Amazon, the Union, and the Future of Distribution

Unless you have been on the proverbial desert island for a few days, you have probably heard that a union has finally gained a foothold in a US Amazon fulfillment center.

Actually, Amazon batted one for two last week. But the one it lossed is commanding all the attention.

In the win, it looks like Amazon once again was victorious in the vote to not unionize an FC in Bessemer, AL.

In April of 2021, Amazon handily won a union vote at that facility, with 71% of several thousand employees voting not to organize.

But in November, the National Labor Relations Board (NLRB) backed a union challenge to the vote, leading it to schedule a multi-week mail-in vote in March, with ballots tallied a week ago.

Of the 2,375 ballots cast, there were 993 votes opposing the union and 875 in favor, so it was a bit closer this time, but workers again rejected the chance to join the Retail, Wholesale and Department Store Union, with low worker participation.

416 ballots remain challenged by Amazon or the union, and in theory the union could prevail but it seems unlikely.

But Amazon did not fare so well in a vote at a FC in Staten Island, New York.

On Friday, the NLRB said the vote to a union prevailed 2,654 for the union to 2,131 against, so 55% of workers voted to organize.

It's major news because this marks the first Amazon FC to organize in the US, though there are several unionized facilities in Europe.

Another nearby Amazon sorting center will also be voting on joining the union in late April. It is a little odd, as it is a sort of makeshift union (the Amazon Labor Union) pulled together by former Amazon employees, including one worker who was fired from his job there for allegedly violating Amazon COVID protocol policies while he was protesting working at conditions at the Staten Island FC.

But that start-up union can claim victory, and may pick up another site at the sorting center in a few weeks.

There are great labor hopes that this success will spur other organizing efforts at Amazon logistics facilities. I think they are probably correct.

The times are certainly favorable to labor. Great shortages of workers everywhere, notably in distribution. That puts labor in its strongest positions in many, many years.

But the market was already recognizing that. Amazon in many if not most markets has blown past its at the time significant jump to a $15 per hour minimum wage. Now the wage is $18 or even north of $20 in many FCs, often with substantial signing bonuses.

Then you may have seen not long ago that Target would be offering pay as high as an amazing $24 per hour at it distribution centers in the most competitive labor markets. That's $48,000 per year before any overtime, and means a husband and wife team could likely make more than $100,000 per year in those markets. Not bad for jobs that at best require a high school education.

Labor also has a great friend in the Biden White house, and a very pro-labor NLRB, which will stay that was through at least 2024.

On the union victory in Staten Island, President Biden said this this week at the national conference of North America's Building Trades Unions: "The choice to join a union belongs to workers alone. By the way, Amazon, here we come. Watch."

In early March, the incoming Teamsters union president Sean O'Brien said this with regard to Amazon: "We're going to negotiate the strongest contracts in similar industries like UPS and DHL, and that's going to be our marketing tool to bring to these workers and say,'Look, this is what you get when you work under a union contract.'"

If you don't know, UPS workers make a lot more per hour than do Amazon workers, even those at the upper end of the rapidly rising range.

The very liberal The Atlantic magazine wrote this week that "The secret of the union successes at Amazon on Staten Island was to largely use rank-and-file worker activists to reach out to their co-workers to organize and mobilize them."

The article then recommends that "the Amazon Labor Union's key organizers could travel around the country [under the financial support of a much larger union] to advise workers at other fulfillment centers on how to engineer their own worker-to-worker union victories."

Very interesting. In the end, here are my thoughts:

More Amazon facilities will unionize, perhaps indeed turning into something of a wave, at least in urban areas.

Upon success, the movement will spread beyond Amazon, initially at places like Walmart and Target.

I think labor is not likely to achieve wage rates much higher than they are now at Amazon and few other in that upper range. But changes to work rules, some of the productivity tracking or targets - those could be in play.

Unionization or the threat thereof will pull up wage rates in many run of the mill distribution centers, a trend already seen with the rise in pay at Amazon and Target, affecting recruitment and retention for all in those markets.

The strong incentive to automate, already in place due to the labor shortages and to a lesser degree rising wage rates, will accelerate - aided by continued advances in various types of robots, awaiting game-changing advances in piece picking machines.

How fast can Amazon further automate its 1200 US logistics facilities? At how many can it do so before a union shows up? I have no idea, but one thing I am sure of is this: where there is a chance to invest in warehouse automation providers, I'm all in.

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