Amazon’s new, unusual labor issue: What to do with too many workers

Rapid expansion in pandemic now brings lower productivity.

Amazon has too many workers, an unusual problem for the United States’ second-largest private employer.

The company said on its quarterly earnings call that it hired too quickly in its warehouses during the pandemic to keep up with demand for hand sanitizer and masks, as well as to cover for workers who caught the omicron variant. The pandemic sales boom is waning as people leave their houses and more businesses open up.

“As the variant subsided in the second half of the quarter and employees returned from leave, we quickly transitioned from being understaffed to being overstaffed, resulting in lower productivity,” Chief Financial Officer Brian Olsavsky said on a call with analysts. He said the company would work to remedy that.

That’s a far cry from the past several years for the e-commerce giant, when it struggled to hire enough workers fast enough to staff its ever-growing network of warehouses expanding across the country. It has hired hundreds of thousands of workers — 270,000 just in the second half of last year — to stay on top of its same-day and one-day shipping pledges. And it has advertised job fairs and its hiring as a boon to the economy.

It’s unlikely Amazon will have to lay anyone off. Its warehouses typically experience more than 100% turnover in a given year in part because of the strenuous working conditions, experts say, and attrition could solve the issue.

Amazon spokeswoman Kelly Nantel said the company is not currently considering layoffs at its warehouses.

Still, labor organizers who are eyeing unionizing the company’s U.S. warehouses — one has been successful so far in Staten Island — have said that workers are drawn to unionization in large part because of Amazon’s ambitious standards for worker efficiency.

“I don’t think that increasing

efficiency needs to come at the cost of the workers and needs to come at the cost of working conditions,” said Matthew Bidwell, an associate professor of management at the University of Pennsylvania’s Wharton School. “But it’s very easy for that to happen unless you are thinking carefully.”

Nantel said in emailed statements that productivity is not about a faster pace of work but changing things to make work more efficient. She used the example of fewer workers being able to unload trucks because of social distancing guidelines. Now, more workers could unload at the same time. (Amazon founder Jeff Bezos owns The Washington Post.)

Amazon has been easing its coronavirus restrictions at its warehouses for the past several months, after ramping up safety policies in the early months of the pandemic. The company says it is following federal and local guidelines.

Unionization pushes at a Bessemer, Ala., warehouse and in New York grew in part out of worker concerns about coronavirus safety at the facilities, which stayed open even while stay-athome orders were in effect because they were considered essential work.

The union movement, which is gaining interest at some of the company’s more than 1,000 warehouses across the United States, involves advocating for higher pay, expanded benefits and better treatment for workers — including more breaks and less intense surveillance. (Amazon said it keeps a “level of security within our operations to help keep our employees, buildings, and inventory safe.”)

Workers at Amazon warehouses are often monitored by how long they stray from their work station, a metric called “time off task.” The company has faced criticism for how closely it tracks this, and workers have said they’ve struggled with being away for too long as they made long treks to the bathroom or to break rooms in the facilities, which can stretch more than 1 million square feet. (Amazon said in a report that workers are “able to take informal breaks to stretch, get water, or talk to a manager.”)

Daniel Olayiwola, an Amazon warehouse worker in San Antonio, submitted a proposal for the company’s shareholders to consider that asks Amazon to drop the use of productivity quotas, saying they pose safety risks.

“When you’re rushing to make rate or when you’re worried that pausing to catch your breath could lose you your job, you’re forced to prioritize speed over safety,” Olayiwola wrote in his resolution.

An analysis last year of work-related injury data from the Occupational Safety and Health Administration showed Amazon reported a higher rate of serious injury incidents that caused employees to miss work or be shifted to lightduty tasks than at other warehouse operators in retail. Amazon’s Nantel said that the company saw an “increase in recordable injuries during this time from 2020 to 2021 as we trained so many new people,” and that it is making improvements on reducing injuries.

The company did not outline on its earnings call exactly how it plans to increase productivity but expects the issue should improve when overstaffing subsides.

“It’s a combination of productivity at the employee level, but it’s also a matter of productivity and harmonization of the network, having the right capacity and the right demand matched at the warehouse level and the transportation node level,” Olsavsky said on the call.

Some experts say that Amazon would not risk upping quotas for workers, especially when it is under so much scrutiny. In a statement with its earnings results, CEO Andy Jassy noted that Amazon had doubled the size of its fulfillment network in the past two years.

“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network,” Jassy said. “We know how to do this and have done it before.”

Michael Pachter, an analyst with Wedbush Securities, said Amazon’s push to increase productivity will not pose a threat to workers.

“Higher productivity is a lofty goal, but I don’t think they are likely to risk the backlash if they force workers to pee in bottles,” he said, referring to past reports that Amazon delivery drivers have had to pee in bottles during their shifts. (Amazon has admitted that its drivers can have trouble finding bathrooms but said warehouse workers have access to them.)

Pachter said that Amazon’s focus on its overcapacity is “an excuse” to distract from its spending. The company is still growing so rapidly that it will quickly fill the extra space, he said.