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Confronting Amazon: Why Teamsters need to organize Amazon

By Dave Schneider

Editor's note: The following article was prepared for the print edition of Fight Back!, which is now on hold due to the pandemic.

Jacksonville, FL – During the hustle of peak season last December, every UPS package driver in my center noticed one major change: the staggering amount of Amazon delivery drivers out on the roads with us. I noticed it too, and the numbers back up our experiences.

An analysis by Morgan Stanley found that Amazon now delivers a little more than half of its own packages, 2.5 billion per year. Their delivery volume doubled from 2018 to 2019, driven by the introduction of one-day delivery service and their growing network of fulfillment centers.

To put it in perspective, UPS leads in total volume of small-parcel delivery with about 4.7 billion packages per year, followed by FedEx at 3 billion. While Amazon still relies heavily on UPS for delivering its growing volume, the online retailer is clearly moving towards its own delivery system.

It’s easy to see why: Amazon spends approximately $3 per package to deliver its own volume. That cost rises to about $6 per package when shipped through UPS. Unlike Amazon’s workers, UPS’s 250,000 workers are represented by the Teamsters, who negotiate our pay, benefits and conditions. Although the top leadership of the Teamsters have repeatedly negotiated sellout contracts with UPS, the wage and benefit standards still exceed that of non-union employers like Amazon.

No corporation in the U.S. has a fleet of tractor trailers or a logistics network as large as UPS, so Amazon remains dependent for now. But under billionaire CEO Jeff Bezos, Amazon is looking to change that and strike out on its own.

Amazon and automation

Amazon is now the most well-capitalized corporation in the world, dominating online sales and increasingly ramping up its own fleet of small parcel delivery trucks. Even while bringing in record-high revenue, though, Amazon saw its first quarterly profit decline in the third quarter of 2019 as the cost of its one-day delivery service exploded. Revenue rose 24% from the same time in the previous year, but expenses for the corporation rose even faster. Shipping costs, in particular, shot up 46% to $9.6 billion, along with tech costs (28%) and operating expenses (28%).

Over the past few years, Amazon has built its own sprawling logistics network of fulfillment centers in most major U.S. cities. Their 58 fulfillment centers in 2014 had nearly tripled to 168 just five years later. It’s part of a longer-term trend in Amazon’s transition from online retail giant to monopolistic behemoth. Fulfillment and logistics accounted for about $2 billion in 2007 for Amazon – representing just under 17% of their total sales. In 2018, they totaled $68 billion – roughly 27% of their total sales.

Amazon’s labor costs have risen, but not from their much-publicized wage hike to $15 per hour in 2018. Business Insider reported in February 2019 that the company offset these higher wages by slashing bonuses for most workers, ending their company stock program, reducing already meager benefits and sometimes cutting hours.

Instead, Amazon saw higher labor costs due to a massive hiring blitz, increasing its workforce 22% to a staggering 750,000 employees. Bezos called these enormous costs “short-term pain” to ensure massive expansion, and Wall Street seems to accept that.

Here’s what’s really going on: Like everything in our economy, labor is the source of all wealth – not management or supposedly brilliant wealthy entrepreneurs. Right now, the U.S. has a low unemployment rate, which leaves employers like Amazon, UPS, Wal-Mart and Target – which heavily rely on unskilled labor – in a bind. To get the labor they need to continue making profits, they face pressure to raise wages.

While building out its own capacity to stock and deliver goods – part of which has meant buying up other major companies like Whole Foods – Amazon also ramped up investment in software, robotics and automation. Their goal is the same as most corporate research and development: ‘efficiency,’ which just means saving on labor costs and raising profit margins. Amazon is no different. They saw their revenues grow by a staggering 160% from 2014 to 2019, but its workforce grew almost twice as fast in the same period, lowering their profit margins.

Amazon is hiring in record numbers to extract more profit from its workforce – profit that they intend to reinvest in its own logistics network and labor-saving technology. No doubt they aim to reduce their dependency on UPS, in large part because of its union contract.

