Amazon.com’s Wage Increase!
October 7th, 2018:
To Eugene Kim of MNBC:
From Mark Oglesby, An Amazon.com Fulfillment Center Worker (login: moglesby):
Subject: Amazon.com’s Wage Increase!
On Tuesday October 2nd, I received a phone call from a co-worker who is out on disability from an accident which occurred at our Amazon.com Fulfillment Center in Moreno Valley, ca. He informed me about the Amazon.com wage increase which I immediately began to research as to better inform my co-workers when I came to work the next day and they commenced to question what I knew or didn’t know about the new wage increase and its implications.
To better inform you Mr. Kim about myself, here’s a brief introduction as to why my co-workers would come to me for this vital information. I have been working to organize a Union in our facility for the last two years whereas I continually research the company! More to the point: Anything Amazon I read, analysis and report.
I write Open Letters to my building (Fulfillment Center Ontario 6, Moreno Valley, ca) management, co-workers and Amazon Corporate which are posted via email, Facebook, The Face of Amazon (look for a section entitled Ont6), my Linkedin account (once wrote a series of four Open Letters concerning a safety incident which received nearly 10,000 clicks, one-third of which were Amazon workers and had my account suddenly shut-down! Took me nearly a month to get my account back up and running) and WordPress. By the way, my blog’s under the name of ‘Don’t Say the “M” Word!’
I write an anti-Amazon blog which goes out (on all of the above sites and email) every Monday, Wednesday and Friday with few exceptions. The blog covers working conditions, safety, management misconduct, wages, benefits or lack-there-of; I write about such subjects as Amazon workers receiving government assistance such as food stamps and rent subsidies. I write about Seattle, Washington and how its city government relented on mandating a business “head-count” tax which Amazon but the kibosh on. Whatever’s relevant to myself and my co-workers I go after if only to let Amazon.com know that people are hearing about its effect on our world.
One more thing! I’ve also written a Tell-All account of working for TheAmazon, a fictional satirical farce rendering of the online retail giant Com.com (Commerce Online Mechanically) and its CEO and founder Bruce Jefferys and his plan to crash the world economy in order to eliminate a present ongoing civil war within his own company. The book’s entitled: ‘Zen & the Art of Masturbation (thus the blog’s name: ‘Don’t Say the “M” Word!’): Experience the End of the Aeon at The Spank the Monkey Café.’ Attached to this email are the book’s front and back covers (paradoxically so, found online at Amazon.com- buy a copy!).
Enough Preamble! Here’s what took place within the FC where my co-workers and I toil away (literally)!
As stated, heard the big news on Tuesday October the 2nd and immediately accessed the Amazon Hub which gave me this:
Amazon Raises Minimum Wage to $15 for All U.S. Employees!
New $15 minimum wage is effective beginning this November 1! New $15 minimum wage includes associates employed by temp agencies. More than 250,000 Amazon employees, as well as more than 100,000 seasonal holiday employees, and their families will benefit from the new, higher pay
Amazon today announced it is increasing its minimum wage to $15 for all full-time, part-time, temporary (including those hired by agencies), and seasonal employees across the U.S.—effective November 1.
The new Amazon $15 minimum wage will benefit more than 250,000 Amazon employees, as well as over 100,000 seasonal employees who will be hired at Amazon sites across the country this holiday. “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon Founder and CEO. “We’re excited about this change and encourage our competitors and other large employers to join us.”
Amazon’s public policy team will also begin advocating for an increase in the federal minimum wage.
“We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago,” said Jay Carney, Senior Vice President of Amazon Global Corporate Affairs. “We intend to advocate for a minimum wage increase that will have a profound impact on the lives of tens of millions of people and families across this country.”
Employees will continue to receive Amazon’s industry-leading benefits, including: Comprehensive healthcare, including medical, dental, and vision coverage Up to 20 weeks of paid parental leave 401k matching
Career Choice, which pre-pays 95% of associates’ tuition for courses in high-demand fields, whether those jobs are at Amazon or another company
Career Skills, which trains hourly associates in critical job skills like resume writing, how to communicate effectively, and computer basics.
With more than 575,000 employees worldwide, Amazon was named #1 on LinkedIn’s 2018 Top Companies list, ranks # 1 on The Harris Poll’s Corporate Reputation survey, and #2 in Fortune’s World Most Admired Companies.
