
Amazon says wage hike ‘more than compensates’ for loss of bonuses - Ours90
https://techcrunch.com/2018/10/11/amazon-says-wage-hike-more-than-compensates-for-loss-of-bonuses/
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kpwags
I can understand some of the frustration, especially for those making just shy
of $15 before the raise, but even if the raise is only from $14 to $15, that
still is around $2,000/yr (assuming 40 hour work week) that is guaranteed the
way a bonus generally isn't.

I would almost always prefer a raise over a one-time bonus for that exact
reason. In my experiences, I can't always count on my company giving me a
yearly bonus.

~~~
behringer
That's all well and good, but Amazon replaced their bonuses for raises and
then pretended like they were giving everyone an actual raise when in fact,
some people could end up getting a pay cut.

~~~
abtinf
Their claim is that everyone affected by this is getting a net raise. Do you
have evidence to the contrary?

~~~
behringer
According to the article:

"Those making, say, $14 an hour prior to the increase may only receive a $1
raise, which fails to make up for the loss of benefits."

~~~
bryanlarsen
And the Amazon statement in the article says "more than compensates for the
phase out of incentive pay and future RSU grants."

The conflict is probably due to the fact that RSU grants were very lucrative
over the last few years. If you assume that the stock is going to quadruple in
the next 3 years, then yes, a RSU bonus is probably better than a raise, but I
don't think Amazon will be a 4 trillion dollar company in 3 years time...

~~~
p0rkbelly
correct. For companies with heavy RSU based compensation they assume a certain
% of growth every year. Say 10%. Let's say Amazon did 50% year over year. You
did better than you expected. However, next year you will get less RSUs since
you made a lot more than planned in the previous year.

Having a very good year, as I imagine most Amazon employees did, does not mean
you should get the same windfall money next year. I'm sure that is not
properly understood.

~~~
behringer
Not properly understood? No, the bonuses were taken away and the pay rate was
raised instead. However, Amazon said people were just getting a raise because
of the poor pay they've been getting. They weren't promised a different way of
getting paid. They were promised a raise

~~~
p0rkbelly
I read an article that said a lot of employee's look at their RSU as a bonus
of when it vets. But in reality, it's part of their compensation. Not sure
what Amazon told employees vs what was in the press "starting wage of $15". I
can understand the frustration if they said "everyone is getting a raise" and
then the math doesn't check out. We need more math.

I've been in a situation where I worked for a company where a large portion of
my comp was RSUs. We had a really good year and I probably made $30,000K more
than they were estimating (assuming the stock grew at x%). The next year and
two, I got a ~5% raise. I took home less money those two years since I had a
windfall the the first year and then our stock leveled out. So despite
performing well, and getting healthy raises, I took home less money.

I would imagine the hourly workers might have just a few RSUs at best at
Amazon's share price of $1500-$2000 per stock. Since that is such a large
percentage of their annual income and if Amazon was trying to level it out to
make it less spikey, people probably thought money was being taken away
because Amazon's stock did so well the previous couple years.

Basically, Amazon Employee's got really lucky with RSUs and got paid more than
Amazon was planning for. So now Amazon wants to bump them up in
"planned/target" compensation -- which may be less than they made previously
because the stock did wildly good.

------
chadash
In the past 5 years, Amazon's stock has gone up almost 6X. Anyone who got paid
in RSUs almost certainly made out well. But, as Amazon points out in their
statement, past results are no guarantee for stock performance going forward.
I can pay you $500 in cash or I can give you $500 worth of stock (which vests
over a period of time). Generally speaking, the cash (which you get right
away) should always be valued more since you can spend it as you want,
including using it to purchase stock (which these days can be purchased for
nominal trading fees).

Furthermore, salary increases are always worth more than equivalent end-of-
year cash bonuses, since you lose out on bonuses if you leave your job mid-
year.

~~~
aetherson
They'll be comparing the instantaneous value of the stock with the value of
the raise.

