
Amazon Warehouse Workers Lose Bonuses, Stock Awards for Raises - petethomas
https://www.bloomberg.com/news/articles/2018-10-03/amazon-eliminating-bonuses-stock-awards-to-help-pay-for-raises
======
chapekaloco
Hi, I work at an Amazon warehouse in Pennsylvania. I agree with one of
Amazon's sentiments regarding these changes - that it's better to get more
direct pay than to "hope" for a bonus" However, the nature of our VCP
(variable compensation pay) bonus is such that half of it is actually
completely and fully within an individual's control. Half of the VCP bonus is
given based on our own personal attendance. If we use personal time or
approved vacation time that's all fine and dandy, but using something called
"Unapproved Time Off" (UPT) is what will end up lowering or negating our
monthly VCP bonus for attendance. The other half of VCP is granted based on
building productivity. So yes, that's largely out of control by the
individual. But it also provided actual incentive for us to do well. Now we
don't really have any incentive to do anything more than the bare minimum. In
any case, the personal attendance thing is completely within an individual's
control and is not just mere "hope" for a bonus.

VCP is up to 4% for attendance and 4% for building productivity normally. But
during Oct-Dec (peak season) these figures double to 8% each. If you average
together the 4% attendance VCP (totally within our control) for 9 months and
8% for 3 months, you get a yearly average of 5% bonus, totally within our
control.

I was earning $15/hr prior to this "wage boost". A 5% bonus on top of that
would make my effective wage $15.75. This is without receiving any VCP bonus
in regard to building productivity. This is also before you consider any
"income" we were receiving through stocks. After the wage boost, my hourly
wage is becoming $16hr. But I will never be able to increase that through VCP
and I will never receive company stock again.

I am glad that employees across the country who were previously at $11/hr and
that new starts at my warehouse are jumping from the starting $12-$13
immediately to $15, but it's hard for existing employees such as myself to see
these changes as anything but a pay cut.

~~~
ioulian
Slightly off topic, but I'm from Europe, and when you are saying "you get $15
an hour", do you include taxes or not and how much taxes do you have there?

~~~
concerned_user
From Europe too, they have progressive system same as we do, if you earn below
certain threshold you pay no taxes, and amount specified $15/hr is before tax.
Someone from US can probably elaborate on the exact numbers where you start
paying the tax, as far as I know it depends if you have children etc.

~~~
anon49124
Yes, hourly earning in the US is customarily _gross_ earning (before taxes).

The median rule of hourly earnings to yearly earnings is 40 hours/week and 50
weeks/year, which results in every $1/hour == $2000/year in earnings.

For $15/hour, that's about $30,000. For a single person in California, without
dependents and claiming themselves for one exemption, it would be 4,264.50
(14.22%) in Federal taxes and 579.35 (1.93%) in State taxes for a total of
4,843.85 (16.15%) in taxes.

Calculator: [https://www.tax-brackets.org/californiataxtable](https://www.tax-
brackets.org/californiataxtable)

~~~
apexalpha
50 weeks a year? That is only 2 weeks off!

~~~
AngryData
Many people in the US don't even get that. Having two weeks vacation is
usually waved in peoples faces as an incentive not to leave after a few years
of full time employement.

------
xt00
This will help with recruitment, but the sentiment that new workers will
essentially get paid the same as older workers is going to immediately be a
big sticking point. From watching the Boeing union strikes over many years, I
get the sense that once a labor force unionizes they setup their own structure
for pay and get that signed off -- where they have seniority and things like
that. But it also means the company becomes very adversarial with their work-
force and spends most of its time trying to figure out how to get around the
demands of the union.

I feel like the concept of unions needs to be rejiggered for the modern era
where its less (But still to some degree) about worker safety and more about
control over compensation / days off / healthcare stuff.

Maybe somebody could come up with something that is like a union but meant to
be more lightweight and more focused on compensation type things and has some
self-imposed restrictions on things like strikes and bargaining hold-outs and
things like that.

~~~
ravitation
A company doesn't become adversarial with its workforce because of unions; a
company is forced to treat its workforce more as an equal because of unions.
The adversarial nature of the relationship between a workforce and its company
is not a result of unions, it exists without unions. It's just that, without
unions, companies are free to largely ignore the demands of individual
workers.

Control over compensation and healthcare "stuff" (and, I'd argue, even days
off) is just as important to the well-being of a workforce as worker safety,
especially in a country with a relatively weak "social safety net".

