E-Commerce Has Fueled The Nation, But Its Growth Could Kick-Start A New Labor Movement
The last time the United States was struck by a pandemic was just over a century ago, when an outbreak of influenza in 1918 and 1919 killed 675,000 Americans.
As the nation battled the flu virus, seeds of social unrest that were growing in the years leading up to it began to bear fruit. Labor groups enraged over unsafe working conditions and low wages had their biggest breakthrough in modern American history and forever changed what it meant to be a worker in the industrialized United States.
In 1919 alone, 65,000 workers sat out of work in the Seattle General Strike, 400,000 United Coal Miners workers went on strike, which eventually led to higher wages and safer conditions, and President Woodrow Wilson imposed martial law and sent U.S. Army troops to Gary, Indiana, after strikers clashed with police during the Great Steel Strike of 1919, when 365,000 steelworkers nationwide took to the picket lines.
One in five U.S. workers walked off their jobs and onto picket lines that year. The strikes had a domino effect that lasted for much of the 20th century. During the decades that followed, labor unions that are still active today, such as the AFL-CIO, were formed.
With the economic and social stage similarly set in 2020, the fallout of the coronavirus could follow the same path, labor experts and historians say. Rather than in coal mines or steel mills, the front lines of a labor resurgence this time around could be e-commerce distribution centers.
As Americans have hunkered down to mitigate the spread of the coronavirus, online shopping has kept the nation running. Since vast shelter-in-place orders began to take effect, online retail sales have skyrocketed. By July, year-over-year online sales increased 55%, according to Adobe Analytics, and they were up 42% in August. In all, the pandemic has prompted U.S. consumers to spend an additional $107B in online sales, according to Adobe.
The sudden and dramatic shift to online shopping has spurred an unprecedented demand for new warehouse space, and with it, the workers needed to fulfill those operations.
In the first half of 2020, e-commerce companies leased more than 56M SF of warehouse space across the U.S., according to JLL, compared to the 9M SF they leased in all of 2019.
Industry giants like Amazon and Walmart are growing to meet the booming demand, and they have announced plans to hire hundreds of thousands of people to do it. The essential workers who operate their warehouses every day have become the linchpin of the economy overnight — showing up to work in dense facilities despite a pandemic that has killed more than 200,000 Americans.
“Essential workers who were traditionally undervalued and paid poorly ... are now sort of these heroes,” said Beth Gutelius, the research director of the University of Illinois at Chicago’s Center for Urban Economic Development. “But I think that they are really afraid to go to work.”
Dozens of warehouse workers have filed formal labor complaints and lawsuits against their employers, alleging they have asked them to work while sick, have hidden coronavirus cases at facilities and not adequately provided them with protective equipment or enforced social distancing.
“The employer is allowing sick employees to continue working,” one Amazon worker at a Charlotte, North Carolina, facility said in a July 14 complaint to the federal Occupational Safety and Health Administration that Bisnow reviewed. “An employee was vomiting inside a trash can and continued working. The employer is not informing employees on procedures to take while having COVID-19 symptoms.”
Amazon declined multiple requests for interviews for this story but provided responses through a spokesperson detailing the safety enforcement protocols at its fulfillment centers.
On top of worker complaints about warehouse conditions, there has been an uptick in labor mobilization as workers of the 21st century demand safety and wages that match a 21st-century economy, not unlike the way they did a hundred years earlier.
“I feel like there's a greater awareness among workers. It's not just about money, it's about safe labor practices,” said Alan Scheller-Wolf, professor of operations management at Carnegie Mellon University's Tepper School of Business. “I think this is indeed making it more likely we'll see more labor organization.”
But not all of the circumstances of 1919 are in play a hundred years later. For one, the federal worker protections that were enacted in the decades after the mass strikes — and the level of union participation — have been whittled away. That has accelerated under President Donald Trump.
