A Deep Dive into The Realities of Wage Theft from Large Companies like Amazon(Part 2 of 2)
This continuous episode is about wage theft, but we really want to cover other ways companies skip on paying money to their people. There are plenty of legal ways you can get free labor from people.
Todd: I want to get into my previous insurance adjuster job. For the underwriters, they were heavily advertising their bonuses. They were these amazing bonuses about half of your pay and a high percentage of employees get it. It all sounded well and good. But after reading the reviews from the employees, I found that the only way to hit your bonus was to clock out of the computer and do work on your days off to hit it. So, you'd have to work seven days a week to hit that bonus they were advertising for the job. If that isn’t an example of what we're talking about, I don't know what it is.
Joe: This lottery system, the idea that one person gets the bonuses and eventually gets a real job, that's kind of the pyramid of work right now. We're going to talk about how that looks legally. How do you get people to work for you for free? Well, one way is with Todd’s story about offering a big bonus or an incentive, but only a couple of people get it if everyone works really hard. Another way is internships. Now internships can be a good thing. We're going to get our information from the same sources before, the EPI. They talk about how between one and two million people will work as interns this year in the United States, which saves firms about $600 million across the board. Now, the way you make an internship legal, an intern has to be the primary beneficiary of the labor, according to The Department of Labor. It boils down to the intern needing to get more out of the deal than the employer.
Joe: Let's talk a little bit about contractors because this really hit it big in the news lately too. If you're listening from overseas, we have a contractor problem. If you are an outside contractor, you're not technically an employee and you don't get benefits. You can just straight up kiss those benefits goodbye. You're there for the pay and nothing else. Once companies learned they could shrink their employee force and inflate their contractor force from outside companies, they used that as a trick to skip on paying 401ks or benefits. They will totally get away with that. According to the LA Times, hiring employees rather than contractors can add 20% to 30% to the labor costs.
Todd: I don't have any stats to back this up, but what I've seen in my corporate life was when there was a contractor, companies would hold a carrot in front of them and say they will hire them on regularly if they do an outstanding job. They make them do a lot more work in that promise and with no guarantee.
Joe: There is a case that just broke the news. In the UK, they were trying to fight for contractors for Uber. Uber and Lyft, and other rideshare programs, are contractors. They don't get breaks, don't get minimum wage, and are not entitled to anything at all. They drive and all of their costs hit them. So, medical coverage, problems with their cars, all that just comes to them. With holiday pay, these companies charge more as well, but those contractors don’t get any of it. The UK just ruled that Uber should treat people like employees that they are entitled to holiday pay, rest breaks, and minimum wage. If this carries over to America, then that means it's basically another taxi service.
Joe: Lastly, I want to cover salary transparency. Have you ever had one of those awkward conversations where you look over at a co-worker and you ask how much do you make?
Todd: Well, being in the sales business, we brag about it. Salespeople don’t have that problem. We love telling people how much money we made. What about you?
Joe: I had a soul-crushing moment once. Once I was doing contract work and I had a new guy come in and he knew nothing. He was screwing up his job and we were all trying to pitch in and lend him a hand. We later found out that this new guy who kept messing up made $2 an hour more than the rest of us. I think every employer eventually goes through needing new people right now, but they are not sure how to treat the people who are already there.
Todd: They don't want to pay them more because they are already loyal, but if no one is applying, they raise the salary to attract more people.
Joe: Exactly. Unfortunately, most bosses will hire new people for more money, but not tell anybody. When everybody is transparent about their salaries, employers lose because people get mad and either want more pay or leave. Those are some ways companies can hire for less or basically get cheap labor. Now, we've already talked about illegal wage theft, like what Walmart got caught with. But how do they make it legal? How did Amazon get away with it?
Todd: Micromanagement and scanners. Scanner technology is the best way to do that. These people literally check every single thing you do. Now, I’m going to leave with part from the Surviving Amazon article. Amazon has built a vast Logistics Empire by subjecting its workforce to extreme forms of technological discipline, designed to keep workers isolated, fearful, and manically productive. You're afraid you're going to lose your job and you become isolated, which we all know can drive people to suicide and mental breaks.