How exactly does a union show that it is worth negotiating with as an equal
without things that demonstrate its power, like strikes and bargaining hold-
outs?

~~~
sethammons
> A company doesn't become adversarial with its workforce because of unions; a
> company is forced to treat its workforce more as an equal because of unions.

I'm not convinced. My brother's work has a warehouse. The warehouse unionized
(a large push by two folks who are no longer there). Most of the warehouse
workers are now making _less_ than they were before due to union dues. There
are guys that my brother would love to promote and reward with better pay, but
the union does not allow that. The union demands such-n-such, the business
pushes back. The workers are in the middle and get shitall. This union (at
least) exists to grow itself and for no other reason.

Now the "office personnel" are not allowed to talk anything union related with
the "warehouse folks." It went from "us" to "us" and "them." The office people
have to be careful on how they say anything or a union rep can file
grievances. When you have to watch your behavior in fear of retribution, I'd
say that is adversarial and I would say this happened due to the union.

~~~
crooked-v
So who's running the union? Some measure of nonsensicality exists here in the
idea of a union composed entirely of warehouse workers that is somehow
magically acting against the best interests of those warehouse workers.

~~~
bradleyjg
The fallacy in your reasoning is that there is a unitary “interests of those
warehouse workers”.

Collective decision making and fiduciary duties are directly contrary to each
other but unions are supposed to feature both. The way the circle is squared
is that unions don’t in fact represent all their members’ interests, only
those of 50% + 1.

~~~
confounded
In my (limited, biased) experience the _primary_ interest of workers is the
same everywhere.

Hint: it pays off both mortgages and bar tabs.

~~~
ALittleLight
I think the disagreement is that a new worker who is skilled and hard working
wants compensation to be based on output. An older worker who has been there
for awhile wants compensation to be based on seniority. Workers with big
families and medical problems want better benefits while single healthy folks
want more cash. The disagreements are that different people want different
things.

------
manigandham
This is a direct attack on competitors, designed to enlist the help of the
federal government to raise payroll and put pressure on arch nemesis Walmart
and any other company that has lots of retail other jobs that are not
conducive to automation.

Remember that Amazon thinks 5 years ahead, and they waited for the perfect PR
and political threshold to announce these changes and capitalize on the news.

~~~
dboreham
If you compare the UX at Walmart vs, say, Costco (which pays higher wages) I'm
not so sure that paying the lowest is good business. i.e. is 1 Costco employee
equal in productivity to 1 Walmart employee? I suspect not.

~~~
barry-cotter
[https://www.bloomberg.com/view/articles/2013-08-27/why-
walma...](https://www.bloomberg.com/view/articles/2013-08-27/why-walmart-will-
never-pay-like-costco)

Walmart pays less because it has much lower profit margins. It serves far more
customers and the average employee is a great deal less skilled. And it’s
cheaper, with greater product choice. The average Walmart employee is
definitely worse than the average Costco employee but Walmart is clearly the
better business. It has higher gross profits, employs more people and serves
more people.

~~~
dboreham
>Walmart pays less because it has much lower profit margins.

Huh? Is that a rule? So when a given corporation's GPM drops, they have to
give their workers a pay cut?

~~~
barry-cotter
It’s a description of the economics of a corporation. If they have so much in
revenues and so much in non wage costs the difference either goes to wages or
profit. If revenues drop either profits will drop or wage costs will.

In the very long run your pay will tend towards your productivity but ease of
replacibility will also play a role among other things. Sculptors and
aerospace engineers are both highly skilled but there are many more jobs for
the second than the first so they get paid more.

In the long run it is almost a rule that if gpm drops wages will. Profits
could also drop. The mix of compensation could change. They could keep wages
the same but fire the least productive staff so the wage bill drops but the
remaining workers do more work.

------
crooked-v
Bonuses for warehouse workers, presumably throughput-based, seem like a way to
optimize for maximum output at the expense of worker health. It's good that
those are going away.

~~~
andrestan
Why? Are the workers completely and totally incapable of deciding for
themselves what the proper tradeoff between increased income and whatever
decreased health comes from working harder?? What is your calculus that helped
you arrive at it being the case that the now former monetary incentives' value
was outweighed by the decrease in worker health that you have perceived?

~~~
techsupporter
In every thread like this, there's an argument like yours, taking the
absolutist view that individual workers should have unlimited freedom
("completely and totally incapable," as you wrote) to sacrifice themselves for
money. In the micro sense, you are possibly correct. However, as a society, we
have decided at the macro level that no, workers are _not_ free to make that
decision because to do so would inherently drive the collective working
environment to the bottom.

We make rules about a lot of things to protect the collective good at the
sacrifice of the individual. Workers are not free to decide that climbing a
tall tower without a safety harness so as to go faster and complete more jobs
for more money is acceptable. Workers are not free to decide to put their
unprotected hands into fast-moving machinery so as to be more efficient and
complete more piecework for more money is acceptable. Workers are not free to
decide to inhale toxic gases, labor in buildings without sanitary facilities,
or be worked non-stop until the worker passes out from exhaustion. (These are,
of course, generalities but, again, we as a society have also decided that
carve-outs can exist where required but these are the exceptions to the wide
rule.)

I would also note that the person to whom you replied expressed a favorable
opinion of the trade-off for health against money not being made. No rule or
law was proposed. That, too, is part of what society does: we debate things in
good faith, not with the assumption that an opinion is a dictate by fiat.
These rules are generally considered acceptable and good. It is up to you, the
person with the view opposed to the current situation, to express why you
disagree instead of simply turning the question back on the person commenting.

