Amazon’s Plague Year
By: Brian Merchant
Tags: Amazon, Business, Jeff Bezos, Technology

Amazon’s Plague Year

As small businesses closed and layoffs hit, Amazon expanded its power — despite a string of crises and worker uprisings

Photo: Rolf Vennenbernd/picture alliance via Getty Images

When the Covid crisis went into full swing in March, two trend lines emerged almost immediately: Small businesses were forced to close down, and Amazon started hiring. At the time, I worried that as the pandemic raged we would see an accelerated consolidation of power among the tech companies that rely on part-time gig labor and e-commerce to gain advantage while everyone else hemorrhaged jobs. That decent jobs at vital local institutions would be traded for precarious jobs at a handful of online markets and platforms. I worried that 2020 would be the year of Amazonification.

With independent businesses shuttering, unemployment would skyrocket — and the conditions would be perfect for companies like Amazon (and Uber, InstaCart, DoorDash, etc.) that hire non-benefited workers to seize the opportunity to both press their advantage against traditional retail and entrench these precarious jobs as the norm. Covid looked like an incredible accelerator of trends set in motion long ago; trends that would push Amazon and gig companies to new heights of dominance at the expense of independent businesses. I was right to worry.

It’s hard to overstate the economic devastation the virus — and near-total failure of our government to provide adequate support for workers and small businesses — has brought. Millions of people have been thrown out of work: Even after a modest recovery, the unemployment rate is 3% higher than it was in February. According to Yelp data, nearly 100,000 small businesses had permanently closed by September. Small businesses, independent restaurants, “main street” shops — these were the hardest hit by the pandemic, and 60% of all closures that happened this year have been permanent. Major retailers like J.Crew and Dean and Deluca filed for bankruptcy. As a result, one study estimates that as many as 40 million people cannot afford to pay rent, and are on the brink of eviction right now; a crisis of almost unthinkable scale looms as the CDC’s eviction moratorium expires on January 1.

Any “stumble” that allows a business to make $6.3 billion of profit in a quarter is hardly a stumble

Amazon, meanwhile, began making its fifth major hiring push of the year in late autumn, to help meet still-surging demand for the products it sells amid a year of record-smashing profits. Those who lost their bartending, bookselling, and small business-running jobs may well be the ones applying for Amazon’s part-time and unbenefitted Flex delivery driver or seasonal warehouse associate jobs.

Despite what have been dubbed as “stumbles” by the Washington Post — some distribution snafus and quibbles like failing to adequately protect its workers from a deadly virus — Amazon crashed through 2020 like the juggernaut that it is, deflecting crises like a mounting death toll of warehouse workers who’d caught Covid, warehouse worker strikes for better protections, and cracking down on dissent by firing of employees who spoke up for them. (The National Labor Relations Board determined that one warehouse worker, who was fired after organizing a protest against working conditions, was fired illegally.) At least 10 of its workers died — Amazon won’t release official fatality figures, but it did admit in October that 20,000 had contracted the virus.

Meanwhile, it faced wide-ranging criticism for the way it gave precedence in its supply chain to essential goods — critics said it favored its own products over struggling third party vendors — a separate Wall Street Journal investigation into its apparent practice of copying the products of third-party vendors selling on Amazon and undercutting them on price, and a highly publicized Congressional hearing.

None of it mattered. Amazon’s profits soared in spite of it all. As VentureBeat noted, Amazon’s “$5.2 billion in quarterly profit in Q2 was the largest ever in its 26-year history. It broke that record again in Q3 with $6.3 billion in quarterly profit, up 200% year-over-year.” According to Bezos, the company “created over 400,000 jobs this year alone.” In Q3, Amazon had over 1.12 million employees, a number up 50% year-over-year.

Those “stumbles,” which were said to help competitors like Walmart and Target get a foothold in the ecommerce space, were clearly overstated — it’s unlikely Amazon alone could seriously ever hope to deliver goods to the hundreds of millions of Americans who were ordering them, many mostly from home for the first time, so of course the other oligopoly retailers could be expected to pick up the slack. Any “stumble” that allows a business to make $6.3 billion of profit in a quarter is hardly a stumble.

Meanwhile, Jeff Bezos’s net worth eclipsed $200 billion, making him the first person in history to amass such wealth. It is wealth that exceeds the GDP of most of the nations on Earth. Of the 180-plus recognized nations in the world, Bezos is richer than all but 52 of them; his personal fortune exceeds the GDP of Hungary, for example. The magnificent rise in Bezos’s wealth is due to Amazon’s stock rising 86% over the course of the pandemic, with analysts encouraging investors to continue buying more up through even today.

As Amazonification spreads, workers will be more vulnerable than ever

The owner of the tech oligopoly is wealthier than many European nations, while 40 million Americans are clinging to a CDC policy that restricts evictions to stay sheltered during the pandemic. That’s the world Amazonification delivers. That, not the rise of Zoom work, not Facebook misinformation or Section 230, is the technology story of the year.

And it dovetails with another major development that was somewhat papered over in the election madness of November. I’m talking about the passage of Proposition 22 in California, which shields companies like Uber and Lyft — and Amazon — from having to classify their workers as employees. It also prevents these workers from organizing. That means workers will most likely never see benefits, healthcare, or worker’s comp, even if they clock 80 hours a week. Uber and Lyft are already trying to export the model to other states, and to turn it into a national standard. As Amazonification spreads, workers will be more vulnerable than ever.

And it’s a bad time to be a vulnerable worker at a company like Amazon. Conditions remain dangerous, and tensions are high at fulfillment centers as the virus continues its resurgence across the nation. Workers staged global protests on Black Friday to call for better protections and conditions, and some even took to protesting outside Jeff Bezos’ New York home.

Amazon says it invested billions in protective equipment for workers, and is lobbying the CDC to deliver the vaccine to its warehouse workers “at the earliest available time,” so it can keep them working as efficiently as possible. But new waves of Covid infections are hitting fulfillment centers across the globe. And far from being more open about its efforts to protect workers, Amazon is fighting efforts to make its actual policies and pandemic response more transparent — California has been forced to sue the tech giant to try to get it to cooperate with the state’s investigation into working conditions at fulfillment centers. Inside company walls, workers without health insurance are weathering the deadliest phase of the pandemic.

While workers are weighing staying home and risking eviction and going to work and possibly contracting the virus, the wealthiest beneficiaries of Amazonification are watching their riches grow, safe at home. America’s 614 billionaires increased their wealth by $937 billion during the pandemic — nearly $1 trillion dollars. If you peruse how much just the top 30 made during the crisis, you’ll note that many of them are capitalizing on the same trend; they use technologies that make work in adverse conditions possible, or exploit precarious labor, or undergird the systems that do all of the above. (As one meme that circulated widely pointed out, if just the top four billionaires in the U.S. pooled enough income to pay every American $3,000 — far more than the U.S. stimulus currently on the table — they would still be richer than when they started the year.)

They are the CEOs of Walmart and Zoom, of Oracle and Nike, of Microsoft and Amazon. Much has been made about the astronomical profits that they have enjoyed in this crisis year, but we have not fully reckoned with the expense: Imploding local institutions, the hollowing out of community culture, and the degradation of work. The word for the rising dominion of this pale, precarious world is Amazonification, the semi-automated delivery mechanism of extreme inequality in the worst year on Earth.