Joe: Did you happen to stumble across Amazon’s video game system? They tried to use their scanners and their work trackers to turn people's productivity on scanning boxes into a video game to compete against each other. It was a multiplayer game. It's another one of those weird things that game them into productivity. Not only are you isolated while you're walking the floor, but they also have you see your name on a board at some point with your score. They did apparently stop doing that video game.
Joe: I keep talking about this $15 an hour sinkhole in the economy, and that is now maybe going to become the federal minimum wage. Do you want to talk about what jobs actually make? I went on a couple of the websites like GlassDoor and I just wanted to play the hypothetical game. I'm not going to say how much I made last year, but I do not work a good job. I write on the side, which is becoming a bit more lucrative these days, but my day job for health coverage is a crap contractor position. I wanted to go through and play this game that everyone plays, which is what if I got my degree in something else? I started seeing that there is a regression that that high-paying jobs that used to be very respectable are starting to sink back down to that $15 an hour mark. Take teachers, for example. A beginning teacher’s salary here in Oregon is around 36k-51K a year. That is not a teacher salary in my mind.
Todd: I know restaurant workers who work 50 hours a week that make more than that.
Joe: If you have a master's degree and you were a teacher, that’s 40K to 63k a year, which is still lower than the happiness index.
Joe: So, I have a quick question for you Todd. Your mother was a teacher, right?
Todd: For 30 years.
Joe: How often would she bring work home, like grading papers, working on syllabus, and things like that.?
Todd: All the time. She started as a teacher in Maine making 14K a year, and that wasn't even a lot of money back then. But her job now, she works seven days a week and twice as hard for the exact same money.
Joe: It is a good thing to note how respectable jobs have been dragged back down to $15 an hour. Anything whatsoever involved in the medical field has shot up. If you wear a white coat, you will make the most amount of money.
Todd: Healthcare field may have gone up, but pharmacy not so much. Pharmacy schools are pumping out 10,000 people with Pharmacy degrees a year, but there are not that many pharmacies. These kids getting out of school thinking they're going to make a lot of money only end up getting to work one day a week. Furthermore, wages haven't gone up for pharmacists because they've got all these students coming out that will work for less.
Joe: I want to get back to the statistics and the articles that will save us from sounding like we're just moaning. So, there's an article I'd like to share with you. It's called Why Can't Americans Get A Raise from Slate. This came out in 2017, and it should be in textbooks.
They rationalize to me why companies like what we're talking about do not give wages or pay raises throughout your career. This article explained why Americans can’t get a raise, and they talk about how job growth and job openings have exploded in the past couple of years. They base some of their data on the Atlanta and Federal Reserve. There are currently 82 straight months of job growth. So, we're in a healthy market for jobs. It should be, at this point, employers shelling out more because they need positions to be filled. There's an unemployment rate of 4.4% and a record of 146 million Americans with payroll jobs. If you take all that into account, that means that currently, job openings in America are about 5.7 million. Given these conditions, wages should be going up. People should be offering more than $15 an hour, but they haven't been. Employers simply will not bring their rates up, and it's been about ten years of that.
Todd: It's ubiquitous for people who have what we refer to as “big girl and big boy” jobs to look at an opening that's on Indeed or wherever, and they will say they will only hire someone with industry-specific experience, and you have to have five years of it. You have to have these degrees; you have to have this experience. And then the starting pay will be about 20-40% less than anyone would make it at their own job. They don’t have any kind of gauge that to get people who have experience in this industry, they need to pay them more than they're making now, or they're not going to come. This seems like real common sense to me.
Joe: What they are trying to on recurring websites is poach you from another job, but they're offering starting amounts. The New York Times covered this. They talk about a Columbus Ohio cleaning company being completely mystified that they couldn't get somebody in at $9.25 an hour. They wanted somebody who's experienced, who could do the job, yet were shocked that somebody wouldn't come in for basically no pay. We're going to look at this as a large economic problem. So, this is also from that Slate article. If one million of those 5.7 million job openings were filled, that would mean an extra $47 billion dollars moving through the economy. It would be going from the corporations who are offering the money to Americans' wallets, and that's not an inconsiderable amount.
They go on to say that we had 18 months of recession between 2008 and 2009, and it was a destructive crisis that just crushed companies and Corporate America, pushing them into what they called a survival mode. The way they survived the financial crisis back in 2008 was by laying off a lot of people and making job pay cuts. In the years 2008 to 2010, private sector companies slashed 8.8 million jobs, and slashed at the same time wages and benefits. When I made the joke earlier about what's a pension, that's what went away from 2008 to 2010 during those [crises months. It became 401ks, limited benefits, and hiring more contractors instead of full workers. Basically, this whole podcast episode comes full circle when we realize that everything went away in those peak recession years, and companies became conditioned into slashing and saving.