Does this apply to Whole Foods and your other subsidiaries? Yes. The new Amazon $15 minimum wage applies to all U.S. employees at Amazon and its subsidiaries. How are you going to work with Congress to raise the federal minimum wage? Our public policy team will work with policymakers in Washington, D.C., to advocate for a higher federal minimum wage.
What do you want the federal minimum wage to be raised to?
We believe $7.25 is too low. We would look to Congress to decide the parameters of a new, higher federal minimum wage. Is anything changing with Amazon’s RSU program?
Yes, we’ve heard from our hourly fulfillment and customer service employees that they prefer the predictability and immediacy of cash to RSUs. We will be phasing out the RSU grant program for stock which would vest in 2020 and 2021 for this group of employees, replacing it with a direct stock purchase plan before the end of 2019. The net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability. Is it required to hit any incentive targets in order to get the $15 minimum wage?
No, we are phasing out the incentive pay component and the $15 will be a simple minimum with no targets required. Are any health care or other benefits also changing? No, Amazon’s industry-leading benefits package is not changing. We will continue to provide comprehensive healthcare on day 1, company-paid life and disability insurance, up to 20 weeks of paid parental leave, 401k matching, and Career Choice, which pre-pays 95% of associates’ tuition for courses in high-demand fields, whether those jobs are at Amazon or another company.
What about Amazon’s hourly Operations and Customer Service employees who are already making $15? Will they see an increase?
All of Amazon’s hourly Operations and Customer Service employees will see an increase, including those who are already making $15.
Will this be reflected in your quarterly earnings report?
Yes – the effect of this additional expense will be incorporated into our earnings guidance.
So far! So good? I place the question mark in “so good” due to my on going distrust of any and everything Amazon! Any wage increase is a good thing. As a “maxed-out” (which takes three years- very rare to achieve working for TheAmazon) employee ( which we’re really “not” employees of Amazon.com as on the payroll books, we work for Golden-West LLC- whoever “they” are?) I was making $14.65 (as of Oct 1st- we received a forty cent raise which = $4 a day or $16 a week or $64 a month or $768 yearly! Changed my world!
Again, any increase in wages is a good thing (my wife has received a dime raise- she works for Warren Buffet’s corporation by the way. But hey, any wage increase is a good thing- right?)! And this latest announcement by Amazon upper management of the “minimum” $15 an hour raise sent waves of excitement throughout our FC (and I’m certain, of the FCs around the U.S.).
What were these shock waves? Basically, outrage! As I over-heard conversations between co-workers after the All-Hands Meeting I attended, conversations which I joined in, I basically heard people express their disgust over management’s ending of VCP (a company bonus program based on productivity numbers and their percentage 4% for making set goals as well as individual attendance- 4% with zero Un-Paid-Time early departures or entire day absentee- 2% with one UPT and zero % with two UPTs).
Now as to the present state of “disgust” among the workers at our FC? Most of the in progress anger has to do with the VCP bonus incentive program being canceled beginning in November of this year. This state of resentment has to do with the reality that most of the workers have already planned on that VCP bonus money (doubled for Peak or the holidays- October through December) as income! Face reality! Many workers use this “extra” income” as holiday money which now won’t go towards getting our children/grandchildren Christmas presents, giving gifts to friends and family; or just making ends meet at the end of the year! Outrage’s putting it mildly!
Now as to the All-Hands Meeting? Here’s what took place: ‘Much Ado About Nothing!’ We were given one half hour for The Wage Increase introduction, a ‘we don’t yet know much about this’ explanation of what our financial future brings and five minutes for Q&A and then ‘back to work- updates will be coming!’ Poor management of a “hot” topic if you ask me.
Now! In those five precious minutes for questions, I was allowed to ask one. And as much as I wanted to ask the question Eugene Kim gave me (‘Why make this change now when clearly Old Timers feel like they lose more than they gain?’), I decided to ask this: ‘I never liked VCP! I can only control my own productivity and I therefore have to rely on everyone in the building. Why not institute Incentive Pay?’ And I proceeded to lecture on the benefits for an individual who “busts” his or her ass for more money in take home pay! Again, ‘Much Ado About Nothing!’
Another question was this: ‘Why have the last double-down VCP in October? Why not leave it until Peak’s finished?’ Management’s response was very basic for Amazon (a paraphrase): ‘We’ve heard from you! We want you to have your money upfront! Money you can count on! The $15 an hour wage increase is guaranteed! VCP is not!’ And other such nonsense!
