The Teamsters’ recent victory, securing a historic $30 billion deal for UPS workers without resorting to strikes, has turned the spotlight toward Amazon as a potential target for unionization. With soaring revenue and market capitalization, Amazon’s immense control in eCommerce and streaming services puts it at the epicenter of the US labor movement’s resurgence. As labor conditions face growing scrutiny amidst income inequality and inflation, the impact of unionization on industries like eCommerce becomes a pivotal discussion.
COVID and the rise of Essential Workers
After lockdowns and remote working became commonplace it became clear that our standard of living and collective psyche was dependent on 3 broad industries; eCommerce (fear of getting Covid), Streaming Services (what you did before & after you got Covid), and Healthcare (because you know, Covid). As anyone who owned Amazon or Netflix stock would tell you, the companies who provided us with these services did extraordinarily well. The outsized profits and revenue for companies like Pfizer, Moderna, Shopify, Amazon, UPS, & Netflix allowed some of these companies to double their market cap in just a few short years. Covid (and its stimulus) were very good to them.
In much the same way that some banks like JP Morgan or Bank of America are deemed as systemically important and therefore “Too big to fail” we created an entire class of workers that became “Too important to furlough” and we readily carved out health policy exceptions for people delivering or making what we needed.
While the companies in control of these sectors experienced unprecedented profits, labor often bore the brunt of the pandemic’s challenges. This dissonance between corporate gains and worker conditions sparked a labor backlash across various industries.
A Labor Backlash
Fast forward to today, and everywhere you look it seems that there are strikes or rumors of strikes.
Discontent brewed as workers felt the strain of unequal gains during the pandemic. The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) is currently on strike, the Teamsters flexed their muscle against UPS and Yellow Freight, a Longshore Strike shook Canada Ports, and nursing strikes rumbled in NYC.
Amidst this backdrop, Amazon stands as an intriguing exception. Despite its grip on eCommerce and Streaming Amazon has only passively been impacted by the labor unrest (UPS is a major partner to Amazon).
Amazon’s Growing Vulnerability to Unionization
The Teamsters’ triumph with UPS has major implications beyond just UPS.
The new teamsters President Sean O’Brien has publicly stated a few times that they needed to extract the biggest contract in UPS history to support their expansion efforts.
The first target is likely FedEx; FedEx is planning to combine its ground and air operations (just like UPS) in the coming years. Their previous framework discouraged unionization under a federal regulatory framework. While FedEx would be great for the Teamsters, the real prize is Amazon and this UPS deal provides a potent case study they can point to.
Drawing parallels with UPS’s wage increase for part-time workers to $21/hr, Amazon’s average warehouse worker wage stands at the national average of $16.33, mirroring past conditions at UPS.
The backdrop for the teamsters to organize Amazon is even more favorable than what they faced with UPS. As points of comparison:
– Amazon’s 2022 Revenue was $514B vs UPS’s $75B
– Amazon’s current Market cap is $1.3T vs UPS $158B
– Even though Amazon technically lost money last year, they’ve shown profits of $22B to $33B in the past few years.
Couple this with the fact that there is rising discontent and documented issues (drivers peeing in cars, etc) within Amazon’s delivery & fulfillment network and you face a moment for organized labor that we haven’t seen in several generations.
The Potential Impact on eCommerce
Amazon is sure to fight any attempts at unionization at specific locations but it’s unlikely that they’d be able withstand a multi prong and widespread attack.
Given the relative lack of alternatives (Walmart has a 5% ecomm share vs Amazons 45%) and the impact a strike would have on the average consumer (82% of households have a Prime account), a strike at Amazon would have a bigger impact on the economy and society than a UPS strike. This would create enormous pressure to get a deal done and give the teamsters even greater leverage if they are able to establish even a small foothold.
A unionized Amazon would send shockwaves through the eCommerce industry. With demands for higher wages, fulfillment and delivery costs could rise substantially, posing challenges for maintaining margins for brands and warehousing providers alike. As labor conditions improve, more workers may be drawn to the industry, potentially impacting other sectors like food service and retail. Furthermore, the payback for robotics and automation might become more favorable for third-party logistics providers.
Is this the Resurgence of the US Labor Movement?
I think it’s possible that in years to come we will point to this UPS deal as the starting point for the resurgence of the US labor movement. The country’s prevailing populist sentiment on both the left and the right, amplified by income inequality and inflation, is fueling the momentum for unions to gain ground in both traditional and emerging industries.
If the Teamsters successfully establish a foothold in Amazon, it could usher in a transformative era of labor dynamics.
The Teamsters’ groundbreaking $30 billion deal with UPS serves as a harbinger of Amazon’s potential unionization future. The perfect storm of Amazon’s dominant position in eCommerce, coupled with a growing demand for equitable labor conditions, creates a fertile ground for unionization efforts.
As labor movements regain momentum, businesses, consumers, and the economy at large will closely watch the impact of Amazon’s potential unionization on eCommerce and the broader landscape. As the path ahead for Amazon and the US labor movement intertwines, shaping the future of work and challenging traditional power dynamics in the corporate world.
