Tag Archives: amzn

Editorial, Local, Shower Thoughts

Amazon increases base pay cap from $160K to $350K citing the hot job market

1 Comment

[SEATTLE, Wash.] – (MTN) On Monday, Amazon announced the company was increasing the maximum base salary for full-time corporate offices employees from $160K to $350K a year, citing competitive pressure in a hot job market. A closer look at how Amazon has compensated tech workers in the past finds that the old model no longer works, and probably never will again.

When Jeff Bezos was CEO, the mantra for hiring was Amazon wanted, “missionaries, not mercenaries.” The company hired people who were closely aligned with their company values and who were more interested in the opportunity to work for Amazon, than the base salary and benefits.

In 2021 Amazon lost 50 people at the vice president level or higher, a significant brain drain, even for a company the size of Amazon. Low pay was a reason cited by a number of employees that departed in 2021 and left the company with significant staffing gaps. It is likely that some departures were fueled by Andy Jassy moving into the CEO role. It is not uncommon in the Fortune 100 for changes to be among the executive team with a new corporate leader, even during times of high satisfaction.

Amazon compensates its corporate office employees based on 11 different pay grades. having insight into how those levels work provides a better understanding of why Amazon is having hiring challenges.

For employees at the associate level, L1 to L3 in Amazon compensation speak, the change in the salary is meaningless. The next pay levels are L4 to L6, which is the backbone of Amazon’s engineering, product planning, marketing, and operations. At the higher levels, the salary cap combined with other forces has become problematic. The next group is senior managers, which are L7 to L8, and there is no L9. L10 are vice presidents, L11 are direct reports to the CEO, and L12 is the CEO. In simplified terms, you can think of L1 to L5 as non-commissioned officers in the military and L6 as the start of the officer ranks at 2nd lieutenant. At the top, L12 is equal to a four-star general.

Prior to 2021, the total compensation model worked well for Amazon. An employee would be offered a base salary. For an L6, that typically would be $150K to $160K a year. In addition, the new employee would receive a sizeable grant for Amazon Restricted Stock Units (RSU). The stock would vest over four years but on a schedule that was advantageous for Amazon. If a new employee was offered 600 shares of stock at $500 per share (simplified example) as part of their initial compensation package, the vesting schedule would look like this.

  • End of first year – 5% – $15,000
  • End of second year – 15% – $45,000
  • Six months later – 20% – $60,000
  • End of third year – 20% – $60,000
  • Six months later – 20% – $60,000
  • End of fourth year – 20% – $60,000

Employees would receive additional RSUs depending on their role, team, and performance that vested on the same schedule. After four years of full-time employment, the packages became extremely lucrative, with multiple grants vesting 20 percent at a time every six months.

The value of the RSUs is tied directly to the performance of the stock market, so the model above assumes the stock price never changed. On Aug. 23, 2015, Amazon stock closed at $482.18. A year later the stock was at $739.61 and the year after that it reached $1038.95. The next value at each vesting window were $1,362.44, $1,802, $1670.57, and $1,992.03. The real value of those RSUs for someone starting on July 24, 2015 would vest at these amounts.

  • End of first year – 5% – $22,188
  • End of second year – 15% – $93,505
  • Six months later – 20% – $163,493
  • End of third year – 20% – $216,240
  • Six months later – 20% – $200,468
  • End of fourth year – 20% – $239.040

The original total value of the stock went from $300,000 to $934,934. That is on top of the salary capped at $160,000 a year and wait, there’s more, a two-year signing bonus.

To provide a compensation bridge for employees who hit the salary cap, and would derive little to no benefit from the RSU shares until 2-1/2 years of employment, Amazon offered signing bonuses. To keep the example simple, an L6 employee could receive a bonus offer of $90,000 in additional compensation, paid out at $50,000 in the first year and $40,000 in the second. The bonus is guaranteed as long as they stay employed.