The one other question (a such important issue as to one’s financial state and to ‘why in the hell keep coming back to this place again and again and again?’ which in my opinion is appallingly poor management even for TheAmazon) allowed was this: ‘Why are Tier III’s being given further step-up increases ($16.65 to $18.65- the max) whereas Tier I’s are making $15.65 capped?’ And this’ a paraphrase but very close to an actual quote.
To conclude the All-Hands Meeting, anyone who wished to stay and ask further questions was allowed to. Anyone who wished to speak to management at a later date was given the option of signing-up to speak with whichever management personnel of their choice under Amazon’s Open Door Policy. But as to any real substance from this “event?” It was surely lacking. Again, a huge mistake on management’s part! And why?
The talk of the town was the outrage over the loss of VCP! Yes, a wage increase is a good thing. But what about that which we are losing? Again, ‘Much Ado About Nothing!’ Now as I moved about the west side of the building (I’m a customer order picker or what we call the pick department which’s the biggest department in the FC. In this we move about the entire building rapidly. In which case, I was able to over-hear and join into multiple conversations concerning the loss of VCP and RSU’s! Clearly, many were confused as well as angry!
And to the point! So many workers in the FC came to this conclusion: This’ nothing but a PR stunt (I use the term TheAmazon PR Amdroids) for (1) The workers moaning and groaning about pay! (2) Senator Bernie Sanders’ campaign for a $15 an hour “minimum” wage (I wrote Senator Sanders and told him to shut-the-hell-up! You try living on $15 an hour! Can’t be done! Why not vigorously campaign for the “MAXIMUM” ‘A Living Wage’ which’s calculated by the geographical locality in which one resides) and the bad PRESS which TheAmazon’s been receiving over it. (3) Wall-Street and Amazon’s share prices. (4) Amazon’s up coming agenda (which I will conclude with).
A clear example of what’s happening to the various workers: A case study if you will with my own financial figures for the year 2018!
A Tier One Associate (Blue badge from 10/2013 to the present):
· VCP (based on averages of making the max in both productivity as well as attendance: before taxes): $150 X 9 months (Jan-Sep) = $1,350 + (Oct-Dec) = (again, an average over the years 2013-2017) $1,500 = $2,850.
· RSUs for 2018 = $3,900 (after taxes).
· Total compensation (VCP before taxes and RSUs after taxes) = $6,750
Wage Increase:
$15.65 X 40 hrs = $626
$626 X 52 weeks = $3,255
The Calendar Year 2018 against that which is to come (as to Wage Increase, VCP and RSUs:
2018 = $6,750
That which is to come = $3,255
For a total loss of ($3,495.00)
To Conclude:
In my four points concerning: ‘This’ nothing but a PR stunt (I use the term TheAmazon PR Amdroids)’ by Amazon.com, I said that I would give my analysis of (4) Amazon’s up coming agenda? But first, an analysis from a friend and former co-worker who was terminated for “union” activities at the Fulfillment Center Ontario 6; Thomas Wight:
1 – Current Amazon employees probably see a small increase in pay during non-peak months, and a small decrease in pay during peak. Amazon completely abandons any attempt at positive reinforcement or incentive. The result is the only remaining feedback loop is negative feedback.
2 – New Amazon employees get $15 per hour. Because the only incentives are negative, I predict higher turnover, if that is possible (turn’s huge at TheAmazon).
3 – Amazon’s master stroke kills Bernie Sanders attempt to punish companies that pay starvation wages.
4 – By ending the RSU program, Amazon is positioning to spin off e-commerce. There is now no way to hide the massive losses Amazon suffers. This allows Amazon to sell unprofitable parts of the company so it can focus on its core, meaning profitable, business.
TheAmazon will come under siege for anti-trust, monopoly conduct, activities and actions! Other big companies will see to this via petition to the federal government which in all likelihood will take place! In which case, Amazon will circumvent this action by splitting its stock and spinning off e-commerce. Now as to why?
E-commerce is so poorly run! So inefficient, incompetent, wasteful; so under-productive that Amazon’s online machine’s hemorrhaging money! Massive amounts of capital are being wasted daily! It actually, if not physically, hurts to witness it up-close and personal! I spent twenty-two years in management and it’s unimaginable; unconsciousable to stand there and observe the squandering of all the hard work which people are putting into this effort. It sickens me!
