Amazon vs. Labor Unions                                      

History of Labor

The organized labor movement in both Europe and the United States has its historical roots in Marxist ideology, the class warfare between greedy business owners and oppressed struggling workers seeking social justice.  The movement has been compromised by corruption within large labor unions, such as the AFLCIO during the 1970’s and in this century by the NEA, the largest and most powerful labor union in history, it has also been vindicated by the central principle of the dignity of the laborer, the value of work in society, and the more idealistic goals of the craft unions, from which the original labor union concept owes its beginnings. There are several underlying principles that come into play.

Inalienable Rights

The Judeo-Christian belief in the dignity of mankind, the writings of Alexis de Tocqueville[i] in the 19^th century, and documents referring to democracy as far back as the 3^rd century BC in Athens, defined the concept of the natural right or inalienable right of self-determination. The worker is a free citizen, pursuing liberty and autonomy in his or her life. This lofty goal is difficult to achieve in today’s complex society, especially in the shadow of our highly fractured political environment.

The Intrinsic Value of Work

The distribution of power and control in our society is not self-leveling. Capitalism has lifted more people out of poverty than all other economic systems or social programs combined. However, Capitalism is not without its inherent flaws, it just has fewer flaws than socialism or communism. The labor movement can and often does provide a set of checks & balances for Capitalism. The working man or woman ideally pursues the beauty and value of hard work, the job well done, the satisfaction of work completed and pride in craftsmanship. In recent years, some companies encouraged workers on assembly lines to stamp their initials or inscribe their name to their part of the product, be it the engine component, wing spar, pump, or whatever to encourage and highlight the pride of the individual in the assembly of a whole or completed product.

Workers Power

Workers that value their craft and contribution to society are often powerless as individuals. It is difficult for the individual worker to distinguish, differentiate, or establish a degree of control. The individual worker lacks sufficient power to demand anything. They are at the mercy of the business owner, the corporation, or the organization they work for. The company has extended them the privilege of employment. “I have given you this job because you need to work, and my company needs your labor in order to succeed. For you to request more of me seems impertinent. I don’t owe you anything more than what we originally agreed to.”

The Social Contract

One view is that companies must agree to sign a virtual contract, a social contract within the communities in which they operate in. A society, which is made up of free citizens allows the company to operate and may provide certain incentives to entice the company to add benefit and value to the community. Within this social contract is the understanding that the worker possesses inherent dignity, self-preservation, and satisfaction in their work regardless of how menial or elemental the job may be. Consequently, as a condition of the social contract the company should inquire of the worker, individually or collectively, “What do you need, what do you want, how can we make your job better, increase your job satisfaction, earn your loyalty, help sustain your family, help you achieve your goals in life, and provide you a sense of meaning in a world that struggles to provide meaning or worth.

The Ideal World

In the ideal world the labor union is unnecessary. The enlightened capitalist corporate management senses the importance of their workers and strives to treat them fairly. The corporation understands that their most important asset is their workers. Without them they cannot survive or compete in the marketplace. However, we do not live in an ideal world. Corporations have demonstrated over time that they don’t always hold their workers in high esteem. Workers have been taken advantage of, discriminated against, forced to work in unsafe, unsanitary, and unhealthy conditions. Consequently, workers consolidated their efforts and engaged in Collective Bargaining in order to negotiate from a position of power. They formed labor unions that could speak with some degree of power and influence, and fight for workers’ rights, basic human rights, inalienable rights. Collective bargaining provided the power that the individual worker lacked.

Shareholder Value

If an American corporation is going to work in our free society it must honor the social contract and uphold its end of the bargain. It is a legal requirement for the corporation to succeed financially. Therefore, the corporation must split its obligations between its shareholders, who have invested their hard-earned money in the corporation, expecting a return on their investment and the laborers that sustain the corporation with their creativity, ingenuity, hard work, and dedication to the corporation they work for. This is a fine line, a balancing act, a give & take.

All parties need to balance their own selfish goals against the needs of those who participate in the social contract. Companies need to benefit their communities. Communities need to provide a healthy and efficient environment in which to operate. Shareholders must decide what is most important – profits only, profits and long-term success of the corporation, financing a company that cares about its workers and the community? There are many considerations in the social contract and sometimes these considerations seem at odds. 

