The Twilight of Corporate Trust
Lessons from Amazon’s latest battle with Walmart
In addition to politicians, Californians get to vote directly on legislation. Propositions, as they are known, appear on official Golden State ballots every election.
I called a friend of mine in California last year, right before the election. “So, what are your opinions on these propositions this year?” I asked.
My friend doesn’t follow politics like I do. “I’m not sure,” he responded. After a second, he added, “but that Uber one, I’m against that. They want their workers to be employees…or contractors…I forget. But whatever they want, I’m doing the opposite.”
Proposition 22 sought to classify gig workers — like those who work for Uber, Lyft, or DoorDash — as “independent contractors,” not regular employees. While such a distinction appears insignificant, these corporations could now deny their workers benefits such as a minimum wage or healthcare.
These particular companies, none of which have even really turned a profit yet, opened their war chest and dumped over $200 million in support of the proposition. Lobbying and marketing don’t come cheap.
Californians ended up passing the proposition to the delight of these companies. But I will always remember my friend’s reaction. He didn’t even understand exactly what the proposition was, but he knew what Uber wanted — and he didn’t want that. When an unsavory corporation pushes X, some of us instinctively want Y.
Enter Amazon. They’ve launched a ubiquitous ad campaign, buying up space on prominent news sites and popular podcasts calling for Congress to pass a $15 minimum wage.
What gives?
In a world of corporate ruthlessness, Amazon ranks supreme. This is the same company whose employees have urinated in bottles to save time and increase efficiency. Now that same profit driven, analytics savvy corporation is pushing to increase worker wages? What will the stockholders think?!
I’m weary of Amazon, but I’m pro wage growth. The ambivalence overtook me. I was reminded not just of my friend from California, whose gut reaction was to be anti-whatever-the-big-corporation-wants, but the era to which I belong — the twilight of corporate trust.
I see commercials of some CEO handing out water bottles after a storm, and I just see some PR experiment. Corporate money spent on charitable causes seem to spawn from two questions: can we write this money off our taxes, and will this make our customers like us more? (And, by extension, make them buy more).
Maybe I’m too cynical. But maybe I’m right.
After being bombarded with these well-placed Amazon ads, I decided to do some digging. Sure enough, I was right.
There are essentially three reasons Amazon would support a $15 minimum wage:
(1). Amazon had to raise their pay to $15 an hour to fill job openings. Amazon went on something of a historic hiring spree last year, hiring over 1,400 workers per day. The problem? Before the pandemic, the unemployment rate hovered below 4%, signaling a strong labor market. With so many openings, and with so few unemployed, Amazon was forced to raise its wages — not by the government, but by the free market.
“My read of it all is that they — for purely labor market reasons — needed to go to $15 an hour to meet their huge staffing needs,” Stacy Mitchell, co-director of the Institute for Local Self Reliance told Vice’s Motherboard. “Recognizing that they were going to need to do that anyways because of market conditions, they decided to parlay it into a publicity move.”
(2). If implemented, a $15 minimum wage would not cost Amazon anything. They already pay their employees that wage, so they aren’t on the hook financially should Congress act. Raising the minimum wage to a rate above what they already pay their current employees — now that would be putting your money where your mouth is.
(3). A $15 minimum wage would cripple Walmart, Amazon’s foremost competitor. Now here’s where things get interesting.
Walmart’s lowest rate for hourly work is only $11 an hour, or 36% less than what Amazon pays. While $15 vs $11 doesn’t seem like a lot, consider the hundreds of thousands of Walmart employees making less than $15 an hour, multiply that by the numbers of hours in a shift, and the result is…well it’s a lot.
“Amazon has already implemented a $15 minimum wage so it has little to fear from this becoming a federal minimum,” GlobalData managing director Neil Saunders explained to Business Insider. “In fact, it is to Amazon’s commercial advantage if rival retailers also have to pay more — particularly Walmart.”
Doug McMillan, the CEO of Walmart, is on the defensive. This month he told investors that Walmart would keep its $11 an hour introductory wage to keep a “ladder of opportunity.”
Even for the low bar of corporate jargon, a “ladder of opportunity” is pretty pathetic. I just hope those Walmart employees don’t fall off that ladder — surgery for a broken leg costs about $35,000 without insurance, or about 1.5 years of Walmart employment.
So Amazon is pushing some regulation that they had to adopt anyway. If implemented, it would cost them nothing. In the meantime, it would financially burden their major competitor. This is the hand they were dealt, and now they’re trying to buy goodwill off of it. No thanks.
Even as I sit here writing this column, I see that Facebook purchased the prime advertising spot on The New York Times’ home screen.
“It’s time for updated internet regulations,” the ad reads. “It’s been 25 years since comprehensive internet regulations were passed. It’s time for an update.”
Thank you, Facebook. I’m sure these regulations you’re so innocently pushing for will be pro privacy and pro competitiveness. I can look into the specifics, but the result would be the same column with new characters.
Amazon will push for these new self-benefiting rules. When you think of Amazon, they want you to think of jobs and wages. Instead, I will think of bottles of urine.
Welcome to the twilight of corporate trust.
