The CARES Act, Amazon, and Labor Supply

A no longer infinite, expendable workforce

A good friend who runs a couple of pizza restaurants started complaining to me about how the CARES Act unemployment insurance was so generous that he'd lose all of his staff. He had never previously done delivery, but had retooled his staff to launch a delivery service, and made a promise to not cut any hours or lay anyone off. After the CARES Act details were released, employees started asking to be laid off.

My first reaction to him was, don't be an asshole like Lindsey Graham; the government needs to be as generous as possible. But once I started to look at the math, it does get quite interesting, especially with regards to freelancers / gig workers, who are, for the first time, eligible for this. The key is the extra $600 a week from the federal government.

The nationwide average for unemployment insurance is around $300 a week in benefits. So in the past, filing for unemployment would give you ~$1200 a month. With the $600 a week injection, you're suddenly at $3600. Assuming a 40-hour workweek, receiving unemployment is now the equivalent of a $22.50 hourly wage.

My friend's complaint was that he would have to pay $23/hour to compete with unemployment which would kill his business. While the pro-labor side of me felt the urge to label him a Koch Brothers-ian dick, it was intriguing: Did we just backdoor America into a $23 minimum wage?

Could this subtly shift the entire American attitude to lower-wage service word?

Disclaimer: I’m aware that the actual disbursement of the unemployment insurance is a mess right now, especially for freelancers. I really hope states can get things together.

DELIVERY AND WAREHOUSE WORKERS

Which brings me to Amazon and all the warehouse and delivery workers making sure people are getting their packages. 

If you’re an Amazon customer, here’s how you can practice real social distancing: stop clicking the “Buy now” button. Go to the grocery store instead. You might be saving some lives.

That’s from an op-ed written by Chris Smalls, the Amazon employee who was recently fired. According to him, for organizing an employee walkout. According to the company, for violating COVID-related health restrictions. More on this in just a bit.

The ethics of online delivery are a worthwhile debate right now. I’m torn. But this is bigger than simply “tipping your delivery guy”.

There are good logistics companies and bad ones. Companies that treat their workers well and prioritize safety, and those that don’t. Amazon is not the good kind. It’s always been their competitive advantage.

The Amazons of the world were built on cost structures that rest on the assumption that the warehouse and delivery folks were expendable. An effectively infinite supply of labor meant, in the hierarchy, these workers knew where they stood. It's how workers literally died while working, long before the pandemic, yet the company didn't have to change anything.

I've always wondered how much of Amazon's delivery speed is genuine technological innovation (robots and such) versus just working their workers more ruthlessly than anyone else. The Amazon vs. labor debate is going to get really interesting in the coming weeks. What happens when your supply of labor is no longer infinite? When people start having to make a literal life-or-death decision on a paycheck vs. their safety? And relevant to the CARES Act, could the federal government begin to, almost shockingly, make the decision a more palatable one for service workers?

SAFETY

At least 30 warehouses have had outbreaks of COVID, yet Amazon just added temperature screenings and is only now going to have its workers wear masks:

Amazon is also keeping its promise to deliver masks to workers; it ordered "millions" of masks several weeks ago that will be distributed to employees starting Thursday. Masks will be available at "all locations" by next week. The company has also worked to keep disinfectant wipes and hand sanitizer readily available.

Could the world's fastest supply chain not get masks to its employees in a time period of "less than several weeks"? Especially when there was a clear danger? I know of infinitely smaller logistics centers that implemented temperature screenings in late Feb because it was the simplest, baseline safety measure one could take. This stuff shouldn’t be reactive.

Who you buy from is going to become an increasingly important decision. If you were at all worried about Amazon’s concentration of power in online retail, then you should be terrified when the FT calls them the Red Cross and the Canadian government asks them to distribute medical supplies. As I see more and more storefronts shuttered on 1st Avenue in NYC, and I just buy less stuff, every purchase feels like it matters more.

Buy stuff but remember you’re defining the future of American commerce. That might sound a bit bombastic but this is all going to move really fast. In a few months, retail will look nothing like it did before all this. Try to push companies to treat their front-line workers a bit better.

And Amazon, man, you really see feel the scorn. This VICE piece is almost shocking:

Leaked notes from an internal meeting of Amazon leadership obtained by VICE News reveal company executives discussed a plan to smear fired warehouse employee Christian Smalls, calling him “not smart or articulate” as part of a PR strategy to make him “the face of the entire union/organizing movement.”

“He’s not smart, or articulate, and to the extent the press wants to focus on us versus him, we will be in a much stronger PR position than simply explaining for the umpteenth time how we’re trying to protect workers,” wrote Amazon General Counsel David Zapolsky in notes from the meeting forwarded widely in the company.

