if you’re a corporate employee, you have the potential to earn $350,000 or move somewhere that will treat you like a human being. But, unfortunately, frontline workers probably don’t.

The Bottom Line on AMZN Stock

As I’ve said many times in the past, if you can stomach the crappy way Amazon treats its employees, it remains an excellent stock to own.

I couldn’t. So, you won’t see me buying its stock no matter how much money it makes from advertising and AWS.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’’ appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

Amazon rolls back mask mandate for some vaccinated warehouse workers

By Brian Fung, CNN Business - Yesterday 

Amazon will no longer require its fully vaccinated warehouse employees to wear face masks at work in states that have eased up on mask mandates, the company said in an internal memo Thursday.

The announcement comes as a string of states, including California, Delaware and Oregon, have said they plan to end or scale back their mask mandates soon.

Under the new policy, those who are not yet fully vaccinated or whose states have not scaled back mask regulations must still wear face coverings in Amazon (AMZN) facilities.

"There has been a sharp decline in COVID-19 cases across the country over the past weeks," the memo said, a copy of which CNN obtained and whose authenticity was confirmed by Amazon. "Along with increasing vaccination rates across the country, this is a positive sign we can return to the path to normal operations."

Amazon declined to comment further.

In the same memo, the e-commerce giant also announced plans to restrict its offer of Covid-related paid leave.

Starting March 18, the memo said, only fully vaccinated employees will be eligible to receive Covid-19 paid leave in the United States. The restriction does not apply to those with medical or religious exemptions.

Unvaccinated employees that are not eligible for paid leave under the policy may still take up to one week of unpaid leave for Covid isolation or quarantine.

Young workers shed new light on life inside Amazon warehouses with viral videos

Ben Goggin - Yesterday 

Quasar Brown, 26, said he and his co-workers were just looking to have some fun when they posted a TikTok video about working at an Amazon warehouse.

The video, recorded in an Oklahoma City facility and posted in July, showed Brown and two of his friends acting out a skit about getting “caught eating on the clock @amazon.” The video quickly went viral, bringing in over half a million likes and 4.5 million views.

Soon, other Amazon workers started commenting on the video. “I’m doing that right now 🤣 shhhh,” one user wrote.

The video is one of many that Amazon warehouse employees have posted to TikTok in the past year, offering brief but unvarnished glimpses into the facilities that power a significant chunk of the U.S. retail economy and have become the subject of labor organizing and political jostling.

NBC News spoke to six Amazon warehouse TikTokers about what has driven them to share on the app. They offered a mix of reasons: Some said they were bored, others wanted to demystify jobs they say are unfairly maligned, and still others wanted to promote jobs they enjoy. The videos are as varied as staged comedy skits about situations that happen on the job and mesmerizing recordings of boxes being packed up. The TikTok creators also detailed mixed reactions from the company to their posts — sometimes they faced swift consequences; other times they were mostly left alone.

TikTok has also become a place for employees to realize they’re not alone in their frustrations with Amazon. Brown, who said he was let go after he asked for bereavement time before he was rehired last year, said the TikTok comments helped him see that other Amazon workers were unhappy, too.

Amazon didn’t respond to a request for comment.

In the last several years, Amazon has faced intense scrutiny of its labor practices. The company employs more than 1.6 million people worldwide, according to a February filing with the Securities and Exchange Commission, and it says it operates over 175 fulfillment centers. Workers have frequently shared their experiences at warehouses with the media and have organized union drives worldwide — although no U.S. warehouses have successfully unionized. In November, the National Labor Relations Board said a new unionization vote had to be held for an Amazon warehouse in Alabama after, it said, Amazon improperly interfered with the first election. Unionization efforts are underway at two Amazon warehouses in Staten Island, New York.

“This is not just this Amazon,” Brown said. “It’s Amazon, period.”

Brown went on to post nine more videos to TikTok, all with a similar tone: humorous but critical of Amazon. Later that month, Amazon suspended him and the other people who appeared in the videos. Brown said that he left the company and that the other employees kept their jobs after suspensions of nearly two weeks.

How Covid-19 changed Amazon warehouses

Before the coronavirus pandemic, Amazon warehouse workers had few outlets to tell their stories.

Kari Magenheim, who has worked in Amazon warehouses since April 2017, said workers were required to go through metal detectors before they started work and weren’t allowed to bring cellphones — meaning they couldn’t easily create content for social media inside warehouses.

What did trickle out from the facilities and into news reports wasn’t great. Workers told journalists they were overworked and subject to a punishing internal system that closely tracks efficiency and time spent working. Images and videos from inside warehouses largely came from Amazon itself or pre-arranged media opportunities.

The current and former Amazon warehouse workers say Amazon’s pandemic policies have changed that, contributing to a surge in video taken inside Amazon warehouses and posted on TikTok.

When Covid-19 spread around the world, Amazon adjusted its phone policy to allow workers to keep their phones in case of emergency — although they aren’t supposed to use them on the warehouse floor. The policy has been extended indefinitely, an Amazon spokesperson told The Markup, after a tornado killed six people at an Amazon warehouse in Illinois in December and employees raised concerns to NBC News about not being able to have access to phones.

