Problems with Amazon Warehouse?  It is exhausted by workers for hiring and has too much space

Problems with Amazon Warehouse? It is exhausted by workers for hiring and has too much space

Amazon’s low-wage, high-turnover work model is starting to show signs of stress.

The tech giant could run out of workers to hire for its warehouses by 2024, according to an Amazon internal research note leaked by mid-2021 seen in the publication Recodingputting the quality of its services, development plans and the model of quick stirring of the work.

“If we continue to work as usual, Amazon will run out of available work on the US network by 2024,” the report said.

The note said Amazon had six levers that it could use to delay the labor crisis by a few years – including wage increases and automation – but the only way to significantly change that timetable is to make sweeping changes to the way of managing its employees.

Some areas face worse deficiencies than others. Amazon is expected to exhaust all of its available workforce in the Phoenix Metro, Arizona by 2021, and staffing of its warehouses 60 miles east of Los Angeles will run out by the end of 2022, the report said.

Amazon noted in the note that it calculated the available workforce based on characteristics such as income level and household proximity to Amazon facilities. The calculations were 94% accurate in predicting which U.S. geographic areas were understaffed ahead of Amazon Prime Day in June 2021 and had delivery delays, the report said.

Some of the sites also coincide with places where Amazon intends to sublease warehouse space it accumulated during the rise of pandemic-era online shopping. The company seeks to lease 10 million square feet of space and evacuate even more by ending leases with landlords, according to Bloombergin warehouses in New York, New Jersey, Southern California and Atlanta.

said Rena Lunak, a spokeswoman for Amazon Luckthat “there are a lot of draft documents written on a lot of issues across the company that are used to test cases and consider different possible scenarios, but then they are not scaled up or used to make decisions. That was one of them.”

He added: “It does not represent the real situation and we continue to recruit well in Phoenix, the Inland Empire and across the country.”

How high is the turnover?

Amazon has long praised employee productivity above all else and built a talent model designed to drive turnover in its warehouses, which employ tens of thousands of people to package and ship the company’s seemingly endless flow of orders.

But while this method has worked for years, with Amazon taking advantage of the reversal rate to keep employees motivated and flexible, it seems the reversal may have spiraled out of control. Amazon’s wear rate, which was 123% in 2019, jumped to 159% in 2020, according to the leaked note. This is much higher than the total turnover rates in the broader transportation and warehousing sectors in the US, where 46% of people jump by boat in 2019 and 59% in 2020, according to the Bureau of Labor Statistics.

Amazon needs to reduce its wear percentages to 2019 levels to gain another three years of hiring, the report said.

A change in the dynamics of power

Amazon employees have long complained about the unique pressures in their warehouses, from repetitive work to face-to-face computer monitoring and relatively high injury rates. In one example, the company was criticized for offering water or soft drinks and a candy or bag of chips, worth about $ 2, as an incentive to speed up the work of warehouse packers working on Easter Sunday.

With an average salary of $ 16 an hour, according to payscale.com, these issues have made competitors such as Walmart and FedEx more attractive workplaces for a number of employees.

In anticipation of increased competition, Amazon has already raised its average initial salary for new hires in the US to $ 18 an hour. Reuters mentioned, but could consider increasing them further. The leaked note predicted that with every dollar Amazon raises its minimum wage, it adds 7% more employees to its potential hiring group.

Amazon is also considering automating more of its operations. But even with the “conservative” goal of improving warehouse productivity by 25% by 2024 through automation, this would slightly repel the labor crisis, the report notes.

Changes already

So far, the need for workers has led to the end of some of Amazon’s strict workplace policies.

“They were so concerned about the deterioration and loss of people that they withdrew all the policies we had to impose as managers,” said Michael Garrigan, former chief executive of Amazon warehouses in Phoenix from 2020 to early 2022. Recoding. “There was a joke among the … directors that it did not matter what [workers] subscribed because we knew HR would release it. It was almost impossible to get fired as a worker. “

Employee shortages can also give unions greater bargaining power. Amazon, which has long thwarted union efforts with the belief that there would be obstacles to business flexibility and warehouse efficiency, finally lost the trade union battle on April 1 when Amazon employees in a New York warehouse voted for membership in the independent Amazon Trade Union.

Looking forward to avoiding a growing wave of unionization, Amazon has considered blocking posts on a planned internal messaging app that contained union-related keywords, according to a leaked memo quoted by The Intercept. The chat room would mean those who contained words such as “union”, “toilets”, “living wage”, “wage increase” and “plantation”.

Editor’s note: This story has been updated with the Amazon statement.

This story was originally featured on Fortune.com

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