comscore Why some Amazon workers are fuming about their raise

Why some Amazon workers are fuming about their raise

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    Prime Now customer orders are ready for delivery at the Amazon warehouse in New York. Last week, Amazon announced it was increasing wages, which will benefit most employees. However, it will no longer give out new stock grants and monthly bonuses. Some workers believe that means their total compensation will shrink.

SEATTLE >> Last week, Dave Clark, Amazon’s senior vice president in charge of operations, stood on a ladder in a warehouse near Los Angeles and announced to employees that Amazon was raising pay for its vast blue-collar workforce.

As soon as he said “new Amazon minimum wage of $15 an hour,” Clark was drowned out by more than 10 seconds of cheers and high-fives.

Clark posted a video of the meeting on Twitter, where it has since been viewed more than 400,000 times. Sen. Bernie Sanders, I-Vt., who had repeatedly criticized Amazon for how it treated its workers, praised the raise and shared the clip, adding another half-a-million views.

But in Amazon warehouses across the country, many longtime workers are fuming that — based on the information they have received so far — they may end up making thousands of dollars less a year.

Yes, Amazon is increasing wages, which will benefit most employees. But it will no longer give out new stock grants and monthly bonuses. Some workers believe that means their total compensation will shrink.

Whether Amazon finds a way to close that gap will be closely watched in Washington. On Oct. 4, Sanders sent a letter to Jay Carney, who runs Amazon’s public policy, “asking Amazon to confirm how the total compensation of employees who would have received stock options — those with the company for two or more years — will be affected as a result of the recent changes,” according to a copy provided to The New York Times.

Sanders, who was alerted to the issue by workers, has not yet received a response from Amazon, a spokesman for the senator said.

The New York Times spoke to about a half dozen workers around the country, from Texas to Kentucky, and viewed numerous employee discussions on Facebook. All of the workers shared their pay stubs, but few would allow their names to be used.

Near Minneapolis, Katy Iber, who handles returned products at an Amazon warehouse, works the night shift. Her region has a tight local labor market, so she already makes more than $15 an hour.

In an “all hands” meeting at the start of her shift Thursday — her first day at work after the pay raise was announced — she learned Amazon was raising her base pay by $1 an hour.

But it was also ending monthly attendance and productivity bonuses, known as the Variable Compensation Plan, or VCP. And she would no longer be granted valuable Amazon shares. The trade-off meant she would be losing money, she said.

It was as though the company was saying “‘Thanks, we appreciate you going into the holidays. Here’s less money,’” Iber said. The New York Times reached Iber through the Awood Center, a nonprofit that is organizing East African workers in the region.

Amazon maintained in a statement that the higher hourly wage “more than compensates for the phaseout” of the stock and incentive bonuses. A traditional pay raise, the company said, is “more immediate and predictable.”

Amazon said more than 250,000 employees and an additional 100,000 seasonal workers would benefit from the pay changes and announced similar changes for workers in Britain. Deutsche Bank estimated that Amazon’s pay increase “represents less than 1 percent of its projected 2019 revenue.”

For many workers, including those who work part time and were never eligible for stock and bonuses, the raises in base pay will certainly put more cash in their pockets.

Amazon officials said that over the next week they would adjust the pay of some employees to make sure workers did not end up losing money with the changes.

The difference between what some employees believe is their total compensation and what the company believes they are being paid also may come down to accounting rules. Amazon said that if employees in 2018 get stock that was granted to them two years ago, that legally counts as compensation this year. But some employees believe that was compensation for work done two years ago.

The difference — whether because of miscommunication or incomplete information given to employees — has resonated in Amazon warehouses around the country, particularly with employees with a longer tenure at the company.

The dispute is over two compensation programs that will end Nov. 1. The first, the Variable Compensation Plan, is paid out each month. It offered up to a 4 percent bonus for attendance and an additional 4 percent if a worker’s building met certain production goals.

Iber said someone in her warehouse wrote “BRING BACK VCP!!!!” on a whiteboard where employees are encouraged to communicate with management.

In the three months around the holiday season, known as “double down,” the bonus doubles, meaning employees could earn as much as 16 percent on top of their regular wages.

The second program gave employees shares in Amazon stock each year. They get to keep the shares if they are still working at the company after two years. Recently, employees have been getting two shares, worth about a combined $3,725 at current market value. With the changes, workers get to keep the stock granted in previous years but will not earn new shares.

Documentation that Iber provided showed that her bonus amounted to $1.28 an hour in August. In the three months around the holidays, that could be more than $2.50 an hour, far more than the $1 an hour increase in base pay she is getting.

She is down even more when stock grants are taken into account. She will keep old shares, but will not be granted new ones.

In a Facebook group popular with employees, workers fumed over the changes, according to screenshots from the page that were viewed by The New York Times.

There were so many negative pending posts on the day Amazon announced the $15 wage that a moderator wrote that she had deleted them and pleaded with workers to write to the corporate offices in Seattle rather than vent online.

Another poster wrote that her co-workers were contemplating a walkout on Black Friday, the big shopping day after Thanksgiving, and others said they were saddened to lose the sense of ownership that the stock compensation provided.

Workers said the timing of the change, just as bonuses double for the holiday season, stings. Iber said a co-worker had told her that he regretted paying down some credit card debt in anticipation of the extra holiday bonus. He worried that without the extra holiday pay, he will not be able to cover his regular monthly bills.

She could sympathize. Last year, Iber used the holiday season bonuses to pay for insulation in her attic. She was going to get a new water heater this year, but now she is holding off. She said that she would wait for the heater to break, and that when it did, she would put the repairs on a credit card.

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