Over four years, wrongly assuming our hypothetical middle-manager never received another RSU share or an additional cash bonus, their total compensation would be valued at $1.67 million – $417,500 a year.

The average tenure at Amazon was under 12 months, so many didn’t even make it to the first vesting window for stock. For others, two years was enough, and the pay gap that was created between the second year vest and the start of acceleration was a bridge too far. For those who could thrive in the Amazon work environment, the path to becoming a millionaire was just three to four years away, until COVID arrived.

On Feb. 26, 2020 when the first COVID-related death occurred in the United States, Amazon stock closed at $1,979.59 a share. On July 7 it broke $3,000 and the stock has spent most of its time between $3,000 and $3,400 ever since. There have been a few peaks and valleys out of that range, but they have been short-lived.

Since the summer of 2020, the stock has been, for newer hires with visions of becoming a millionaire in under four years, flatlined. The chances that $300,000 in RSUs at hiring will be worth closer to $300,000 four years later has dramatically increased.

There is room for growth. Amazon’s market cap of $1.64 trillion is equal to the GDP of Canada, and several companies, including Microsoft, have reached a $2 trillion market cap. However, the handful of stocks that have reached that milestone, haven’t climbed much higher.

The acceleration of Amazon’s success as an e-commerce platform, an entertainment platform, and a provider of cloud computing services, all fueled by COVID, broke the existing compensation model. Additionally, with many tech companies fully embracing remote work, the competitive landscape to hire new talent also created new opportunities for talent already working for Amazon.

The reinvention of Microsoft and a major change in its corporate culture, along with the presence of tech giants Google, SAP, Facebook, eBay, TikTok, and Apple, have created a cutthroat job market for tech workers. The salary cap at Amazon, a flatlined stock, ethical questions about the treatment of warehouse workers, and a high-pressure work environment has taken away much of the allure of working for the global behemoth.

The high rate of employee churn has created another problem. Thousands of highly skilled workers who used to work for Amazon would never consider returning to Amazon. Within Puget Sound, the pool of available hires has continued to shrink while remote work, and the current tight labor market provides almost unlimited opportunities for anyone who can write code.

Historically, the rewards for the resume and the bank account outweighed the reputation Amazon has for being a toxic work environment. Like other large corporations, what group someone works in and who their managers are, frequently dictated the culture within that team. Land in a team with the right manager, working in the right team, and at the right time, and the professional and personal rewards are great.

The shift in compensation model signals more than just hiring challenges. It is a signal that the days of minting millionaires by the thousands on a yearly basis are coming to an end, and Amazon is moving to what was once called a blue-chip stock.

BIPOC, Local, National

Amazon union-buster calls Black organizers “thugs” at NYC Distribution Center

[NEW YORK] – (MTN) The same union-busters who prevented a worker’s union at an Amazon facility in Bessemer, Alabama, are now helping the company in Staten Island, New York. JFK8, New York City’s only Amazon fulfillment center, has a concerning workplace culture, according to several employees.

Amazon’s JFK8 employs consultants to prevent employee activism, but it’s one symptom of a system designed to increase productivity and one that mistreats women and employees of color, according to four current and former employees. Malcontent News also obtained two federal complaints filed against Amazon with the National Labor Relations Board regarding illegal union-busting techniques and harassment—complaints filed while some workers can’t afford rent and sleep in their cars.

According to a Truthout report, Amazon pays multiple union-busting companies like the Burke Group thousands of dollars to prevent organizing. Natalie Monarrez, an Amazon employee of three years, says on May 4 she spoke with Bradley Moss, President of the Eastern Division of the Burke Group. Moss is the same union-busting consultant who worked at the Bessemer location.

“He said the organizers [at Bessemer] were just Black Lives Matter protesters,” Monarrez said. “Then he shifted over to, ‘These guys in front [of JKF8 are] never gonna get off the ground. They’re just a bunch of thugs.’ I knew exactly what he meant.”

