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Will Amazon Strike Strike Down Share Prices?

By Bill PoulosStock MarketsDec 17, 2018 03:38PM ET
www.investing.com/analysis/will-amazon-strike-strike-down-share-prices-200368848
Will Amazon Strike Strike Down Share Prices?
By Bill Poulos   |  Dec 17, 2018 03:38PM ET
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Amazon (NASDAQ:AMZN) is under scrutiny for worker conditions. Will there be an Amazon strike and will it strike down share prices?

First, let’s get some context.

Bloomberg reported earlier this week that a committee of employees had been formed to represent Amazon’s newest fulfillment center on Staten Island earlier this week. The employees have made their intent clear, they plan to unionize. They do this in the hopes that Amazon will grant concessions regarding numerous issues including, but not limited to: safety concerns, hourly quotas, shift length, and pay.

Rashad Long is one of many excited about the idea of unionizing. He is an Amazon worker who drives four hour to get to work with a pay rate of $18.60. He says, "They talk to you like you’re nothing -- all they care about is their numbers,” he said. “They talk to you like you’re a robot."

Recently, an Amazon training video was leaked which detailed methods of “union busting” behavior, such as having managers notify a superior should they see activities involving “unusual interest in policies, benefits, employee lists, or other company information [by workers].”

Senators Bernie Sanders and Elizabeth Warren escalated their efforts regarding workers rights after the video went live, and subsequently viral.

"Workers' rights do not stop at the minimum wage, and raising the pay of your lowest-paid workers, while important, does not give you a free pass to engage in potentially illegal anti-union behavior," they said in an open letter to Jeff Bezos.

Those Tax Breaks Are Going To Cost You, Bezos

Jeff Bezos is a sly businessman. There’s a reason he’s so successful. He knew he could negotiate tax breaks from whatever state he decided to open locations in because of the work he would be bringing to the region. All those new jobs come with a price to taxpayers.

However, in the long run, he may lose more from strikes due to work conditions than he makes from those initial tax breaks.

The leader of RWDSU (Retail, Wholesale, and Department Store Union) Stuart Applebaum believes that Amazon workers have the power to make Bezos’ life a nightmare. Enough so to force at least some of the concessions they are fighting for.

“There’s never been greater leverage -- if taxpayers are giving Amazon $3 billion, then taxpayers have the right to demand that Amazon stop being a union-busting company… It’s incumbent upon the governor and the mayor to make sure that nothing happens to these workers who are standing up for their rights. If Amazon continues its union-busting activities in New York, they should call off the deal.”

Three Reasons Why Bezos Doesn’t Need to Worry

Applebaum believes he holds a good amount of Leverage over Bezos and, subsequently, over Amazon. Unfortunately that is simply not the case. While Amazon will pay for those tax breaks both in delays and bad press as well as financially when those tax breaks come to an end, it is Bezos who holds all the cards.

Amazon has access to a never-ending supply of interested workers looking to get $15 an hour. While unionizing may seem like a good idea, Amazon is more likely to lay everyone off and hire an entirely new workforce than to concede to worker demands.

Unionizing only works if it is costly for a company to replace its workforce, but that is not the case when it comes to Amazon’s warehouse jobs.

Amazon is not doing too bad in the PR war. With their wage hike, weekly hour max, and overtime rates as high as $34, many workers have been left feeling like their concerns have been validated and answered by the greater establishment, taking the wind out of a potential union’s sails.

This is only one of MANY Amazon warehouses. When we look at the big picture, the potential unionization of one warehouse isn’t going to affect the company as a whole. It would take a company-wide walkout to effect things in a major way, but with all the moves Amazon is making, we will not likely see that kind of worker dissatisfaction.

All of that is good news for Bezos and investors.

Will Amazon Strike Strike Down Share Prices?
 

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Will Amazon Strike Strike Down Share Prices?

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