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Amazon Might Have a $203 Million Problem on its Hands

One of the world’s most transparent companies apparently wants to muzzle its workers.

Amazon, which Transparency Global placed Tuesday among the top 100 most transparent companies for the second quarter, is reportedly mulling an automatic word monitor that would block out certain terms and phrases on a planned internal messaging app, including those that might be used to criticize the retail juggernaut’s labor practices.

According to internal company documents viewed by the Intercept, banned keywords would include many associated with labor organizing, including “slave labor,” “union,” “grievance,” “pay raise,” “harassment,” “living wage,” “representation” and “unite.” Even “restrooms” could be non-kosher, perhaps due to reports of high productivity quotas that are forcing Amazon workers to skip bathroom breaks and risk injury. Phrases such as “I hate” and “This is concerning” could likewise be verboten.

Amazon executives, the Intercept said, had suggested the app as a way to allow employees to compliment co-workers’ performance with posts called “Shout-Outs.” By using a gamified rewards system that awarded users with virtual stars and badges for activities that added “direct business value,” such a program would foster worker happiness, increase productivity and reduce employee attrition, documents stated. But company officials also warned that the messaging system would require active monitoring in order to maintain a “positive community.”

“With free text, we risk people writing Shout-Outs that generate negative sentiments among the viewers and the receivers,” a document detailing the program noted. “We want to lean towards being restrictive on the content that can be posted to prevent a negative associate experience.”

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Barbara Agrait, a spokeswoman for Amazon, told Sourcing Journal that the program had yet to be approved and could change significantly or not launch at all. “Our teams are always thinking about new ways to help employees engage with each other,” Agrait said. “If it does launch at some point down the road, there are no plans for many of the words called out to be screened. The only kinds of words that may be screened are ones that are offensive or harassing, which is intended to protect our team.”

Transparency Global, which bills its Transparency Index as the world’s first such ranking for investors, listed Amazon alongside brands and retailers such as Canada Goose, Lululemon, Steve Madden, Calvin Klein parent PVH Corp. and The North Face owner VF Corp. for exhibiting the “highest level of organizational transparency” among the thousands of globally traded public companies it analyzed. Companies that wish to be Certified Transparent can pay a $100,000 “research and licensing” fee for a personalized transparency report and use of the logo.

Last week, more than 8,000 workers at Amazon’s JFK8 fulfillment center in Staten Island, N.Y., voted by a 10 percent majority margin to establish a union, the first for the Everything Store in the United States. Many compared the historic victory to David’s defeat of Goliath, with a ragtag band of former and current workers succeeding where traditional unions had failed.

In a note to investors Monday, Morgan Stanley analysts estimated that Amazon’s 2023 operating expenses could jump by $203 million if the e-commerce giant increases the starting wage of its JFK8 employees from $18 to $29 an hour. Even so, that sum would pale in comparison to the Seattle company’s annual operating expenses, which hit nearly $445 billion in 2021, a 22.52 percent increase from the year before. Amazon’s “high-margin businesses” will also continue to allow it to drive greater profitability while still continuing to invest in last-mile delivery, fulfillment, Prime Now, Fresh and more, they said.

While analysts don’t expect a “rapid trend towards unionization,” Amazon’s costs could further increase if more warehouses take that route. (The JFK8 workers, they noted, represent 1 percent of its 750,000-plus warehouse workforce.) “Every 1 percent of Amazon’s front-line workforce that unionize[s] would lead to an incremental $150 million of annual [operating expenses],” the analysts wrote.

But “material unionization” could take years, Morgan Stanley analysts said. The Amazon Labor Union will still have to negotiate a contract with executives and the Jeff Bezos-owned company has said it could file objections against the National Labor Relations Board for “inappropriate and undue influence,” which could further slow things down.

“To be clear, the shift toward unionization is far from linear,” the analysts said, pointing out that Amazon workers in Alabama have voted against a union twice. “That said, in our view, the larger trend to monitor is whether we will see any contagion or louder unionization fervor from the rest of [Amazon’s] warehouse workforce.” If unionization efforts do start to spread rapidly, Amazon could increase the clip at which it invests and incorporates automation into its warehousing efforts, they added.