[Best_Wordpress_Gallery id=”55″ gal_title=”Amazon Anti-Union”]

Monarrez says Moss was referring to union organizers outside JKF8 who pass out literature, connect with workers and host barbecues—and who are Black. It’s not the first time Amazon was racist; Vice reported in 2020 that during one executive meeting CEO Jeff Bezos attended, a company exec called organizer Chris Smalls, who is Black, “not smart or articulate.”

Hiring union-busters aren’t the only way Amazon prevents unionization. Employee and organizer Derrick Palmer recently filed a complaint with the NLRB after an incident on June 12. An Amazon manager took union literature and papers Palmer left on the break room table for other employees. Palmer says the manager wouldn’t reveal who told him to confiscate the material and says complaints have been filed previously for the same thing. After recovering his property, another manager tried to take similar literature from worker organizer Connor Spence.

Amazon has also put up anti-union signs in the bathrooms, according to Palmer, and Malcontent News obtained photos of anti-union digital signs inside the building with messages like, “Be careful who you trust.” Although there has never been an Amazon Labor Union, or ALU, at JKF8, the signs say the ALU has a “history of financial trouble.” This is in addition to a fence Amazon built around JKF8, which according to the Commercial Observer is designed to make organizing harder. Palmer filed charges with the NLRB because of the fence on May 11.

amazon anti-union ads ran on the amazon twitch platform in 2021

Employees say the internal culture is racist, too. Palmer says he believes being Black is part of the reason he hasn’t been promoted. After showing managers he had achieved enough “Matrix points,” a sort of internal tallying system of leadership and experience, management denied him an interview for promotion even though he had exceeded the requirements. Additionally, the New York Times reports that while many hourly workers are people of color, management is overwhelmingly white. Spence agrees, saying many managers are white men hired “fresh out of college.”

The company culture and union-busting do nothing to help employees who are struggling, Monarrez says. Monarrez, who also filed an NLRB report after a now-terminated manager physically prevented her from using the bathroom, says she and nearly 100 other JKF8 employees are homeless and sleep in their cars in the parking lot after work. Monarrez has been homeless for three years. She lost her job after the 2008 recession and had a difficult time finding work, so she moved to New York City and began working for Amazon in 2017.

Monarrez lives on just more than $19 an hour, but in New York City rent can be more than $2,000 per month for a one-bedroom apartment, which she can’t afford it. She says she’s gotten a gym membership so she can take a shower. However, it’s not easy to work 10-hour shifts handling around 1,800 packages per hour and not be able to afford basic necessities. 

“I wish people knew the truth,” Monarrez says. “It’s really bad, and we need help.”

Smalls, Palmer, Spence, and other labor organizers at JFK8 are doing their best to help. Every employee Malcontent News spoke to knew about each other’s struggles and had established relationships. Smalls says the barbecues he hosts outside the building help workers come together.

Because JKF8 has about 5,600 employees, Spence says they need about 1,700 signatures to vote on creating a union. They’re making steady progress, and Spence says they may hit their goals and push for a vote this year. But if it takes longer, they’re willing to put in the work.

In Bessemer, union efforts failed after 738 voted for, and 1,798 voted against a union. However, Amazon installed a mailbox there, and some reports say it’s possible Amazon tampered with votes. In addition to union-busting tactics, JKF8 has a turnover rate of about 150 percent. Spence says this means that in a building of 6,000 people, they may hire and fire as many as 9,000 employees in a year, making it difficult to unionize.

amazon’s union busting training video – full version – from 2019

“It’s not the only reason they do it, but trying to prevent labor organizing is one of the components of that business model,” Spence says. “High turnover prevents labor organizing.”

Still, there are ways the public can help. Smalls says locals are welcome to come and volunteer and that anyone can donate.

“We are self-funded,” Smalls says. “Donate whatever you can on amazonlaborunion.org. Help us amplify anything online. If they can volunteer, they can come on down.”