“This has not been a good four years for workers,” National Employment Law Program Worker Power Program Director Anastasia Christman said. “We’ve seen terrible leakage of career civil servants in these agencies who take with them decades of experience and knowledge of these programs to protect the American people, and they’re just disappearing.”
The flood of complaints and fledgling organizing efforts among warehouse workers — especially those working in e-commerce, where productivity is king and packages need to get to Americans’ homes in two days or less — might add up to nothing if the pandemic continues to drag on and e-commerce companies are the only ones hiring unskilled labor.
“If there's 10% unemployment and they say we need people to work in warehouses, who are you going to get? You're going to get the person who worked for JCPenney,” Emory University Goizueta Business School Associate Professor of Finance Tom Smith said.
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The social and economic backdrop before the onset of the coronavirus pandemic bears a striking resemblance to the social and economic landscape of the 1919 influenza, said Christman, who has a Ph.D. from UCLA in American history and specializes in labor research.
“It’s almost uncanny the number of overlaps between the 2020s and the 1920s,” she said.
The global upheaval prompted by both contagions was preceded by a period of growing wealth inequality in the U.S: The top 0.1% of the wealthiest households held 25% of the nation’s overall wealth in the years leading up to 1918, one of the peaks of wealth inequality in the 20th century, according to a study by Emmanuel Saez, an economics professor and director of the Center for Equitable Growth at University of California, Berkeley.
Similarly, wealth inequality has been on the rise in the U.S. in the decades leading up to today. The top 1% controlled 29% of the nation’s wealth in 2016, according to the Survey of Consumer Finance, and the top 0.01% of the population owned about 11% of the country’s wealth in 2014, Saez wrote. Since April, Amazon CEO Jeff Bezos’ net worth has grown by $62B, according to Forbes.
Both pandemics crystallized the gap. In 1919, coal and steel workers powering the increasingly industrialized country were often making low wages without benefits like healthcare and paid sick leave. As they were working longer hours in more dangerous conditions, the wealthy grew significantly wealthier.
In this era, the divide is between those who can afford to stay home and those who can’t. The coronavirus pandemic has exposed the class divide in public health, Christman said.
“People who can afford decent healthcare, who can afford to work from home, who can afford to buy groceries and have them delivered to them, are living in one sort of reality during this pandemic, which is challenging to be sure but not necessarily life-threatening,” she said.
“But then we have low-income people, people of color, immigrant workers who are compelled to continue going to work, who live in close quarters, who don’t have access to a healthcare system and they are disproportionately dying of this pandemic, which again is a very similar situation to what we saw in the early 20th century.”
During both pandemics, working-class people have had a lower chance of surviving the diseases.
Black and Hispanic people in the U.S. are nearly three times more likely to contract COVID-19 and nearly five times more likely to be hospitalized with the disease, according to the Centers for Disease Control and Prevention. Black people are more likely to die of the COVID-19 across the country than any other racial demographic.
At the end of 2019, Amazon said 45% of its workforce identified as Black/African American and Hispanic/Latinx, but they make up only 16.4% of its management.
Public perception has shifted in favor of warehouse workers during this pandemic, said Scheller-Wolf, who focuses on the interplay between inventory, logistics and its workforce. That has given more collective power to the voices of warehouse workers.
“These workers who are often viewed as low-paid labor jobs are now suddenly being labeled essential, which elevates them in stature,” he said. “I think that creates a more general favorable societal view.”
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The need for more warehouses wasn’t caused by the pandemic, but it has been accelerated. By 2025, demand for industrial real estate could reach an additional 1B SF, according to a July report from JLL.
E-commerce warehouses require many more workers than traditional bulk distribution centers — in some cases, three times as many, according to a 2017 JLL report.
The average space-per-worker at e-commerce warehouses is between 700 and 1K SF, JLL found. To staff all of the space e-commerce companies have leased so far in 2020, they would need to hire between 55,000 and 78,000 new workers.
Overall, industrial developers completed more than 78M SF of construction in the second quarter, according to JLL, and the active construction pipeline was 280.6M SF.