So if you previously got pay for the month of let's say $2,000 plus $400 in
RSUs (the value of the RSUs at the moment they're assigned), then you might
lose the RSUs but get paid $2,500 per month -- a $100/month raise.

If you then feel that Amazon stock is a good investment, you can buy $400 of
Amazon stock on the public market, and you'll be where you were before, plus
$100 in cash.

~~~
test6554
Not to mention that owning stock in the company you work for is not a very
diversified portfolio. If Amazon crashed and filed for bankruptcy for some
reason, you would lose both your job and your savings. That doesn't seem very
likely given Amazon's size, but look at Sears.

------
dreamache
"Bezos is no fool. He will reduce his headcount, and step up his automation
effort to eliminate as many low-skilled jobs from Amazon. Then he will lobby
Congress to increase the minimum wage for his competitors that still employ
lower-skilled workers. As these competitors will lack the resources to
automate, they will be driven out of business, and all their workers will lose
their jobs. Less competition will make it easier for Amazon to raise prices."
\- Peter Schiff

I'm all for voluntarily raising wages for your employees; that's a great
thing. But if we see that Amazon is backing efforts to raise the minimum wage,
we'll know Schiff was right.

~~~
s3r3nity
The problem I have with this argument is that it sets up Amazon in a
caricature that always makes them look evil and anti-labor:

1) Don't support lowering the minimum wage = Democrats + labor groups hate on
you for not paying workers, even if you can hire more of them = anti-labor 2)
Support the minimum wage nationally + across their international workforce =
"This is an automation ploy + competitive advantage = anti-labor

There seems like no ideal approach for low-skilled labor here that won't seem
anti-labor in the short-to-medium term

~~~
krapp
Amazon is anti-labor. Someone posted a leak of their union-suppression
policies not long ago[0], and they're quite vocal about their anti-union
stance being a part of their "ownership culture."

You're right that they're damned if they do, damned if they don't though, but
let's not pretend they haven't earned that mistrust.

[0][https://news.ycombinator.com/item?id=18077434](https://news.ycombinator.com/item?id=18077434)

------
beat
I kind of think Amazon botched this from a PR perspective. It could have been
a total win for them. Instead, it looks like a scam. Even if it isn't a scam,
and employees will truly be better off (which is probably true), it at the
very least failed to capitalize on the opportunity to look like a progressive
company that cares about its employees.

------
thoughtexplorer
This sort of hand wringing seems like a distraction from the likelihood that
Amazon has moved up the date* in which these jobs will be eliminated. Whether
employees are netting out the same or not is going to be moot. If it's similar
though then that really doesn't seem like a good deal longer term.

*Robots will be able to do the jobs for $15 hour sooner than they'll be able to for $7 an hour. The math will accelerate the move to automation.

~~~
beat
I don't buy this argument. The problem usually isn't that robots are too
expensive to do the human jobs, it's that robots can't do the human jobs,
period. If something _can_ be done by machine, it _is_ done by machine, and
that's been true since the beginning of the industrial era. Entire job
classifications get wiped out by new automation, all the time.

At this point, the jobs that are still done by humans are jobs that require
judgment and intuition. Those things are very, very difficult to emulate in
software, unlike repetitive motions and data lookups.

~~~
cromwellian
The Amazon of China, Jingdong, has a fulfillment center that handles hundreds
of thousands of packages a day and employs just five people:
[https://youtu.be/RFV8IkY52iY](https://youtu.be/RFV8IkY52iY)

Amazon used humans because the investment to build full automation was too
expensive and take too long to build out compared to spinning up human labor.
However now the logistics of the fulfillment center are well understood and
they can be rebuilt with full automation.

It was clearly a matter of time and money, not “these jobs are impractical
hard to do with automation”

~~~
pkaye
Automation doesn't work for everything. Like when the product being shipping
is of varying size and shape. Like clothing, books, pouches all in one box. Or
stacking the boxes in a truck. Or look at something like car assembly. Tesla
still uses people to route wiring harnesses through the car body because
robots can't do it well. Many simple things can get automated but there is
still a lot not yet possible.

~~~
pixl97
Why does it matter if automation doesn't work for everything. There is a
particular breaking point in unskilled labor where doing enough means lots of
unemployed with little chance of being reeducated for the necessary jobs the
future demands.

