Amazon’s “Customer-Centric” Business Model Couldn’t Function Without Abusing Workers
Amazon wants to be both “Earth’s Most Customer-Centric Company” and “Earth’s Best Employer.” But it can’t have both. In fact, its customer-dazzling business model is predicated on worker exploitation and endangerment.
For the investor class, April is the month not only of spring showers and tax avoidance but also of the annual shareholder letter. Typically an exercise in banality, the CEO of a publicly traded firm produces a few pages of reflections on the previous year and on prospects for the future. In those instances in which a particular company has recently been subjected to unwelcome media scrutiny, the shareholder letter is also an opportunity for the CEO to reassure investors that the firm has listened to its critics and is taking appropriate measures to remedy any perceived problems.
This latter opportunity is especially important for Amazon, which, despite record profits and a breathtaking pace of expansion, has endured a few rough years in the public relations department. In the spring of 2020, as is well known today, the company unduly terminated a Staten Island warehouse worker for the insolence of organizing a walkout in protest of the firm’s wholly unsatisfactory COVID mitigation measures. And then in September, a report from investigative journalist Will Evans, who had obtained access to the company’s internal records, revealed that, between 2016 and 2019, the rate of serious injuries for Amazon fulfillment center employees had risen steadily, from 5.9 per hundred workers to 7.7, the latter figure nearly double that of its industry peers.
All this negativity cast a dark cloud over Jeff Bezos’s April 15, 2021 shareholder letter, which had been much anticipated, since it was his last as Amazon CEO. While the letter was, as discussed in last year’s commentary for this magazine, littered with misrepresentation and misdirection, Bezos cannot be accused of remaining silent on the matter: he dedicated no fewer than eighteen paragraphs to employee relations. And to say that the soon-to-be executive chair spoke boldly about the company’s planned revisions in this department amounts to an understatement. Henceforth, Bezos announced, Amazon would strive to be “Earth’s Best Employer” as well as “Earth’s Safest Place to Work.”
Hardly content to while away his golden years aboard the Y721, Bezos even announced that he would be putting his time and energy where his mouth is, indicating his eagerness to roll up his sleeves and “work alongside the large team of passionate people we have in Ops” to remake Amazon as the world’s best and safest workplace. These were big promises, and skeptics can hardly be faulted for doubting whether they were meant in earnest.
Perhaps the only concrete outcome of Bezos’s Parthian shot was that it cranked up the pressure on incoming CEO Andy Jassy, whose first shareholder letter was published on April 15, 2022. That Jassy appears to evince considerably less interest in workplace safety is evident enough from the fact that he couldn’t be bothered to devote more than two paragraphs to the matter. Jassy’s first address to Amazon investors, indeed, amounts to a near complete capitulation, made abundantly clear in one startling act of erasure. Here’s Jassy, revising the language of Bezos’ leadership principles:
Last summer, we added two new Leadership Principles: Strive to be Earth’s Best Employer and Success and Scale Bring Broad Responsibility. These concepts were always implicit at Amazon, but explicit Leadership Principles help us ask ourselves — and empower more Amazonians at all levels to ask — whether we’re living up to these principles.
At least “Strive to be Earth’s Safest Place to Work,” however rhetorically displeasing it may have been, was more or less concrete. Its replacement is a deliberately vague and shabby paraphrase of comic-book wisdom.
Jassy’s first shareholder letter thus constitutes a case study in the downward adjustment of expectations, not unlike the leader of a country at war conceding that no quick victory shall be forthcoming, that the nation must gird itself for a long struggle, for mounting casualties. It is now all too clear that if Amazon’s fulfillment centers are ever to become safe places to work — let alone “Earth’s Safest” — it will only be because change is imposed on the company.
Amazon and the Cult of Invention
In a certain sense, Jassy’s walking back of Bezos’s grand designs amounts to a wholly rational decision, for the problem of workplace injury at the company’s warehouses, under present conditions, is all but unsolvable.