Persuit of Happiness

In our Republic, in our representative democracy, each citizen possesses individual liberty and personal freedom. Our citizens have an inalienable right to life, liberty, and the pursuit of happiness. Happiness isn’t a guarantee, but we have the right to pursue it. If a corporation, a government, or other individuals deprive you of that pursuit they are in breach of the social contract. In our free society all the conditions, elements, and participants in the social contract must be examined, carefully weighed, and implemented. While there are successful models to examine, there is no one way. Each community must take into consideration what is best for its corporations, its citizens, workers, and shareholders.

The Free Market

In the free market, no one should feel guilty about realizing substantial return on their investments – those who are willing to take significant business risks have earned the right to see the reward for those risks. America is a phenomenal success story largely based on that simple equation. By the same token, those individuals who help make corporations successful through their creativity, hard work, and diligence should not feel guilty demanding reasonable compensation. That compensation takes many forms, not the least of which is a safe, healthy, and suitable work environment. 

A Prescription

The following is a prescription for balance between the needs of the corporation, its shareholders, and its workers. Each community should form a work oversight team. This team is composed of corporation leaders, community leaders, workers, citizens, lawyers, and business forecasters. Each participant brings their unique vision and expertise to the table. The committee ask questions and recommends suitable paths to success and satisfaction. The oversight team considers issues such as: how much profit, what does the community owe the corporation? Are taxes too high, what does the corporation owe the community, is it willing to help pay for infrastructure? What are the legitimate needs, rights, and conditions for their workers; is their total compensation enough to keep them in their position within the corporation while at the same time ensuring the profitability and competitiveness of the corporation? Labor and management agree to abide by the decisions of the committee. The formation of a labor union only becomes necessary when this collaborative, responsible, and sensible oversight committee fails to satisfy its mission, responsibilities, obligations, or weighs one side significantly over the other.  

Just because the presence of a labor union helps provide reasonable checks & balances for Capitalism doesn’t mean that all parties are happy. When our Congress debates for weeks on end, negotiates as nauseum, and eventually reaches compromise legislation, nobody is completely satisfied.  Different parties have different goals and objectives, arguments inevitably ensue. Negotiation and deliberation are almost always required to make anything happen. The different parties may smile and shake hands but in truth, no one is ever completely happy.

Amazon vs. Labor Unions

Amazon is an incredibly successful company. The case can be made that Amazon is a truly great company, its impact on society being generally positive. Amazon is a disruptive company; its business model has radically changed forever the way people buy things. Similar to Microsoft, its neighbor across the water, its size, reputation, and value paints a huge bullseye on its back. Amazon generally puts its customers first by providing the customer with an inexpensive, easy, and a consistent way of purchasing just about anything. It is often said, “If you can’t get it on Amazon you probably don’t need it.” Amazon has a reputation for outstanding customer service. It also has a reputation for demanding the utmost from its workers. It hires the best, invests in the best, and pays comparatively high salaries to those skilled workers that help Amazon grow, profit, and succeed.

However, Amazon also has a reputation for being a sweat shop. One can find many Amazon horror stories of workers that simply burn out after giving their all, and Amazon expecting still more. Attrition rates for salaried and semi-skilled workers is high. Amazon certainly could do a better job of providing its unskilled and semi-skilled workers better working conditions and better hourly wages. To a certain extent they are guided in their compensation strategy by their shareholders. It is no secret that Amazon shareholders have been extremely patient over many years when the retail side of the business did not generate ANY profits. Those investors who hung in there have been rewarded, some would say, beyond all expectations as the stock has gone from $20 dollars a share to $3,000 dollars per share or even more.

Amazon & Labor Unions

That brings us to the current Amazon’s Bessemer, Alabama warehouse 6,000 employee unionization effort. Amazon’s supply chain processes will be disrupted by the presence of the labor union. If Amazon pushes too hard it will completely alienate its workers causing irreparable harm; there will be a labor stoppage. If the labor union pushes too hard it will engender an untenable work environment and future workers will be difficult to find, hire, and keep. Amazon will experience its worst fears in its attempt to placate its workforce.

Inevitability of Automation

Amazon has created the most sophisticated, technologically advanced, and efficient warehouse management system there is. It is the envy of virtually every online reseller & shipper on the planet. State-of-the-art automation is the hallmark of the online shipping & receiving system. Continued use of automation and robotics will continue to grow. Labor organization pressures will continue to mount but automation will increase, and the warehouse jobs will be lost. Those workers who lose their jobs to increased automation will hit the unemployment lines, lose some of their work-related dignity & satisfaction, and need to scramble to find new semi-skilled work in a labor market that is being universally squeezed by automation, this is a fact of life.

