Amazon Squandered and Gambled - Now They’re Cutting Peak Pay and Laying People Off
Top execs invested lavishly in a number of losing ventures and pet projects, spending money on everything but wage increases and jobs.
This holiday season Amazon is the real grinch, laying people off and ending peak pay for its workers laboring overtime to deliver presents. Unionizing workers at the Northern Kentucky Air Hub (KCVG) for example, have been robbed of the seasonal $2/hr increase in wages that Amazon paid last year. Instead, Amazon has offered insulting “cost-of-living” raises as low as $0.40/hr in some areas. Today Amazon announced it was laying off 10,000 workers, the largest layoff in the company’s history.
Where did Amazon’s profits go? The bosses spent it on themselves or squandered and gambled it away.
The recent pay cuts and layoffs come from Amazon bosses panicking to lower costs. When everyone was locked down during the pandemic, the corporation made an easy profit of $21 billion in 2020 and $33 billion in 2021. But this year, Amazon has lost $3 billion so far. Amazon’s retail division in particular has lost $2.6 billion in North America and $5.5 billion in the rest of the world.
These retail losses have been covered by high-tech Amazon Web Services (AWS), a major cloud computing provider, which made a profit of $17.6 billion since the start of the year. But even that star has begun to fade, as AWS grew at its slowest pace this year. Now the corporation has issued a glum prediction that for the rest of the year, it will earn an overall profit of $0-4 billion.
In September, Amazon execs closed several dozen delivery stations and warehouses, and halted or delayed construction on dozens of others. Last week, they froze all hiring for corporate roles. Management is in extreme penny-pinching mode, ordering workers to dangerously overload delivery vehicles and looking for other ways to save money in the warehouse. CEO Andy Jassy has started a “cost-cutting review of the tech giant and paring back on businesses at the company that haven’t been profitable.” (WSJ)
How can Amazon lose money when its workers are overworked to the point of injury or death? Are workers to blame for Amazon’s loss of profitability? As much as Amazon execs like to point fingers, the blame lies solely with them and the rest of big corporations. Amazon only spent $2 billion more on fulfillment this year compared to last year. A good chunk of that is not even worker pay but corporate costs. By comparison, Amazon spent $6 billion this year on stock buybacks, with $4 billion more planned. That alone is double this year’s total corporate losses, and six times what Amazon spent on its recent insulting “raise.”
Amazon’s upper management have utterly mismanaged and squandered the company’s pandemic windfall, and are dumping the consequences on workers. They assumed that online shopping was going to forever grow exponentially, and doubled Amazon’s warehouse space to 525 million sq ft by the end of 2021. This year, as consumers return to in-person shopping, Amazon had to reverse course and shutter or halt construction on 53 million sq ft of warehouse space.
Top execs invested lavishly in a number of losing ventures and pet projects, spending money on everything but wage increases and jobs.
Amazon bought shares of electric vehicle startup Rivian, whose stock cratered 66% this year after Ford and other proven competitors released their own electric vehicles. Amazon has lost $10.4 billion so far on that investment. The company’s devices unit, which includes Jeff Bezos’s favored creation Alexa, loses more than $5 billion a year because privacy-conscious customers won’t buy Alexa devices unless the company sells them at a loss. And Amazon had been on a corporate spending spree, buying moviemaker MGM for $8.45 billion and spending $4 billion more on sales, marketing, and administration than last year.
One of the biggest loss items for Amazon is a $7.3 billion increase in the cost of buying goods for sale. This is why even though Amazon sold 10% more goods this year, it still lost money. As global trade slows and the economies of US and China decouple because of inter-imperialist rivalry, importers and exporters will be hit especially hard. Joe Biden’s saber-rattling against China and Xi Jinping’s nationalist responses are not confined to the news, but have come home to roost as economic protectionism and global economic winds batter US import companies and Chinese advanced manufacturing.
The bosses have their golden parachutes if things go south, it’s the workers who are really caught in the crossfire.
For this year’s peak season, Amazon is set to work its warehouse associates harder than ever. Management is saddling workers with the consequences of their complete mismanagement and global economic headwinds. On November 3rd, Amazon management assigned workers a weekly mandatory overtime (MET) shift from November 27th to December 23rd during Peak Season, with only three weeks' notice, leaving many workers to scramble over alternative plans for necessities like child care, second jobs, course schedules, etc.
On top of that, there is still an ongoing labor shortage. Amazon needs workers for peak season and will offer new workers a “good” (less rotten) pay deal with large signing bonuses, to get people into the warehouse but also to sow divisions between long-time workers and newcomers. But if overloaded delivery vans are any indication, management will overburden new and old workers alike with unreasonable work at unreasonable pay.
Behind the fantasy of Amazon’s digital one-click instant delivery, is a massive human mechanism sorting, picking, packing, and delivering goods. This is an oppressive, technologically unadvanced, low-profit-margin system that depends on squeezing as much work out of workers as possible.
Workers deserve more. Where has peak pay gone? Straight into the pockets of the bosses, who spent it on themselves or squandered it on gambles. That’s why workers at KCVG are fighting for $30/hr starting wage and 180 hours of paid time off. The next time Amazon says they can’t afford to pay $30/hr we’re gonna remind them they gambled our pay away. If you work at Amazon and want to fight for higher pay and better conditions, contact us and pledge for the union!