In order to get a comprehensive understanding of the dilemma the new CEO has inherited, we’ll need to take a look back at how his predecessor framed the matter in his final letter. Unlike Jassy, who insists — rather preposterously — that the firm’s injury rates are “about average,” Bezos did concede that Amazon needs “a better vision for our employee’s success.” But in proceeding to introduce the new leadership principles, Bezos inadvertently stumbled into a clear articulation of the core problem:
We have always wanted to be Earth’s Most Customer-Centric Company. We won’t change that. It’s what got us here. But I am committing us to an addition. We are going to be Earth’s Best Employer and Earth’s Safest Place to Work.
The critical phrase is “what got us here,” where the “what” stands in for the firm’s astounding feats in logistics — i.e., the ruthless efficiency that allows it to serve its customers’ every whim — and the “here” refers to Amazon’s market dominance in e-commerce. But could it be the case that the company’s obsession with customer service is also what resulted in its injury crisis? As a general rule, the more a firm seeks to cater to the desires of its customers, the more it tends to demand from its workers — something has to give here. But Bezos audaciously elides the contradiction, promising that Amazon will become the best in the world at both.
How is the company to achieve the impossible? Here Bezos appeals to one of the more exasperating aspects of our unhappy age: our near universal faith in “invention” — or, more commonly, “innovation” — as the solution to any and all crises:
In my upcoming role as Executive Chair, I’m going to focus on new initiatives. I’m an inventor. It’s what I enjoy the most and what I do best. It’s where I create the most value. I’m excited to work alongside the large team of passionate people we have in Ops and help invent in this arena of Earth’s Best Employer and Earth’s Safest Place to Work. On the details, we at Amazon are always flexible, but on matters of vision we are stubborn and relentless. We have never failed when we set our minds to something, and we’re not going to fail at this either.
The cult of invention is so second nature to us that it even extends to those hardly rare instances in which the problem itself is the direct result of prior invention, as is most certainly the case with Amazon’s injury crisis.
One of journalist Will Evans’s more illuminating findings was that the rise in injuries at Amazon warehouses closely tracks with the introduction, in late 2014, of the company’s robot fleet, an “innovation” touted by the firm as a means of making “those jobs better and safer,” indeed even of permitting workers “to take advantage of their innate human creativity instead of doing rote things over and over again.” Setting aside the subjective — and rather laughable — component of this claim, the serious-injury rates in Amazon’s robotized facilities are consistently higher than for its non-robotized factories. As demonstrated in the 2021 report of the Strategic Organizing Center (SOC), between 2017 and 2020, the serious-injury rate for workers at robotic facilities was consistently between one-quarter and one-third higher than for employees in the company’s less “innovative” venues.
An easy way of immediately reducing injuries, then, would be simply to turn off the robots. But even this would be insufficient to bring Amazon into alignment with its industry peers, let alone render it Earth’s Safest Place to Work. A bigger problem is the inhuman pace the company inflicts on its workers in all facilities. As noted in the 2022 SOC report, the Washington State Occupational Health and Safety Administration (OSHA) office has in the past two years repeatedly cited Amazon for violations of multiple federal health and safety rules. Its admonishments directly connect the firm’s “very high pace of work” and its “monitoring and discipline systems” to its rate of injury. According to the SOC researchers, this judgment is without precedent in the fifty-year history of the agency; never before has it been “determined that a company’s pace of work, on its own, is so high that it constitutes a separate violation of the OSHA Act, requiring specific steps to reduce work speeds.”
One of the many curiosities of Bezos’s 2021 shareholder letter was that he did not tout the substantial decrease in the serious-injury rate between 2019 and 2020, a 17 percent drop, from the peak of 7.7 all the way down to 6.4. But we now know that there were good reasons for this omission, for, as the 2022 SOC reports illustrates, this reduction was an unintended by-product of the company’s COVID mitigation measures. As part of its efforts to reduce infections, the company temporarily suspended its notoriously draconian disciplinary system, thereby significantly easing the pressure management exerts over warehouse employees. Not surprisingly, the suspension was lifted in October — Prime Day was just around the corner, after all — and the rate of serious injury began to climb again. Thus another means of reducing injuries reveals itself: Amazon could phase out its system of surveillance and punishment, or, at the very least, soften its harder edges. But to ease up the pressure even a little would directly conflict with Amazon’s business model.