The policy has created confusion and inconsistencies across warehouses about what is and isn’t acceptable. At some warehouses, phone use and even viral TikTok videos aren’t really issues. At others, viral content shot on the warehouse floor has resulted in suspensions. Most workers who made viral TikTok videos on the job felt uneasy afterward, not knowing how their newfound social media fame would be received.

Magenheim said that at her warehouse, people generally won’t get caught using their phones if they’re discreet. “As long as you’re still doing your job, that’s all they really care about,” she said.

Magenheim has posted three generally positive videos from inside her Amazon warehouse, which have brought in tens of thousands of views.

“I think people really want to put out the truth about what it’s like to work in an Amazon warehouse,” she said. “Whether it’s good or bad, whether it’s funny.”
Some creators want to help Amazon’s reputation

Jonathan Lozada, 23, lives in New Jersey and works in a warehouse in the tri-state area. Lozada lost his job at Applebee’s because of Covid-19 closures and eventually found his way to Amazon.

Lozada said that he genuinely likes his job and that his first video was actually inspired by an Amazon ad he saw on TikTok. “Maybe I could make that better,” he thought.

In the video, which has over 3 million views, Lozada is in the warehouse goofing around with package scanners as a text-to-voice feature reads off his hours and how much money he makes.

Lozada said he hadn’t realized it had gone viral until he was approached by a co-worker who said he recognized him in the video. “I was like, ‘Oh, God, I’m going to get fired,’” Lozada said.

When Lozada’s manager and other leaders at the warehouse found out about the video, Lozada said, they didn’t seem to care. All he’s heard in an official capacity since the video went viral was a general reminder in a group meeting not to record on the warehouse floor. Lozada has posted over 50 videos featuring the warehouse since his first taste of virality.

“When I post something about Amazon, it starts blowing up,” he said.

Lozada isn’t alone in that observation. All six of the TikTok creators who spoke to NBC News experienced doses of virality from their Amazon warehouse videos and said Amazon warehouse videos in particular seem to do well. Most speculated that people can’t resist getting an inside look at the mysterious process that leads to packages’ arriving at their doorstep and the workers behind it.

Thepackman123, who asked NBC News not to publish his name for fear of retaliation, knows this better than anyone else. He’s one of the biggest Amazon warehouse creators, with 1.4 million followers, and he almost exclusively posts videos of himself packing up boxes.

Thepackman123 said he started recording his videos just to show his family what his job was like. He posted his first video to TikTok on a whim. It quickly brought in hundreds of thousands of views.

After that, he decided to take advantage of the attention and try to grow his following by posting more of the same type of videos. The videos, which thepackman123 calls “​​very satisfying,” all have thousands to millions of views, and he said they are most successful during the holiday season.

Ultimately, thepackman123 said, his goal is to work with the Amazon marketing or advertising team, which he believes should be interested in the massive positive attention his videos get. “That’s what my main goal was — to create an ad for Amazon. And this is actually a pretty good one, where people would see your shipments being packed,” he said.

Even so, thepackman123 said, his videos haven’t been received well by the company. He said he has been asked numerous times to stop making them. “HR initially had said that corporate told them to tell me to stop,” he said.

“They haven’t been clear on why I couldn’t record,” he said, but he said he believes that if recording restrictions were lifted for everyone, “a lot of Amazon workers in there would not use it for positive feedback on the company.”

Since his last reprimand, thepackman123 said, he has been posting videos that he has previously saved on his phone. His most recent video has over 347,000 views.

Joshua Freeman, a distinguished professor of history at the City University of New York who specializes in labor history, said Amazon's seeming aversion to the TikTok videos is part of a wider change in corporate outlook.

Corporate leaders used to take pride in their companies’ work, he said, showing off the inner workings of their factories.

"Everyone in America knew what it looked like to see a Model T being assembled," he said. "Now they're very concerned about proprietary information about both the products and the processes, and they are really, really worried about the exposé of labor or environmental abuses."

TikTok videos are recruiting workers

Alexis Barajas said she started working at a Nevada warehouse because of TikTok. “That looks easy,” she said of the videos she was seeing.

“It was just them, like, working and, like, putting, like, a random caption or, like, dancing to, like, some type of music,” she said. “So it didn’t seem so bad.”

When she arrived, however, the reality of the warehouse didn’t live up to the picture painted on TikTok. “I worked graveyard shift. So I would wake up at midnight and go in at 1:20 a.m. and get off at 11:50 a.m.,” she said. “It’s pretty draining.”

Barajas said she made her first TikTok video to break up the monotony of warehouse work. “I was bored,” she said. “It’ll give me something else to do.”

Her first video was about colleagues who asked for her social media handles in the warehouse. Barajas said Amazon’s human resources department had mentioned that asking for contact information like phone numbers or social media handles on the job could be an invasion of privacy or even part of harassing behavior.

The video quickly blew up and became the talk of Barajas’ warehouse.

Despite a public and private warning not to post TikTok videos after the video went viral, Barajas posted three others from inside the warehouse.

“Patiently waiting for VTO after 20 minutes of working,” she said in one. “VTO” stands for voluntary time off, which is unpaid time off Amazon workers can use to leave work early if they choose. In another video, she said workers were played bingo at the warehouse for VTO time.

Barajas said she’s still weighing whether she wants to continue working at the warehouse.

“I will give myself another month,” she said. “I cannot mix working at Amazon and school, because it’s like, harsh hours and graveyard.”