~~~
beat
So what are we going to do about it as a society? "More jobs" isn't the
answer, I don't think. Maybe getting rid of "jobs" entirely is.

------
jorblumesea
Amazon is correct. Equity is an inherently risky asset and is something better
suited for those who can accept the risk.

If you're making $12/hr, adding Amazon stock on top is a feast or famine
situation and would almost certainly cause issues in the next few years. We're
on the end of a 10 year bull market, and the most likely situation is trending
down.

As the saying goes, a bird in the hand is worth two in the bush.

------
rdtsc
Not sure what to think about Bernie needing too go as far as naming the bill
"Stop BEZOS"

[https://www.sanders.senate.gov/download/the-stop-bezos-
act-s...](https://www.sanders.senate.gov/download/the-stop-bezos-act-
summary?inline=file)

It was a political move, and it worked it got Amazon do respond. But seems a
bit childish.

Remembering when I was making $7.50 / hour, bump in salary would have been
better than bonuses or RSUs. I think in that salary range, this is still a
good move.

~~~
ThetaOneOne
While it is targeted at bezos I think the name is more of a joke if anything.
After all even in the document that you linked it lists several other
countries.

With that said I don’t think Bezos’ move is based on Bernie. In the current
political climate there is no way a bill like that would ever pass. I would
guess this is based off of public pressure but I’m not 100% sure what this
move if for.

¯\\_(ツ)_/¯

------
fareesh
Is it something like this?

For someone who worked at one of these jobs at Amazon for 3 years

Basic wage: X

Bonus Wage: Y

Total: X+Y

Under the new system

Basic Wage: X+Y

Bonus Wage: 0

Total Wage: X+Y

The net effect is zero but principly the value of the bonus has been reduced
to nothing, after the loyalty of rhe employee and the benefits that come with
that, have already been collected by the employer.

Seems somewhat unfair from that perspective, but they can do what they want I
guess.

~~~
sfcguyus
More accurate:

Basic wage: X

Bonus Wage: A

Market Appreciation: B

Total: X+A+B

Under the new system

Basic Wage: X+Y

Bonus Wage: 0

Total Wage: X+Y

X+Y > X+A

Sometimes, X+Y+Z > X+A depending on if you keep the RSU. But you can always
also take Y (the increase) and invest it and it will always be higher.

------
sys_64738
Are bonuses incentivized? What is that incentive and how will it impact
Amazon's business now it's gone?

~~~
behringer
They were generally not incentivized, but had a 2 year vesting period. That
kept people working at Amazon longer for that extra few grand.

~~~
kss238
The bonuses were incentivized. It was based on monthly attendance. The stock
grant program was not though. You might be confusing them.

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swarnie_
I'm going to assume a lot of these warehouse workers would rather have more
money in there pay packet now then a share or two which need years to vest
with an unknown value.

~~~
ceejayoz
That's true for shares, but NPR had interviews with Amazon warehouse workers
that indicated the cash bonuses are monthly. One of the interviewees indicated
his bonuses would sometimes equal his salary during busy periods like the
holidays.

~~~
p0rkbelly
I wonder what % of the employees got bonuses though. are 95% of the employees
better off, and the highest performers taking home less?

~~~
krapp
It depends on whether your entire building exceeds productivity by a certain
amount, which isn't guaranteed. Also, employees lose half or all of their
bonus for the month using UPT, which puts them one flat tire or traffic jam
away from potentially losing out even if they would otherwise get VCP that
month.

When it works, it works, the problem is you can't predict it, and since you
can't predict it, you can't depend on it.