Joe: So, speaking of people that keep their jobs forever and they get secure in it, I noticed that in our pitch document, you had something in there about immigrant work ethic. I feel like this is the better episode to include that.
Todd: Well, it's something that's warm to my heart. My ex-wife is Korean, and my current wife is Filipino, so I have a soft spot for any immigrant that comes to the country. My experience is that they are really hard workers, not to say that Americans aren't, but there's really something to be said about someone who has a tougher situation and comes here to make it. I had a construction painting company up in Seattle, and we started out with all Korean employees because that's what we knew. I was family, and then we added Hispanic. The whole time we tried to hire Americans, and they would always have driver's license problems or personal problems. We just didn't have any luck with them. It wasn't like we gave up on it, but it started to be kind of a waste of time. But on the immigrant work ethic, we had a whole family from Mongolia that worked with us. They were Mongols, and they were terrific workers. And the thing I remember most was they worked with a smile on their face.
Todd: I also used to work on a farm as a kid on the weekends. I worked directly with the owner, but there were many undocumented immigrants worked there. I remember the owner of the farm seemed to have a real negative attitude towards them. I watched them work so hard in the field, they lived on the property, and they worked seasonally. He always had ways of not paying them. There were no benefits, and he would pay them l commission. So, they work long hours for little pay, and they couldn't count on earning money based on the weather or conditions. The owner didn't have a grateful heart like these guys. It was pretty apparent to me that he was just flat-out racist.
Joe: There is a lot of data to back up what you're saying. One of the things that came up over and over in these cases against large companies is that the vast majority of people who were disrespected, disenfranchised, and experienced wage theft were immigrants. Basically, if you get hired illegally, you can fully expect to have wage theft happening to you.
Joe: We have an episode coming up that heavily involves immigrant-started businesses and the stats behind those, but I'll just leave a little brief spoiler here. According to several college studies, they're more successful, and they last longer on the market. We also don't have as many migrant workers in America today as we did before because so many of them don't want to do the jobs for low wages.
Final Thoughts
If you think you never encounter wage theft, I want you to think back on every boss that's asked you to stay late to have a quick chat off the clock about your schedule or kept you late without compensation. Maybe you’re a person who takes lunch at your desk, or you deal with the office trash bin on your way out the door. Even if you're not being robbed at a big-time warehouse or store, you still might be vastly underpaid for what the company is making off of your labor, especially if you're a contractor instead of a full employee or an intern not getting paid at all.
According to Purdue University, 60K-75k is what it takes to be happy in America, and 95k a year to achieve life satisfaction. But the state of Oregon, where we're podcasting from, teachers, firefighters, and window washers either barely meet the lowest side of the happiness index, or they fall far short. In fact, in the modern age, it feels like $15 an hour has become a gravity in the economy. It has dragged jobs that used to be respectable like teachers down toward that number, while back-breaking warehouse jobs are sucked up towards $15 an hour at the cost of incredible burnout rates and injuries. For companies like Amazon and Walmart, there is no one product that makes all the company's money. They don't produce a rare metal. Instead, automation or overseas labor provides a vast array of cheap, replaceable commodities and the real goods are the employees' time. Or as Amazon puts it, its almighty rig is the real product, and that high rate keeping cheap goods in constant motion to cut down on cost requires human hands, hands at Amazon and Walmart have proven that they'll steal back from given the chance.
Half of America has become the labor force building Amazon’s pyramid or the pyramid of some CEO. However, instead of hauling stone and blocks for the bare rations, we are moving boxes around an Amazon warehouse. Or were serving tacos, or answering phones in a call center for $15 dollars an hour plus benefits, because we employees are grateful just to have a job.
Employers are mentally stuck in the labor recession of 2009. This is a trend that will take a lot of rotten crops in the field and books going unbalanced before employers finally get competitive with compensation. Until then, 42% of the US will labor in Amazon's empire. But unlike Amazon and Walmart, at least the builders of Egyptian Pyramids weren't asked to give back a sip of beer each day.