Amazon.com, Inc. (AMZN), which generates some $74 billion in annual revenues, has in the last two decades grown to become the largest online retailer in the world. Naturally, growth of this kind demanded an expanded distribution network across the globe to facilitate speedy customer deliveries. And although the company focused on, and succeeded in, creating an efficient supply chain, the disruptive retailer seems to have neglected to provide working conditions at par with required standards.
Labor conditions for Amazon’s employees came under scrutiny after a recent accident at a distribution center in Carlisle, Pennsylvania resulted in the death of Jody Rhoads, a 52-year-old woman employed by the retailer. According to reports, Rhoads rammed the pallet jack she was driving into some shelves in the process of carrying out her duties at the warehouse.
The recent incident, though, is not the first instance that has raised concerns over labor conditions at Amazon. Last holiday season, Ronald Smith, a temporary worker at the company, died after he found himself trapped in material-handling equipment at Amazon’s facility in Avenel, New Jersey.
The US Department of Labor issued a press release this week saying it had imposed penalties on five parties – four temporary hiring agencies and a third-party contractor – for the accident reported on December 4 last year.
The Occupational Safety and Health Administration (OSHA), which handled Smith’s case for the federal Labor Department, fined Genco – a third-party agency running Amazon’s warehouse in Avenel– and hiring agencies $6,000 each for failing to provide acceptable work conditions. Under present regulations, staffing agencies and host employers are required to ensure working conditions are safe such that no worker faces any potential hazards.
The OSHA, which concluded its investigation on June 12, penalized the Pittsburg-based contractor as well as staffing agencies, including Abacus, Corporate Resource Services Inc., Remedy Intelligent Staffing Inc., Santa Barbara, and Staffmark. It also ordered a thorough workplace assessment within 15 business days. However, Amazon, which contracted Genco to run its warehouse, was not penalized. The federal agency said it is separately investigating the recent accident at Amazon’s Pennsylvania facility.
Amazon boasts low prices for its products by saving on physical store investments, and has expanded rapidly to keep pace with the rising needs of its customers. With stellar growth in its customer base, the company’s storage needs have increased exponentially as well, which warrants a much wider distribution network. Last year, the company spent a hefty $3.4 billion on capital expenditure, a major proportion of which went to scaling up its distribution capabilities.
In its pursuit to provide top-notch services for its customers, the company has however failed to cater to the needs of its employees. Amazon has faced criticism for paying low wages and providing inferior working conditions at its service centers.
Verdi, a labor union in Germany, reportedly led labor strikes at two of Amazon’s nine distribution centers in the country, to press for better work conditions and increased pay scales. Amazon is not the only US company under fire for its discriminatory wage policy. Last month, hundreds of McDonald’s Corporation (MCD) employees gathered outside the company’s headquarters to demand a minimum wage hike to $15 an hour.
Should Amazon be taken to task for the reportedly substandard work conditions it provides for its employees? Let us know, and our analysts will join the discussion.