~~~
ip26
_because to do so would inherently drive the collective working environment to
the bottom_

Also the part where the cost burdens of bad health outcomes are generally
socialized.

~~~
Trill-I-Am
Many people who object to unions would also object to that, thought

------
drawkbox
Isn't it better to get your money and not be hoping for a bonus or stock
award?

Most people would take the guaranteed pay raise over the non-guaranteed bonus
or profit sharing/stock awards. Let people decide what to do with their money,
'benefits' largely benefit the company not always all individuals.

The problem is real pay/share of GDP to persons has gone down consistently [1]
while 'real compensation' [2] has supposedly gone up and supposedly makes up
over 30% of everyone's pay on average, that includes bonuses, healthcare,
other benefits that most people don't see or use regularly. Even real
compensation is dwindling. [3]

As an example of increasing wages over benefits, I'd rather people got paid
and then purchased healthcare for instance on their own as it would be a more
consumer, rather than employer, focused market.

Raises should be given on the regular and the base way to reward value
creating employees, not some _might be bonus_ or stock award tied to the
company instead. A bonus oro profit sharing on top of increasing wages is
still ok but not in spite of it. What if the employee wants to buy other
stock, pay them so they can. Give raises, quit with the 'real compensation'
gains that don't put actual money in your accounts, people would always take
actual money over benefits.

The velocity of money (domestic money that changes hands) has also fallen off
a cliff [4] because pay to persons/raises have been efficiently worked out of
the system in favor of 'real compensation' which does not get money in
accounts consumers can spend.

[1]
[https://fred.stlouisfed.org/series/W270RE1A156NBEA](https://fred.stlouisfed.org/series/W270RE1A156NBEA)

[2]
[https://fred.stlouisfed.org/series/COMPRNFB](https://fred.stlouisfed.org/series/COMPRNFB)

[3]
[https://fred.stlouisfed.org/series/PRS85006151](https://fred.stlouisfed.org/series/PRS85006151)

[4]
[https://fred.stlouisfed.org/series/M2V](https://fred.stlouisfed.org/series/M2V)

~~~
rincebrain
AIUI the problem with individual medical insurance, in the US, is that without
group bargaining and a requirement that all people must have it, there's both
little incentive for insurance providers to compete for business, and the
nasty reality that lots of people not having many expensive problems subsidize
the few that do, and if you cut the long tail of people with problems that are
cheaper than their premiums, you end up with exorbitant costs for the
remaining people, and then a death spiral as "more healthy" people continue to
opt out of rising costs, and the cost needle keeps moving up.

I'd probably prefer something more like a logical inverse of that - baseline
guaranteed coverage for everyone by a government agency, and then if necessary
private providers can wrestle over offering various incentives to use them
beyond the guaranteed coverage. (Not that I have an incredible amount of faith
in most governments acting efficiently, but they almost always have a better
record than for-profit agencies, and I'd prefer to avoid a government mandate
of a non-government agency.)

(I'm not going near the convoluted structure of compensation types because I
don't think I'm informed enough.)

------
savanaly
Impossible to judge the effect until someone investigates the relative sizes
of the lost bonuses and the increased hourly wage.

I did read Amazon's claim in the article that the increase outweighs the
decrease. But I would like to see a journalist confirm that and also report on
how big the difference is and whether it affects certain types of workers
differently than others.

~~~
whoisjuan
I don't think there's anything to judge here. Amazon said multiple times that
with bonuses and stock awards their average compensation was well above any
compensation for fulfillment workers in the sector. People thought this was
bullshit/paper money and kept demanding for a higher hourly wage.

So Amazon did the logical thing. It increased the hourly wage, removed a
highly unappreciated and misunderstood form of salary and simplified the
compensation scheme so it could actually rebalance this value into a more
predictable, easy to understand and liquid compensation. This should help
anyone that felt exploited and of-course is going to piss off the people who
actually understood the variable portion of their compensation and the ones
who were already above the 15 USD mark.

I don't think what were people expecting? Hourly wage raise + stock + bonuses?
I mean I don't want to sound like a capitalist pig, but that doesn't make
sense, especially when we are talking about this kind of job. People deserve
livable wages but also they deserve to get recognized economically when they
pursue advanced studies and put the effort to get into jobs that require more
specialized skills.