No labor union, governmental department of labor, or community labor oversight team will be able to counteract this trend. Amazon has no choice but to further automate its operations and eliminate the human workers from its payroll in an effort to keep its costs low. To do otherwise would be a violation of its social contract with its customers, shareholders, and the community it thrives in. Even the most benevolent company will be forced to adopt automation in its warehouse or factory or run the risk of becoming extinct in the face of global competition. Attempts at setting up artificial barriers in the form of tariffs will ultimately be unsuccessful. Customers will always seek the highest quality at the lowest price and tariffs simply delay the inevitable.

Is Labor Rebounding

Labor union membership is beginning to rebound after many years of declining participation. While some see this as a new era for the labor movement it is likely a temporary blip. The labor movement will need to shift its mission away from simply securing better wages and working conditions for its members to a much broader focus on the impact of automation in general. We are about to experience the most dramatic change in the workplace we have ever seen. Automation, robotics, AI, and machine learning is going to slash jobs, once held by humans, as never before. Nearly every industry will undergo some degree of human job reduction, some industries will experience job reduction by as much as 90%. Transportation, the service sector, agriculture, banking & finance, healthcare, and manufacturing will be particularly hard hit.

Industrial Revolutions

In the past when technological revolutions took place certain industries experienced substantial job losses. During the 1^st Industrial Revolution, the steam engine virtually eliminated the need for jobs requiring muscle strength, from both humans and horses. However, there always seemed to be other places humans could find work, other industries, other markets typically soaked up workers whose jobs were eliminated.

Digital Transformation

We are now well into the 4^th Industrial Revolution: Digital Transformation. The 4^th Industrial Revolution will have greater impact on society and generate greater revenues than the other 3 industrial revolutions Combined. Nearly every mechanical or electrical device now contains a printed circuit board with amazingly complex and capable microprocessors. Software written by humans is imbedded in each of those devices reducing their size, complexity, and cost. More recently we have entered an era where Artificial Intelligence and Machine Learning is good enough to replace the humans who write the software. It is replacing the analysis that used to be performed by humans in nearly every industry and market segment.

The sophistication of industrial robots on the factory floor has already displaced millions of jobs around the world and this trend is accelerating rapidly. When nearly every industry and market segment begin to lose jobs once performed by humans, now performed by intelligent machines, that learn on their own there won’t be enough new job opportunities to absorb massive layoffs.

Unabsorbed Layoffs

Large factories will be managed by a handful of highly skilled and specific engineers. Much of the maintenance & servicing will be automated as well, requiring only a few highly skilled maintenance engineers. Shipping & receiving will be entirely automated. The trucks that receive the products at the warehouse will be autonomous vehicles as the entire transportation system will become automated. Autonomous trucks will be unloaded at stores and distribution centers by robots, store shelves restocked by robots. For those stores that see customers in person, check out and point-of-sale systems will be fully automated. These systems will use sophisticated predictive analytics to balance inventory and implement just-in-time restocking. The question of our age is, “what will become of all these displaced workers?”

Conclusion

When this scenario accelerates to the point where millions of jobs are eliminated in nearly every area of society fighting for higher wages and better working conditions becomes irrelevant. There won’t be any wages, there won’t be any working conditions; there won’t be any workers. The very idea of organized Labor will become superfluous; there will be no labor to organize. While Amazon and nearly every other company may experience some temporary interruption to its business model as labor unions score some short term wins the future of the labor movement in the United States and around the world is not simply dim, it soon will be non-existent.

Further reading

Life 3.0, Being Human in the age of Artificial Intelligence, Max Tegmark

Autonomy, the quest to build the self-driving car, Lawrence Burns

Army of None, Autonomous weapons and the future of war, Paul Scharre

The Theory of Moral Sentiments, Adam Smith

 

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[i] Alexis de Tocqueville, colloquially known as Tocqueville, was a French aristocrat, diplomat, political scientist, political philosopher and historian. He is best known for his works Democracy in America and The Old Regime and the Revolution. In both, he analyzed the improved living standards and social conditions of individuals as well as their relationship to the market and state in Western societies. He wrote Democracy in America, which was a defining work on democracy and the marketplace. It was published after Tocqueville's travels in the United States and is today considered an early work of sociology and political science.