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 19th century, and documents referring to democracy as far
back as the 3rd 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 1st 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 4th Industrial Revolution: Digital Transformation.
The 4th 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
[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.