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Is What’s Good for Amazon Good for America?

With ambitious job growth planned in 2017, Amazon may come to define the nature of work in the United States

(Amazon Jobs/Ringer illustration)
(Amazon Jobs/Ringer illustration)

Among business managers, the memoirs of former General Motors CEO Alfred Sloan are taken as a holy text. Published in 1964, My Years With General Motors explains in lucid detail how a lackluster assortment of nascent car brands chasing Henry Ford’s Model T were reassembled into a suite of well-marketed lifestyle products that targeted consumers across the economic spectrum. With his hands-off managerial technique and aggressive pursuit of scale, Sloan built GM into the largest single employer in the United States after World War II. On one edition of the book, its cover bears a quote from Bill Gates, who proclaims it “the best book to read if you want to read only one book about business.”

I don’t know whether Jeff Bezos has read Sloan’s tome, but there are certainly passages in it that would resonate deeply with the Amazon founder: “One of the corporation’s greatest strengths is that it was designed to be an objective organization.” “If we penalize efficiency, how can we as a nation compete in the economy of the world at large?” “We do things in a big way in the United States.”

Fifty years after Sloan’s book was published, Amazon is redefining what it means to be “big” for a company born on the internet. Last week, the online retailer announced that it will be adding 100,000 full-time jobs in the United States over the course of the next 18 months, bringing its total workforce to 280,000 (that doesn’t include tens of thousands of temporary workers Amazon hires every holiday season). Though U.S. employment figures for specific companies are hard to come by, Amazon will definitely be among the top 15 employers in the U.S. if it meets its goal, and probably among the top 10. It has already surpassed GM, which now employs only about 100,000 people domestically. And it is much bigger than its tech peers such as Apple, Microsoft, and Alphabet, none of which employ even 100,000 people domestically.

Amazon, which had just 30,000 employees as recently as 2011, is transforming from a lean and nimble online disruptor into a job-creating giant that supports the livelihood of hundreds of thousands of American families. And while its competitors in Silicon Valley employ largely ] engineers with computer science degrees, many of the workers at Amazon’s fast-growing fulfillment centers are in roles that don’t require college diplomas. Like GM before it, Amazon is a wildly ambitious company generating massive wealth for its leaders and convenience for its customers, all thanks to the plain physical labor of its employees.

But there are drastic differences in how postwar GM and current Amazon view their employees, and they say a lot about how work has changed in recent decades — and where it’s headed.

Amazon is headquartered in Seattle, but its pulse beats through a growing network of fulfillment centers dotted across the United States. The company operates about 100 of these sprawling warehouses in the country right now, according to an analysis by Piper Jaffray, and new centers are slated to open this year in Jacksonville, Florida; Cecil County, Maryland; and Chicago. Each typically employs between 800 and 2,000 people.

The grueling nature of warehouse work is outlined in stark terms in a Huffington Post feature about a man who died midshift at an Amazon fulfillment center in 2013 in Chester, Virginia. The most common Amazon laborers, known as “pickers,” scurry across the massive warehouse of goods to scan and retrieve products customers have ordered online. Pickers are expected to walk as many as 12 miles in a shift, and those who don’t grab packages at a fast enough rate may be fired. In the Huffington Post article, one picker noted that simply drinking more water to stay hydrated and healthy was an economic risk, because extra trips to the bathroom would lower a worker’s productivity.

General Motors factory workers were also subjected to long hours of monotonous labor, but their efforts brought them job security. Employees often spent decades at the company, and entire cities thrived because of the economic prosperity a factory guaranteed. Thanks to strikes and agitation by labor unions, GM in 1948 instituted two annual raises for all its workers — one tied to inflation and another that matched productivity increases in the U.S. economy, typically around 3 percent. The productivity raise became a staple of major corporations during the period and has been credited as a key element in building the American middle class. In his memoir, Sloan credited the raise with bringing “labor peace” to the relationship between workers and management. “[GM] evolved an approach to labor that reflected a desire to have a stable and loyal workforce,” says Ken Lipartito, a professor of business history at Florida International University. “It was a kind of dual strategy of keeping workers pretty loyal to the company, but at the same time try to discourage worker loyalty to a union.”