Amazon said last month that it intends to increase its distribution space by 50% in 2020 alone, after 15% growth last year. From April to June, Amazon spent $9B on capital projects, it said in its second-quarter filing with the Securities and Exchange Commission. Ultimately, it hopes to open 1,500 last-mile delivery centers across the country.
While Amazon is the largest driver of new distribution center space, it is not alone. Walmart announced plans in July to open a $220M, 1,000-plus job distribution center in Ridgeville, South Carolina, this month. It also announced last month that it is building a 2.2M SF distribution center in Hancock County, Indiana, and a 550K SF distribution center near Toronto.
Walmart reported its e-commerce sales nearly doubled in Q2.
To power these new centers, e-commerce companies have launched a hiring spree. Amazon increased its workforce by 34% year-over-year in Q2, hiring 175,000 new workers in April and May alone, putting its overall headcount over 1 million. The company is in the process of making 125,000 of these employees full time, Amazon Chief Financial Officer Brian Olsavsky said on its Q2 earnings call.
Walmart said it hired 200,000 new workers between March 18 and April 30.
Despite the presence of significant community spread in many of the country’s industrial hotbeds, like Atlanta, South Florida and Texas, Amazon and other e-commerce companies are pressing forward with expansion plans because their customers tend to be in dense, urban markets where the coronavirus spreads quickest.
“The need for [warehouses] near population centers has only increased,” said Michelle Comerford, a national site selection consultant for the logistics industry with Biggins Lacy Shapiro & Co. “And yet you’re walking that fine line where outbreaks are.”
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“We are scared.”
Those were the final words submitted to OSHA on March 27 in a complaint by an anonymous Amazon fulfillment center employee. The worker wrote and said two colleagues had tested positive for COVID-19, but that Amazon required all the other employees to continue working at the facility “with no restrictions, no personal protective equipment.”
From Feb. 1 through Sept. 20, OSHA received 171 complaints over coronavirus working conditions from warehousing and distribution center workers, an agency spokesperson told Bisnow.
Most of the complaints accused employers of not doing enough to protect workers from the virus, and those concerns aren’t confined to those who filed federal complaints.
In a recent survey of logistics workers by workforce management software company Quinyx, half said their employer was not doing enough to keep them safe, and 61% considered leaving their jobs because of those concerns.
Only 6% of logistics workers said they were granted paid sick time and 29% thought they would be fired if they took off more than one consecutive sick day. Even as the coronavirus raged on, 14% of logistics workers said they had come to work sick, the survey found.
“There have been 10 people sent home yesterday, and more have followed today for vomiting, shortness of breath, fever,” a KB Specialty Foods employee in Greensburg, Indiana, told OSHA on March 28. “It is rapidly spreading in our plant, and we can only distance so much when we all work in the same rooms.”
Calls to KB Specialty Foods for comment were not returned. The food products supplier is a division of Kroger Co.
In some cases, employees alleged that managers asked sick workers to continue to come to the warehouse.
“Supervisor told an ill employee not to reveal the fact that they were sick and instructed us not to communicate with the sick employee. Supervisor also instructed the ill employee not to respond to us if asking about her condition,” a Meyer Logistics employee in Jasper, Indiana, told OSHA on May 19. “There have been other instances asking sick employees to come in anyway, as well as asking employees with COVID-positive symptoms or diagnosis to continue to report to work.”
Other companies that have been the subject of worker complaints, according to OSHA Freedom of Information Act records posted online, include Walmart, kitchen retailer Williams Sonoma, Nabisco, Target, Staples, Dollar General, Lowe’s and The Home Depot. But Amazon drew the most federal workplace complaints, according to OSHA’s database.
At a warehouse in Memphis, an Amazon worker said the company wasn’t properly cleaning and it had made social distancing impossible at the facility.
“Thirty new cases of COVID and employees are still required to work in close contact with one another and cannot maintain six feet apart,” the Amazon worker said to OSHA.