One of the most deceitful gestures in Bezos’s final shareholder letter was his expression of pride in “the fact that Amazon is a company that does more than just create jobs for computer scientists and people with advanced degrees,” that the firm’s beneficence also extends to “people who never got that advantage.” What distinguishes Amazon from its Big Five peers is that it directly employs hundreds of thousands of blue-collar workers; as Francesco Massimo has recently estimated, roughly 70 percent of the company’s employees work in the warehouses or as couriers. Amazon’s most impressive innovation is not the Alexa machine or the Kindle, but the fulfillment center, where the company has pioneered new techniques for maximum extraction of labor from its low-paid workforce. It is Amazon’s triple threat of surveillance technologies, robotics, and algorithmic management that permits the firm to deliver packages rapidly and at little or no cost to the customer — all at the expense of the health and well-being of the pickers and packers and sorters and drivers.
It was Bezos himself, along with Jeff Wilke and Dave “The Sniper” Clark, who oversaw the development of this system of labor extraction, indicating that, at its very highest levels, the company has long been aware of the damage this model inflicts on workers’ bodies. All that has changed is that, thanks to the efforts of Evans and those who have followed in his wake, the company’s efforts to conceal the magnitude of the crisis have increasingly faltered. But no amount of bad press is going to shame the firm into voluntarily surrendering what is most certainly its signal accomplishment. Instead, we can expect more hollow reassurances that the company can and will achieve the impossible, that Amazon is fully capable of being “Earth’s Best Employer and Earth’s Safest Place to Work” and at the same time “Earth’s Most Customer-Centric Company” — and indeed, as Bezos concludes, that the “two vision statements” will “reinforce each other.”
Were it not for a compensation package in excess of $200 million, one could almost pity Jassy for the mess he’s gotten himself into. With his predecessor seemingly preoccupied with plans for the establishment of a galactic empire, the burden of remaking Amazon as Earth’s Best (if not safest) Employer now falls squarely on Andy’s shoulders.
Like Bezos’s last, Jassy’s first shareholder letter was eagerly anticipated — especially given the company’s recent failure to suppress a union organizing drive spearheaded by the aforementioned former Staten Island worker. Overlooked amid the enthusiasm for Jassy’s letter was the release of the SOC’s 2022 report, which revealed that, despite all the new measures promised by Bezos, the serious-injury rate is once again heading in the wrong direction, up from 6.4 in 2020 to 6.8 in 2021, against the figure of 3.3 for all other warehouse workers. Amazon employs a third of US warehouse workers, yet accounts for 49 percent of serious injuries. (I reached out to Amazon for comment and have yet to receive a reply.)
Much like his predecessor, who had huffed that, “if you read some of the news reports, you might think we have no care for employees,” Jassy in his shareholder letter bemoans the media coverage of his firm’s workplace injury record, insisting that Amazon’s “injury rates are sometimes misunderstood.” In setting out to correct the record, Jassy then offers up a series of deliberately misleading figures.
In one carefully constructed sentence, the new CEO concedes that Amazon’s serious-injury rate is a “little higher than the average of our warehousing peers,” 6.4 against 5.5. But as Alex Press immediately countered in this magazine, the rate of 6.4 is for 2020 rather than the 6.8 of 2021, thus concealing the unpleasant fact that injuries are once again on the rise. Even more egregiously, Press notes, the figure of 5.5 is inclusive of Amazon’s workforce, which again constitutes fully one-third of US warehouse employees. The figure for non-Amazon warehouse workers is 3.3, indicating that the company single-handedly pushed the industry average up 2.2 points.
In an equally disingenuous gesture, Jassy then claims that the serious-injury rate for Amazon couriers is significantly lower than the industry average, 7.6 against 9.1. He does not however mention that Amazon’s “Delivery Service Partners” — that is, the drivers of the blue vans who drop off the packages — are not included in this figure. As indicated in the 2021 SOC report, these “independent contractors” are injured at nearly three times the rate of unionized UPS couriers. From Amazon’s perspective, the Boys in Blue are someone else’s problem.