And

“We should spend the first part of our response strongly laying out the case for why the organizer’s conduct was immoral, unacceptable, and arguably illegal, in detail, and only then follow with our usual talking points about worker safety,” Zapolsky wrote. “Make him the most interesting part of the story, and if possible make him the face of the entire union/organizing movement.”

The General Counsel tried to explain away the leak:

In a statement to VICE News, Zapolsky said his “comments were personal and emotional.”

“I was frustrated and upset that an Amazon employee would endanger the health and safety of other Amazonians by repeatedly returning to the premises after having been warned to quarantine himself after exposure to virus Covid-19,” he said. “I let my emotions draft my words and get the better of me.”

Really?

Zapolsky worked at the most prestigious corporate law firms starting almost 30 years ago. He is the chief legal officer of a sometimes trillion-dollar company. At any organization I've ever seen up close, the General Counsel is almost by definition, the person who brings a dispassionate temperament. They're the ones making sure others don't get too emotional. (Though I do kind of love the idea of using the word 'umpteenth' in a fit of rage).

The leaked notes make perfectly reasonable, ruthless strategic sense. They don't look like rage; they look like logic.

That's bad enough, but very similar to how Facebook's PR has felt like it went off the rails, I’m perplexed what Jay Carney is trying to do on the comms side. Carney has been aggressively combating journalists since 2015, and clearly does a great job, as the company had quite a run of goodwil from the public. But, I just don't understand what is happening here:

The scorn, it’s palpable.

If there was any doubt why the company is weeks and months behind much smaller players in taking basic safety measures, these attitudes seem to make it a bit more clear.

MINIMUM WAGE

Which brings us back to the CARES Act.

As I noted above, people won't automatically start getting the equivalent of $22.50 an hour. Already the flood of claims has overwhelmed states like NY, where you're required to call in and speak with someone to file. You also, of course, have to be laid off - meaning if your employer doesn't let you go, you're not getting that pay.

But maybe this does represent a small push. Maybe Team Bernie quietly won a major battle in the labor vs. capital war. We saw Lyft tell their drivers to go work for Amazon, but now gig workers can file for unemployment. Until at least July 31st, they could have an ounce of agency that didn’t exist before. The numbers tell you to not go work in some dangerous warehouse. The Koch Brothers die a little bit as, for once, the federal government is genuinely incentivizing you to stay at home. Even with Amazon, could the decision be $17 vs. $22.50?

Jay Carney @JayCarney
We've taken multiple steps to protect our workers. We also raised minimum pay to $17/hr, nearly 2.5x the federal min, and are hiring 100K new people. We expanded paid time off. And we've always provided insurance. For more detail:
bit.ly/2JBkGMb.

Meghan McCain @MeghanMcCain

Great - now do this inside your own house Jeff Bezos: Protect your workers Give them hazard pay PPE Paid sick leave Health insurance https://t.co/mBhDAYmpbO

And maybe then, the supply of labor is no longer infinite. And workers have a bit more say in their conditions. And rather than just calling them "heroes", companies treat them as such. And cost structures are no longer built on the assumption of disposable contract workers.

The next few weeks and months are going to be really important for the long-term impact Amazon has on our country and economy. New Yorkers in lockdown have come to depend on it as much as electricity and running water. Did we get a backdoor transformation of the American economy thanks to a genuinely impressive injection of unemployment insurance? Probably not, but instead of tweeting about tipping your delivery people well, demand that the companies for which they deliver create an environment that is safe for them. Please.


Note 1: I was speaking with a number of people last week about what kind of money was available from the CARES Act. A menu of payroll protection loans, disaster loans, unemployment insurance, etc. all were on the table for companies and individuals. For a brief moment, I was almost excited that now small businesses and individuals got to play a game normally reserved for big corporations. 

But I shouldn’t be excited that we’ve effectively democratized corporate grift. I shouldn’t be celebrating that all Americans now have a change to try to game the system to extract as much cash as possible through a complex set of procedures.

Wouldn’t it have been simpler to just give everyone more money, if we’re already setting up the $1200 per adult under 99k? Or just directly subsidize payroll (like the Germans) directly? This was a good thread on why the government should work directly with payroll providers. This Slate Money podcast did a good job on how the mechanics of the SBA loans are the most American thing ever.

Note 2: Watching Carney’s behavior in all of this really makes me wonder: Where is Obama (for the unfamiliar, he was Obama’s press secretary)? Just in general. Is his complete public disappearance an arranged thing with the Biden campaign?