Institutional ownership points to industry-wide approach to unionism

If you ask someone who owns Amazon or who owns UPS, you will probably hear answers like “Jeff Bezos” or “the CEO.” Some workers who own a couple shares of stock might even say they, “the shareholders” own it. But this isn’t the case at all.

Most major corporations in the U.S. are under institutional ownership, meaning that a majority of their stock is owned by banks, financial institutions and other corporations. Amazon, UPS and FedEx are no different.

About 57% of Amazon’s stock is owned by financial institutions. For both UPS and FedEx, that number is even greater, with roughly 70% of both companies owned by banks and institutions. Vanguard, Blackrock, State Street Corp, Bank of America – these are the real owners; they did none of the labor but profit from ours anyway.

A closer look at the actual institutions that own all three companies reveals something more insidious: The same banks and institutions own all of them, even so-called competitors. 21 of the top 30 owners of UPS are also top 30 owners of Amazon (70%). 16 of the top 30 owners of UPS also make FedEx’s top 30 owners (53%). Taken together, just shy of half of all three companies’ top 30 owners are identical. In other words, the same class of Wall Street bankers, billionaires and corporations get richer no matter which company ‘out-competes’ the others.

I’ve heard a number of UPS Teamsters – and even some managers – express a fear that Amazon might one day become a direct competitor to UPS or attempt a buyout. Considering the same ruling class owns both companies, that’s quite possible. But while Amazon’s unchecked expansion poses a serious threat to UPS Teamsters, it also underscores the need for a different approach to unionism.

Competition between companies owned by the same institutions amounts to a weapon to push down wages and benefits for workers. To get around this issue, unions in the past embraced an industry-wide approach, which aimed to set industry-wide standards of pay, benefits and conditions. The Teamsters National Master Freight Agreement did exactly this for the trucking industry in the 1960s, although deregulation and massive concessions to employers has left it in tatters today.

Bold action, not business-as-usual, needed to organize Amazon

Even as they come under more fire for rampant safety hazards and dystopian surveillance of its own workforce, Amazon is determined to keep unions out. Under the National Labor Relations Act, workers can form a union through a petitioning process. When a certain number of workers signs the petition, usually a simple majority, they present it to the employer who can either recognize the union and begin bargaining or call for an election overseen by the Labor Board (NLRB).

Most employers go the election route and try to break support for the union through intimidation, harassment, threats and other means. This is illegal, but the minor penalties for union-busting are a small price to pay for keeping a union out of the workplace. Amazon is the subject of more than 50 unfair labor practice cases, and yet to date, not a single union election among the 750,000 workers employed directly by Amazon has taken place.

Labor law in the U.S. favors employers over workers, and organizing Amazon will require a lot more than the typical legal tactics. Besides an NLRB election, there are other ways of forcing an employer to recognize and bargain with a union. Before 1935, workers often engaged in recognition strikes, which often spread across entire industries like steel and coal. During the Great Depression, autoworkers won union recognition as part of the historic sit-down strikes. After the National Labor Relations Act forced employers to recognize unions after an election, recognition strikes became less and less common. But as labor law came to increasingly favor employers, workers found winning these elections more difficult.

Fighting unions are the key

The problem is that our current union leadership has no will to fight. Teamsters International President Jim Hoffa Jr. and his cronies – many of whom still run local unions across the country – cut deals with employers and sell out their own members, rather than fight for better contracts. Their well-documented corruption weakens our union’s ability to organize new members and confront serious challenges like Amazon that cannot be solved through legal channels and negotiations alone. Ultimately a union’s strength rests on the workers who make up the rank and file. Weak sellout leadership results in a weaker union.

Until 2018, organized labor in the U.S. had largely abandoned the strike weapon – by far, the most powerful leverage that workers have in our arsenal. While that has started to change, it’s clear that the top brass of the Teamsters won’t fight these necessary battles. We need union leadership that are willing to do battle with employers like UPS for better contracts and confront the monster that is Amazon.

Dave Schneider is a package car driver and Teamster steward in Jacksonville, Florida.

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