Business

Amazon says it knows it could run out of workers for its warehouses, according to leaked memo

Business Insider US
(Photo by Gabe Ginsberg/SOPA Images/LightRocket via Getty Images)
(Photo by Gabe Ginsberg/SOPA Images/LightRocket via Getty Images)
  • Recode reported on a leaked memo from Amazon raising the alarm about running out of workers from mid-2021. 
  • An NYT story last year said Amazon executives were worried about this.
  • Amazon said in May it is overstaffed now, but attrition is likely still huge at the company, and a union push looms.
  • For more stories go to www.BusinessInsider.co.za.

Amazon is going to have to do something to avoid potentially running out of workers, according to an internal memo from last year obtained by Recode

A New York Times investigation from June 2021 found a turnover rate for hourly workers of about 150% each year and reported that Amazon executives were worried about running out of people to hire

However, this newly leaked memo from that time period provided an in-depth look at Amazon's understanding of its own labour issues and how it might solve them. Insider did not independently verify the memo. 

"If we continue business as usual, Amazon will deplete the available labour supply in the US network by 2024," the memo says, according to Recode. 

The leaked document "reads like an attempted wake-up call," Recode added. 

The memo reportedly says Amazon could use six methods for its warehouse workers, including raising wages or increasing reliance on robots, to fix the issue, but that the problem is coming at the company pretty quickly, especially in certain parts of the country.

Those areas include Phoenix, and the places in and around Memphis, Tennessee, and Wilmington, Delaware. 

Another understaffed danger area, the memo said, is the "inland empire" region of California, where the company could potentially run out of interested workers by 2022 because of hiring competition from other logistics companies. 

The memo said the models used for those labour predictions were 94% accurate when it came to figuring out where in the US the company would not have enough workers to meet June 2021 Amazon Prime Day-related demand, Recode noted. 

The report goes through various solutions, Recode writes. If the company raised wages a dollar, it would see a corresponding increase in the number of people in its hiring pool of 7%, per the memo. 

Its existing staff could work more or use a budding tool to transfer workers from warehouse to warehouse depending on demand. And the company could take into account the available labour pools for warehouses where the location is more flexible. 

It's unclear how relevant this memo is to Amazon's current operations, especially given anxiety over a recession and overstaffing in retail after the omicron variant. Amazon did not respond to a request for comment. 

In mid-May, Amazon's Chief Financial Officer Brian Olsavsky said the company had "quickly transitioned from being understaffed to being overstaffed." He added that the issue would "dissipate." 

On Thursday, as Recode noted, The Wall Street Journal reported that now-gone Amazon executive Dave Clark proposed that the company should cull its worker base through attrition. 

Amazon workers have long reported tough conditions, and the company even aims to get rid of a certain number of workers a year, Insider has reported — which jibes, in some ways, of Jeff Bezos' management ethos, a New York Times investigation revealed

The first Amazon warehouse in Staten Island, New York, unionised in April.

Read the whole Recode piece here.

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