Can Amazon afford to keep churning through its frontline workers?
Amazon.com knows it has an employee turnover problem, and internal documents acquired by Engadget put a price on what that costs the company — $8 billion a year.
The retailer and technology giant, which posted a net profit of $33.36 billion last year, has attrition rates higher than its industry peers, according to the report. Amazon tracks both regretted and unregretted attrition. Regretted accounts for workers who choose to leave the company and unregretted covers those who are fired.
The numbers of those choosing to leave occurs at twice the rate of those who are let go and “only one out of three new hires in 2021″ stayed with Amazon for at least 90 days. The highest attrition rates come from within Amazon’s Tier 1 designation, which covers lower paid frontline workers, including those in the company’s warehouses.
The internal documents reviewed and reported on by Engadget support a similar Recode report from June on a leaked 2021 Amazon memo speculating that turnover rates at its warehouses would far outstrip its abilities to hire and train new workers by 2024 unless the company responded quickly with higher wages and increased automation. These changes were positioned as triage actions designed to give the company more time.
Amazon last month said it would invest $1 billion over the next year to raise the pay of frontline workers in customer fulfillment and transportation. Those on the frontline will now earn between $16 and $26 per hour, depending on their position and where they are working in the U.S. The average pay, according to Amazon, will be more than $19 an hour.
Critics have argued that workers pay the freight for Amazon’s obsessive focus on meeting the needs of customers with many suffering from burnout. This has led to increased labor organizing activity at Amazon’s warehouses, although only one of the five elections held to date has gone in favor of a union.
In a vote held this week at a warehouse in Albany, NY, workers voted 406 to 206 to reject becoming part of the Amazon Labor Union (ALU). The totals are preliminary until the National Labor Relations Board (NLRB) certifies the election.
Lawyers for the ALU, CNBC reports, have filed 27 unfair labor practice charges against Amazon and may challenge the results of the election.
- Amazon’s attrition costs $8 billion annually according to leaked documents. And it gets worse. – Engadget
- Will Amazon’s $1 billion payroll investment work to keep front lines staffed? – RetailWire
- Leaked Amazon memo warns the company is running out of people to hire – Recode/Vox
- There might soon be no one left to hire at Amazon’s warehouses – RetailWire
- Amazon workers in Albany vote against unionization, labor leader calls it ‘sham election’ – CNBC
DISCUSSION QUESTIONS: Is corporate culture the source of Amazon’s employee relations problems with frontline workers? What will it take to lower Amazon’s high employee turnover rate?