As a perennial disruptor that has effectively cracked down on unionizing efforts, Amazon cares more about efficiency than stability. Even as it adds workers to its payroll, Amazon displaces thousands of people working at brick-and-mortar retail outlets that can’t compete. The company has a high turnover rate, and it even pays employees to quit in order to weed out the less dedicated. Amazon also offers a retraining program to some warehouse employees, on the assumption that they will leave the company sooner rather than later. “In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company,” Bezos wrote in a 2014 letter to shareowners.

Amazon did not respond to questions about how it allocates raises, but in general, American workers today have no expectations of guaranteed pay increases tied to the country’s overall economic prosperity (including at the major automakers, which phased out the productivity raise in the 1980s). In fact, growth in labor productivity has massively outpaced growth in real wages for decades. The old adage “What’s good for GM is good for America” was, in Sloan’s era, broadly true. Today, that’s not the case for any one company.

“When GM was hiring hundreds of thousands of people in the postwar [period], they were hiring them into a very different labor-relations system,” says Louis Hyman, the director of the Institute for Workplace Studies at Cornell University. “There were unions, there were expectations of job security and also expectations of growth, permanent growth. … [Today] it’s an expectation that the economy will be not permanently growing, but growing in fits and starts.”

Amazon survived the dot-com bubble and the global recession unscathed — in fact, those two events knocked out many of the company’s would-be competitors, both physical and digital. In that sense, the Amazon model of doing business, with workers viewed as modular parts that can be scaled up or down as needs arise, has already won. The GM model, centered on job security and company loyalty, ultimately sent the company to the edge of extinction in 2008 because union contracts and expensive worker benefits such as pensions meant labor costs remained high even when car sales slowed. “Certainly people have looked to Amazon to think about how their own corporations should be organized,” Hyman says. “It’s hard not to think, ‘Should I be doing that here?’”

But even as Amazon grows, there’s no guarantee the company will hang onto its new workers for long. Amazon now has 30,000 Kiva robots roaming its warehouse floors and helping human pickers to retrieve items (one of these facilities is a repurposed GM plant outside of Baltimore). Increased automation via warehouse robots and drones will be a key factor as the company expands its lightning-fast delivery service Amazon Prime Now to more locations. In 2015, Amazon even held a contest to find the best robotic picker in the world.

“Amazon is looking in the future to be a robot-driven warehouse,” Hyman says. “In the long run, they’ll have a core of highly skilled, highly trained programmers and logistics experts. In a lot of ways it’s like Uber — they’re trying to get a lot of people to help them over the hump toward the automated future.”

No one knows for sure when that automated future will arrive, but if it will save money and improve the customer experience, Amazon will undoubtedly seize upon it. Until it does, companies will have ever-growing Amazon to look to as a model for the kind of social contract that should exist between employers and workers. The company’s hard-driving philosophy does not only apply to its warehouses — a New York Times feature outlined how the company’s intense and sometimes callous corporate office culture often led to rapid burnout and people crying at their desks.

This may be the price of customer satisfaction. Amazon has thwarted its opponents because it offers the best retail experience on the planet. And it offers the best retail experience on the planet because it wrings every ounce of efficiency it can out of its 180,000 workers. Soon they will have 100,000 more colleagues, and the “Amazon Way” will be that much more typically American.

“General Motors saw itself as the mirror of American society,” Hyman says. “They were supposed to be the leader in imagining the economy and bringing the ‘good life,’ both in terms of the car — which is the quintessential American product — and the good life in terms of the job, which made it possible for workers to buy those cars. I don’t think Amazon feels the same way … but that would be wrong. It certainly is the mirror of American society insofar as workers don’t have the expectation of permanent jobs. And with the expectation in the long run that anything that can be automated away will be automated away. And of course they look to not just an American future but a global future. It’s just a very different set of expectations and assumptions of what the purpose of a corporation is.”

An earlier version of this piece mistakenly stated that Apple, Microsoft, and Alphabet don’t employ more than 100,000 people globally; each do, and the intended point was about their domestic workforces.