Amazon: union stymied but labour costs are rising anyway

Non-union workers in the US earn 84 cents for every dollar union members make, according to the US Bureau of Labor Statistics. Yet in the private sector, just 6 per cent of US workers belong to a union. True to that pattern, Amazon workers have conclusively rejected membership in a closely watched vote.

Warehouse staff in Bessemer, Alabama turned down the Retail, Wholesale and Department Store Union by a wide margin. They were influenced by vigorous campaigning by Amazon and their doubts over the ideology and usefulness of collective bargaining.

With half of all ballots counted, ‘no’ votes outnumbered ‘yes’ two to one. While the vote is relatively small — equal to around 0.6 per cent of Amazon’s US workforce — it will hamper further efforts by activists. 

As the largest online retailer in the US, and the second largest employer, Amazon is a touchstone for the country’s labour issues, including stagnant real income, unpredictable working hours and intrusive employer oversight. 

Depictions of founder Jeff Bezos as the modern version of a miserly mill owner are not entirely fair. Amazon’ pays a starting salary of $15 an hour, almost double the federal minimum wage.

Adding another dollar to every US worker’s hourly rate would not break the bank. Assuming a 40 hour work week it might cost around $2bn per year — equal to just 6 per cent of last year’s free cash flow.

Amazon’s resistance to unions reflects the fact that it is far more exposed to labour costs than other tech giants. Its trailing operating margin is 6 per cent compared to 38 per cent for Facebook, according to S&P Global. Net income per employee was $16,400 last year. The figure for the social network was 30 times that.

In the past two months, the US president has spoken out in favour of unions and Costco has lifted its minimum rate to $16 per hour. The US economy is rebounding and Democrats control Washington. Amazon will have to increase pay anyway — but by less than a unionised workforce might have insisted on.

The Lex team is interested in hearing more from readers. Please tell us what you think of unions and big tech in the comments section below.