A Deep Dive into The Realities of Wage Theft from Large Companies like Amazon(Part 1 of 2)

In 2019, in an Amazon warehouse in San Bernardino, California, Beverly Rosales filed a workplace discrimination charge. She was being let go from Amazon for getting pregnant. Beverly had been working in the shipping warehouse for two years, and she knew the increased bathroom breaks during her first trimester would put her on the chopping block. Her fears were justified because Beverly got the boot right after Cyber Monday, Amazon's busiest shopping day. She's not alone either. According to cnet.com, seven women have filed suits for being discriminated against by Amazon for their pregnancy. And every one of these cases has been settled out of court.

In an Amazon warehouse in Staten Island, New York, Jimpat Lacewell, a former inmate, said he'd rather go back to prison than work at Amazon again. The 25-minute wait to get through security, the grueling work and the way managers treated the robots better than humans made him go on record with The Guardian saying, “I would rather go back to a State Correctional Facility and work for 18 cents an hour than do that job. I'm sure Mr. Bezos couldn't do a full shift at that place.”

That same Staten Island warehouse landed in the news earlier for its labor protest when workers went to battle for their short 15-minute breaks. Not that the workers wanted more breaks, they weren't greedy. They just wanted their (2) 15-minute breaks to be stacked together into one 30-minute break because 15 minutes wasn't even long enough to walk across the sprawling warehouse floor and back. To get any rest during the 10-hour shift, workers have to sit on the ground or sit at the warehouse belt for 15 minutes.

In 2019, the Staten Island facility also shattered records for workplace injuries. And this is based on Amazon's own injury report. The rate of injuries and severity were staggering, according to the nonprofit law organization, Make the Road. To their own admission, Amazon's warehouse beat out steel foundries and sawmills for injuries both in frequency and in severity. For the record, the Fulfillment Center, which is what Amazon calls its warehouses, had an injury rate that was 50% higher than a steel foundry and tripled the injury rate of a sawmill.

In 2018, it was also revealed that thousands of Amazon workers received food stamps to augment their $15 an hour pay rates. This was briefly met with demands from Twitter to force Amazon to pay for those food stamps, which would shift the burden of feeding Amazon's workers from the public back onto Amazon. Bernie Sanders later used this as a rallying cry for labor rights. If we wanted, we could play this game all day. The internet is bursting at the seams with horror stories from Amazon warehouses. And if you miss the news, Jeff Bezos, the 2020s richest man in the world, has just vacated the position as Amazon CEO. While Bezos might be stepping down, his legacy remains, and it's a legacy we want to explore on the podcast today. It is a legacy that affects every man and woman in America, even if you don't work for Amazon. A legacy called wage theft, which can happen to every company at every level. In fact, it may have already taken money out of your pocket at least once.

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Here's a fun fact for you. If you're a full-time, minimum wage worker in America, there are exactly zero counties where you can rent a two-bedroom apartment or house, which is kind of important. We want to compare how much Amazon thinks a full-time warehouse worker can live on with minimum wage in its city of operation. For example, the minimum wage in Staten Island, where an inmate would rather go back to prison, is $14 an hour. This means Amazon was beating minimum wage by a whole dollar. Or take what Beverly Rosales was making in San Bernardino back in 2019, $15 an hour. This is exactly what our county's minimum wage just got bumped up to this January, and I can hear what some of the listeners are shouting at their phones as we talk about companies that barely beat minimum wage - get a grown-up job.

But today's episode is all about those “grown-up” jobs. We want to find out where they all went because, as of right now, 42% of Americans make $15 an hour or less. To clarify, that's $150 million Americans who are making Amazon warehouse money. Or worse, the biggest companies in America that have been caught red-handed stealing from their $15-an-hour employees. Because businesses like Amazon and Walmart have become like payday loan scams of capitalism. Except that shadiness isn't as obvious when Jeff Bezos or the Walmart family perpetrates it.

So those are our three myths today, folks - What wage theft looks like when it's committed by companies that employ half of America, how companies like Amazon abuse the healthcare system to lock employees into shit jobs by holding health benefits in front of our faces, and we'll look at where all the big boy and big girl jobs went and why half of us were left sorting cardboard boxes for $15 an hour.

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 We're going to cover what is happening right now with age theft. I feel like everyone I talked to about this has had their own experiences with wage theft. It was a thing where I hadn’t heard it brought up before, but as soon as I read about it, everybody I knew had something to weigh in on.

 Joe: I found out one time that the security companies I worked for made more than 40% of my take home. That they almost get half of what I effectively make for the company, and I know some of that goes to overhead and how much it costs to run a business and things like that. At the end of the day, I am their product. You can't help but think, couldn't they give me a more significant cut of that? They also used to make us take our lunches at our desks, and that's the part of this where I realized it was wage theft. If you don't have the freedom to actually go take a break during your break, that is a form of wage theft.

Todd: I was in the car business for a long time and what they have is called ‘pack.’ Let's say that the car dealership bought the car for $10,000 and a salesperson sold it for $12,000. That’s a $2k profit and you get 25% of that. However, the pack is said to help pay for the store, business cards, and advertising. So, let's take a thousand dollars out of it and put that on top of the $10,000. This means when you sell a car for $12K, you only make a $1k profit. But through the years, they've gotten greedier and greedier with the pack. It started out as $300, and now it is as much as $3,000. It's just a way for them not to have to pay salespeople commission.