An Amazon spokesperson said all workers receive a text message when someone at the facility tests positive, and it uses its cameras that monitor workers to engage in contact tracing. Its policy includes mandatory cleaning of shared personal protective equipment after each use and maintains that it has an open-door policy for employees to voice safety concerns to supervisors.
In Whitestown, Indiana, a worker said Amazon wasn’t providing safety equipment, wasn’t disclosing when workers were infected and wasn’t providing or requiring masks.
“They need to shut the facility down,” the worker wrote to OSHA on May 29. “It needs to be cleaned out.”
OSHA has come under fire during the pandemic for a lack of investigation and enforcement on COVID-related complaints in the meat-packing industry, in particular, which was hit hard by the coronavirus. The Washington Post recently found that of the nearly 10,000 coronavirus-related complaints filed with OSHA since March, two meatpacking plants — run by Smithfield and JBS — were the only facilities to result in citations and fines, which totaled $29K.
“They checked out and turned a blind eye to this for months,” United Food and Commercial Workers International Union Vice President Mark Lauritsen told the Post.
Of the 171 complaints OSHA has received from warehouse workers during the pandemic, it has only opened eight inspections, according to an OSHA spokesperson. Three cases were closed with no violations found. Five remain open. OSHA didn’t identify which companies’ warehouses it inspected.
For the 163 other complaints, 144 were closed without any inspection or investigation, and the other 19 remain open. OSHA hasn’t penalized any warehousing or storage company for violating worker protection laws since the pandemic began.
OSHA closes cases for a number of reasons, including unprovable allegations and unverifiable complaints. It also closes cases in states where laws grant them the right to investigate cases instead of the federal government and those containing allegations do not fall under the purview of the Occupational Safety and Health Act of 1970.
As workers were filing confidential complaints to the federal work safety watchdog, more than a dozen outbreaks spread at warehouses across the country, many at Amazon facilities.
More than 100 workers were believed to have been infected with the virus at Amazon’s 600K SF warehouse in Hazle Township, Pennsylvania, and workers claim that social distancing protocol was not being enforced and hand sanitizer was not readily available, The New York Times reported.
Workers at six Southern California Amazon warehouses got sick in early April, The Los Angeles Times reported. Workers at Amazon warehouses in Kentucky, Michigan, Connecticut, Florida, California, Indiana and Washington also contracted the virus, according to a Reuters roundup of outbreaks.
When asked about the complaints workers have filed through OSHA, Amazon didn’t comment on specifics but said it has always adhered to federal and local guidelines and recommendations of health experts.
Amazon's spokesperson said its policy includes mandatory cleaning of shared personal protective equipment after each use, and the company maintains that it has an open-door policy for employees to voice safety concerns to supervisors.
The company said it has hired more than 5,700 janitorial workers, provided more than 100 million masks and 34 million gloves, added 2,298 handwashing stations and 48 million ounces of hand sanitizer, and deployed more than 31,000 thermometers and more than 1,115 thermal cameras.
“We are really seeing a real tension between what workers are saying they need in order to feel safe coming to work and what employers are giving, and sometimes it’s a tension between what they say they are giving and what it ends up looking like to the worker,” said Gutelius, a senior research specialist at UI-Chicago’s Great Cities Institute.
Workers for other e-commerce companies were also getting sick at warehouses around the country, feeling unable to take a day off from work. On April 3, a Walmart distribution center in Bethlehem, Pennsylvania, temporarily shut down after nine of its 1,800 workers tested positive for the coronavirus. The workers felt they had no choice but to report to work before and after the shutdown.
“It’s your paycheck or your health,” one Walmart Distribution Center worker in Bethlehem told Lehigh Valley Live in April.
The workers at the facility told local reporters they were “packed in like sardines.” Despite the growing case numbers, workers said they couldn’t wash their hands properly and that the building was not being cleaned thoroughly. Walmart didn’t respond to a request for comment.
