Amazon Dodges Union Bullet, for Now

24/7 Wall St.

The number of people who voted was tiny. But Amazon.com Inc. (AMZN) workers in Delaware turned down the opportunity to join the International Association of Machinists and Aerospace Workers by a margin of 21 to six. The win for Amazon was much, much larger than the size of the voter pool shows.

Amazon has had similar challenges in Europe and elsewhere in the United States. Its struggle with unionization of its workforce could last for years. The reasons for Amazon's opposition to its workers being members of unions are the same as for most other companies. Unions often give workers more bargaining power for wages, benefits and job security.

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Amazon eventually will have to make the case that its people are already compensated well enough that union membership is not necessary to improve their financial situations. Since there is not uniform compensation for each tier of Amazon workers and each department of the e-commerce company's employment base, unionization of some of the people who work at the firm seems inevitable.

While the difference between Amazon and brick-and-mortar retailers appears very different, the labor problem is something each has in common. It may seem that an e-commerce company should have few workers employed at large physical facilities. However, as Amazon has grown, management has found the most efficient way to operate its infrastructure is by building large warehouse facilities. These make it easier and more economical for Amazon to serve both the United States and parts of Europe. Amazon is only an e-commerce company from the standpoint that most of its sales originate online. Below that surface, its e-commerce roots mean very little, at least as far as a large portion of its workforce is concerned.

Amazon may be able to beat back union movements for a while. But sometime soon some of its workers likely will see that they have little to lose by being part of organized labor and something to gain. In general, retailers press to pay workers at physical locations as little as possible. The e-commerce giant cannot reverse that impression, because it is true.

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