Did you hear about Biden trying to get a $15 minimum wage passed? I was researching this article and it popped up in breaking news and it was he's trying to get it passed with the corona stimulus package. I don't know if that's supposed to keep up with inflation, if he knows of Amazon's algorithm, or just it’s become so prevalent across the workforce and across companies that maybe everyone just agreed on that number. Every metric you can possibly look up says that wages have not kept up with inflation. And that's basically one of the first arguments against minimum wage being raised, as it will cause more inflation.

Wage Theft Realities

So, we're going to first define wage theft, and then we're going to get into some of the court cases that have proven that it is happening. At the top, we talked about how wage theft is being asked to work when you're off the clock, being asked to take your breaks in places where you aren't being paid, or where you're not actually leaving work for breaks, or being compensated for time. I think that's the best way to put it. As you go up the levels, this issue seems to be less frequent. They're really picking on the lowest end of it, which is very sad, right? They are pushing wage theft onto the people who are building the pyramid, not the people holding the whips.

This is our first metric and comes from a 2017 study by the Economic Policy Institute. They estimated that about 2.4 million people lose a combined eight billion dollars in income every year. However, the FBI thinks that over 16.4 billion was lost in wage theft from large companies, which is about half of all other theft crimes combined. Now only in these ten states in the article, the typical worker victimized by minimum wage violations is underpaid by approximately $64 a week, which totals to about $3,300 a year. The EPI also estimates that the total yearly amount for American wage theft is closer to $15 billion. So, these are not small numbers at all.

Court Cases

Would you like to jump into one of these court cases? I would like to start with one that will make us feel a little bit better, one where they actually got caught and were punished. This happened in Braun versus Walmart. It was a class-action lawsuit and was at the Pennsylvania Supreme Court. The jury sided with the workers of Walmart for a $188 million-dollar settlement. They said it was because of missed rest breaks and working after the shifts had ended. This six-week trial took place in 2006.

The interesting part is that Walmart's own policies said that employees needed to be paid for their hourly work. So, they had to basically hold their own “no duh” policy against them because Walmart's defense wasn't ‘we weren't paying you for things that you were supposed to be doing,’ Walmart’s defense was you can't sue us based on a sample size.

This goes back to a court case called trial by formula. The way a trial by formula works is you're not allowed to sue a corporation for damages by taking a group or a slice and then do the math for everybody. That would be like saying all car dealerships were cheating people. However, Walmart's defense not only was heinous by being ‘we cheated everybody sure, but only you three stepped forward’ their defense was shot down because their own policy stated that they were not supposed to cheat people and then their own records also showed that yes, we're cheating people.

I kind of want to get into the benefits of allowing this to happen. Why didn’t those Walmart workers not immediately walk out when somebody said, could you please clock out and then come back? I will leave you with a quote from Surviving Amazon. “The running joke is that the only benefit to working at Amazon is the benefits.” For full-time employees, Amazon offers health insurance, a 401k, and then there's a minimum wage now. Let's go back to our example of the pregnant woman that sued, Beverly. First of all, she needs those benefits if she’s having a baby. Have you ever looked up how much it cost to have a baby without benefits? Generally speaking, if you have a baby without benefits, you’re broke for the rest of your days.

Now, being pregnant also means needing more breaks because they are tired and fatigued. Can you imagine being pregnant working on a concrete floor for 8-10 hours? They want more bathroom breaks than everybody else and they have evidence that they're pregnant, right? They're not making this up. They're bringing notes in from doctors saying that they can't work the same hours as they did before. Today, it is dangerous to work at an Amazon warehouse because people are forced to keep up, or they'll get fired. People who last long there probably figured out the value of both pacing themselves and also making it look easy. After all, if they don't work that $15-hour job, they may lose their house.

Differences Between Benefits and Pensions

I want to talk about the difference between benefits and pensions. Let's say you work for the railroad. When you retire, you get a pension. Police officers and firefighters also get them. It is what you put money into most of your career (a percentage of your pay) until you retire. There are a lot of really good pensions that essentially gave people the same amount of money they did when they were working. That's how they live out the rest of their lives comfortably. As an elder millennial, I know that my retirement is actually going to be working as a Walmart greeter and living off of a really crappy 401k.

The other thing that's the opposite of the pension is a 401k. The difference is with a pension, you pay in, and so does your company for every single hour and every single salary there. It’s a team effort. But with a 401K, you put in a 100%, and shitty companies will match like tiny percent of it. Mine does about a 2% match. Another thing I want to talk about with union jobs and pensions is you have health benefits until you die. Let's say you're in the military. You get the VA benefits for the rest of your life, right? You only get benefits at Walmart and Amazon while you're working there. You could break your back to get promoted. But when you leave, you're done. Almost all companies that didn't unionize have benefits that work that way when you leave a company. For this last part, Amazon tends to pick bad locations to reside in. Why do you think? The labor forces. It’s easy access to instant, cheap labor.

As an apolitical podcast, we don't side with the parties in America. We are starting to sound like we're taking the labor side versus the company side. For the record, we do often side with small businesses, and I usually side for pro-capitalist matters. But in this particular case, with Amazon wage theft and 50% of America being stuck loading boxes, I'm siding with the people who are getting money taken from them. I just want to clarify that when we talk about benefits, not siding with companies that hold jobs over people's heads, and companies who threatened to not come to your small town that has an incredible unemployment rate to set up a factory, we're going to say that's a shitty way to do things.