~~~
kmkemp
Saying that their compensation is higher than competitors in the sector says
nothing about whether they will be paying out more total dollars after the
changes than before.

~~~
drakenot
_For those hourly workers, Amazon plans to replace its RSU grant program with
a direct stock purchase plan by the end of 2019. The net effect, the company
says, will mean "significantly more total compensation" for the workers._

[https://www.npr.org/2018/10/02/653597466/amazon-
sets-15-mini...](https://www.npr.org/2018/10/02/653597466/amazon-
sets-15-minimum-wage-for-u-s-employees-including-temps)

------
hef19898
SO, that explains the business case behind the pay raise just fine. Reducing
the $ 4.2 billion stock based compensation (2017 figures) and giving the blue
collor workers an added sense of stability. In Germany, one of the main
complaints used by Unions was that RSUs and bonuses are not what workers want.
So both problems solved, kind of.

~~~
_Codemonkeyism
I thought the main complaint is that Amazon regards it's warehouse staff
categorized as logistics, while the unions want them categorized as (higher
paid) retail.

~~~
hef19898
The underlying reason for this are salary levels. In Germany Retail agreements
are higher paid (and almost dead, another reason why unions want them). In
France it's the contrary, so Amazon put warhouse worker in the logistics
category.

------
ComputerGuru
I’ve always thought the answer to the union “problem” was easy: multiple
unions. Mandate that no more than, say, 30% of the workforce may be part of a
single union, then let them fight it out. Monopolies suck both when it comes
to corporations and the workforce.

In my experience corruption sinks in on both sides when people can get away
with putting in place policies to protect the status quo. When there are
multiple options, and the same antitrust policies that are in place to prevent
collusion between employers are also enforced to prevent “unionization of
unions,” I believe _that_ is when the individual worker actually wins.

~~~
1stcity3rdcoast
Aside from the philosophical objections to this model, think about the
practical issues that arise, specifically regarding overhead. Unions are
notorious for having well-paid administrative staff and leadership, and that
does not scale with three or four separate unions. You end up with a net drain
even if you were able to eke out some slight pay advantage.

~~~
Apocryphon
> Unions are notorious for having well-paid administrative staff and
> leadership

Couldn't you say the same about corporations?

~~~
mamon
Corporations are spending their own money, unions are spending someone else's.
That's the main difference. To be clear what I mean: At least in my country it
is a legal requirement for the corporation to pay salaries of union leaders
and staff - few FTEs per union.

~~~
ilikehurdles
Corporations are spending someone else’s money. They aren’t a mint. That is in
no way different. A corporation is accountable to its owners, and a union is
accountable to its owners. A corporation usually has fewer owners than a
union, or at least can ignore most owners who aren’t on the board; whereas
union leadership can be changed by its members, the workers.

------
just_myles
Having worked in an Amazon warehouse before this would have been nice. Some
families need their money right away and can't really afford to wait for a
bonus or stock options.

------
tareqak
If unions can do some bad thing X and corporations can do that same bad thing
X, then why are unions judged more harshly for doing the same bad thing?

------
whatever1
Are we really comparing the tangible leap from $7.5 -> $15/hour that will help
people get out of the government sponsored poverty, to the _potential_ gains
that some workers who already make more than $15/ hour would make in the
future (if AMZN does not become GE)?

~~~
br3n7
The expected bonus never comes.

------
NeedMoreTea
Much more detail, with figures, although for UK Amazon workers here:
[https://www.theguardian.com/technology/2018/oct/03/amazon-
of...](https://www.theguardian.com/technology/2018/oct/03/amazon-offsetting-
pay-rise-by-removing-bonuses-union-says)

The TL;DR for the UK is they lose over half the pay rise from losing the
bonuses.

They got one share, worth £1,500 or $1,960 after every year, and an additional
share once every five years. That can be tax-free if held for 2 years.

They also lose the possibility of cash bonuses for meeting targets.

~~~
mmt
That seems like an overly simplistic anlysis, unless an employee who quits or
gets fired not on an anniversary receives a pro-rated partial share at
departure.

Otherwise, a separation before the first anniversary (presumably a certainty
for seasonal workers) results in losing none of the raise, at just shy of the
second anniversary only one quarter of the raise.

Half the raise is an upper bound, and we'd have to know at least the average
tenure of a warehouse employee to guess how much an average worker loses.