All this obfuscation is meant to reassure shareholders that Amazon’s record is really not so awful, and with a little more time for “learning, inventing, and iterating,” those “passionate people” over in Ops will get this under control. And sadly enough, it will likely work, for as Greg Norman recently reminded us, the investor class is, on the whole, a forgiving lot, at least with respect to past indiscretions. It is indeed arguable that the strategy has already worked, given the results of the May 25 annual shareholder meeting. All fifteen shareholder proposals — among them, a call to suspend warehouse productivity measures, for an independent audit of the company’s workplace safety culture, for worker representation on the board, and for a report on the firm’s union avoidance tactics — were defeated.
In the letter, Jassy informs the shareholders that, in the early days of his tenure, he spent “significant time” out there in the fulfillment centers. And with all the earnestness of an India Office inspector general, the CEO is dismayed to report that the problem is . . . complicated. Like his predecessor, Jassy largely attributes this to Amazon’s extraordinary scale of operations, noting that the company hired no less than 300,000 new workers in 2021. But this rather conveniently elides the company’s unprecedented rate of turnover, which renders the argument moot. Even if Amazon was not growing, it would still need to replace its entire warehouse workforce every eight months or so. As a backup self-defense, the CEO adds personal insult to injury, reminding shareholders that all too many of the new hires fall well short of the company’s optimal physical standards for its “industrial athletes.”
Another through line between old and new CEOs concerns perhaps the most bizarre — and certainly most disturbing — aspect of Bezos’s final shareholder letter. As discussed in last year’s commentary, Bezos articulated nothing less than a novel theory of value, according to which workers (the hundreds of thousands of wage earners and contractors who pick, pack, and deliver the goods) are conceived as the beneficiaries of the company’s (senior management’s) largesse. Just like our customers and third-party sellers, says Bezos, “we” create “value” for them — no less than $91 billion worth in 2020 alone. This conflation of labor and consumption, which would be laughed out of any business-school classroom, is what permits Bezos to maintain the fiction that there is no contradiction between being best at serving customers while at the same time being best at meeting the needs of workers. According to the Bezos Theory of Value, the only difference between customers and employees is that, whereas customers receive goods for a price, employees receive wages and benefits in exchange for labor.
If there was any hope that Jassy might think otherwise, it was quickly dissolved by his assurance that the company would approach the problem of workplace injury in the very same manner they “do other customer experiences.” Indeed, the process is already well underway, for Jassy is proud to announce that the safety team has “researched and created a list of what we believe are the top 100 employee experience pain points and are systematically solving them.”
The word choice here is revealing, as Jassy simply transposes a concept from the consumer-relations side — customer experience “pain points” — onto the qualitatively different domain of employee relations. For the Amazon warehouse workers who suffer from the company’s daily predations, this is profoundly insulting. In effect, Jassy equates the hassle of a broken hyperlink or an errant delivery address to the debilitating physical distress inflicted on workers’ bodies.
The Silver Bullet
Jassy must be aware of the preposterousness of Bezos’s proposal to bend over backward for customers and workers alike. Indeed, it’s surely why he quietly annulled the company’s short-lived pledge to be Earth’s Safest Place to Work.
It’s also why the new CEO, unlike the old, stubbornly refuses to acknowledge the extent — indeed, even the existence — of the crisis. After the nonbinding shareholder proposal to abandon the company’s work quotas and surveillance measures was defeated, he once again insisted that Amazon’s rates of injury “are only a little higher than average.” He added that, as with every other aspect of the company, he “finds no solace in being average,” reaffirming his commitment “to be the best in the industry.”
This is language purged of all meaning, a transparent and shoddy attempt to deflect from what is abundantly evident: Amazon is perfectly comfortable with operating injury mills. Such is the necessary cost of catering to customers’ every fancy.
Jassy writes that he had genuinely hoped his foray into the fulfillment centers would reveal “a silver bullet that could change the numbers quickly.” He’s surely using the metaphor in its modern sense to mean panacea, but it’s interesting to consider its origins in folklore, where a silver bullet was the only weapon that could kill a werewolf. From Jassy’s perspective, it’s clear that the werewolf in need of slaying is not the company’s grueling exploitation of its workforce but the forces of state and organized labor that so insolently attempt to interfere in the relationship between management and workers. The desired silver bullet is whatever will make it all go away.