Think about it (e-commerce) this way: In the second quarter of 2018 Amazon’s sales went up 54% over that of the second quarter of 2017; good job! Now in the same second quarter of 2018 Amazon’s revenue went down 39% from that of 2017’s second quarter; not so good! How do you increase sales yet decrease revenue? Debt! Massive amounts of debt!
The ‘Whole Foods’ purchase? Debt! Amazon’s leases (which will in fact be placed in the “debt” column of their financials come 2019) amount to massive: Debt! The only thing holding up this Amazon Monolith is the share price (over valuation which will catch-up sooner if not later- I predict sooner once the first quarter financials are released with those “pesky” leases -Amazon really doesn’t own anything- on them as debt! And that’s not to mention -please read ‘There’s a New Crash Coming!’ by John Feffer, September 18, 2018- the economic crash which’s coming. It will devastate any and all entities: governmental, business, personal; heavily encumbered with debt!) and Amazon Web Service or AWS which is the only real source of income in the company! Face it! Amazon’s free cash flow is in the crapper!
When you look at the RSUs? Think about this! Again, from former Amazon.com Fulfillment Center Thomas Wight:
I contemplated what was said at dinner Sunday evening (current and former Amazon.com warehouse workers meet for Indian food at ‘Curry & Kabob’ in Moreno Valley, ca- The Best Ever- every so often).
Amazon hires at least 100,000 workers per year. Probably closer to 200,000. It “gives” each worker 5 shares of stock on the day the worker is hired. The stock “vests” giving the worker access to the stock 2 years later. In the meantime, the stock is “held” by Amazon in trust for the worker.
Amazon fires more than 90% of new hires before the stock vests. When the worker is fired, Amazon “retires” the stock. The stock retirement is recorded as a stock buy back on Amazon’s balance sheet. The buy back costs Amazon nothing. This scheme allows Amazon to artificially reduce the amount of Amazon stock on the market by at least 1,000,000 shares per year at no cost to the company. This continual buy back generates artificial demand for Amazon stock. It also artificially creates a stock shortage. Both of which drive up price. This combination of artificial demand and artificial shortage explains why Amazon is the most shorted stock in the US.
Amazon’s business model requires that it fire the vast majority of workers before their stock vests. The business model isn’t designed to make money by creating new technology or delivering goods to consumers. Amazon’s business model is to artificially inflate its stock price. In effect, Amazon is a giant ponzi scheme, the only winner of which is Amazon’s CEO. *
* Note: This Amazon business model does not include the human cost in the financial lose of a job! Amazon staunchly refuses unemployment benefits and fights the “terminated” employee tooth and nail for their rightful benefit! In which, most drop their claim while attempting to find other work. Many lose homes, apartments, life insurance, spouses, loved ones; family! Many end up homeless adrift in the American wasteland which capitalism’s brought us! Amazon.com being a most amazing case in point!
Now this being the case, and I know that it is! Why shut-off this steady stream of stock “held” in trust for the worker! Isn’t that killing the goose which lays the golden eggs? Yes! Look! We Amazon.com workers are being “breed” for shares of stock and what Mr. “Wight” is saying is completely legitimate. So the question again: Why kill the goose?
Amazon’s aligning itself for the future at the expense of its workforce. This’ a cautionary tale not just for hourly wage workers but more so for salaried middle-management and HR who are going to be disposed of really soon! Think about it! What will make e-commerce more attractive in a buy-out then the dumping of payroll? Massive amounts of payroll via hourly wages, salaries, stock shares (what will the ending of RSUs mean to management?), health benefits and all the rest. And at its heart, this’ what’s taking place with the “so-called” $15 increase!
Mr. Eugene Kim! Sorry to have written such a long response but it needed to be stated! Yes, I am just a low level Amazon plebian but I am also an extremely well educated, well read and hyper-active researcher who has Amazon.com in his sights!
Take from this what you will! Use whatever you like! And please, consider what’s happening in TheAmazon Universe come 2019! It’s gonna knock your socks off: Promise! To the point sir!
Everything you’re reading out there about the $15 Wage Increase is merely window-dressing! The real story, for you or any other investigative reporter is the share price, the breeding of shares via Amazon hiring practices and the upcoming buy-out of Amazon.com’s e-commerce is the place to investigate; scrutinize to the max!
Sincerely,
Mark Oglesby (login: moglesby).