“Working in transportation/warehousing, it's not very telework-friendly,” Bureau of Labor Statistics Research Economist Michael Dalton said. “So if you're going to do this job, you're going to have to show up to the warehouse.”
In addition, the setup of logistics factories and the demand for high productivity often make it impossible to comply with local mandates in place to mitigate the spread of the virus, warehouse industry experts told Bisnow.
“In a loud, busy warehouse, there’s a tendency to get close to your coworkers so you can hear them,” Garrett Lazenby, a partner at risk management and insurance brokerage firm Sterling Seacrest Partners, told Bisnow in an email. “That’ll be exacerbated if people are wearing masks, so maintaining the recommended 6 feet distance might be harder.”
Dotcom Distribution, a third-party logistics distributor in Edison, New Jersey, that ships online orders for FAO Schwarz, SiriusXM, Bluemercury and cosmetics company Milk Makeup, reduced its staff from 400 to 250 at the height of the pandemic, CEO Maria Haggerty said.
To mollify employee concerns, Dotcom made masks and gloves mandatory, instituted temperature checks and forced social distancing. That has slowed the facility’s ability to ship products, but Haggerty said her clients have been understanding.
Despite the precautions, Haggerty said the center has had three employees come down with the coronavirus. Each time, it required her to close the facility for a shift to allow cleaning crews in hazmat suits to come in and disinfect the work areas.
“It’s adding a huge cost burden to us,” she said.
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Like the waves of strikes across the country amid the influenza pandemic of 1919, workers across the country have been walking off the job to protest their occupational conditions.
Workers went on strike in Staten Island, New York, at Amazon’s JFK8 warehouse in March, demanding extended sick leave, more transparency around positive cases in the warehouse and better safety procedures.
One of the strike’s leaders, Chris Smalls, was fired the next day. Amazon said at the time it was because — among other things — he did not follow social distancing protocol, but Smalls and the organizations that helped lead the walkout disputed the company's public reasoning.
In April, a group of workers at Amazon’s DCH1 warehouse in Chicago, called DCH1 Amazonians United, successfully demanded Amazon extend sick leave to part-time workers after at least two employees tested positive. Later that month, workers in Spokane, Washington, organized a strike to protest Amazon’s sick leave policy.
On May 1, workers from Amazon, Instacart, FedEx, Target and Whole Foods staged a walkout, protesting their employers' alleged neglect of proper safety protocol in facilities.
There had already been a trend toward unionization within the private sector in recent years. But, there are still significant barriers to unionization for third-party logistics warehouse workers, especially for those who work at the largest e-commerce companies.
After there had been momentum toward unionization at Amazon warehouses in 2019, the company sought out corporate employees with experience handling unions, CNBC reported. That same month, Gizmodo reported on a video the company sent to its Whole Foods Team Leaders on how to quell worker organizing tactics.
“We do not believe unions are in the best interest of our customers, our shareholders, or most importantly, our associates. Our business model is built upon speed, innovation, and customer obsession — things that are generally not associated with unions,” Amazon said in the leaked video, according to Gizmodo. “When we lose sight of those critical focus areas we jeopardize everyone’s job security: yours, mine, and the associates.’”
While Amazon’s million-strong workforce remains unionless, advocate groups and nonprofits across the country have come together to organize strikes, walkouts and demand safer conditions and better pay.
As of June, the average weekly earnings of a transportation and warehousing employee was $959.36, a more than $7 increase from the same month in 2019, according to the BLS. Those weekly earnings increased again in May, to $968.51. Amazon, Walmart and Target increased hourly pay and extended leave benefits to their warehouse employees.
Workers have pushed Amazon to account publicly for how it is keeping workers safe. In March and April, the company suspended its attendance point system, provided workers with unlimited unpaid time off and increased worker pay. Target and Walmart also boosted their base worker pay in the spring.
But the companies rolled those measures back in May, despite the fact that the infection rate was worsening in some areas of the country.
An Amazon spokesperson said the company is “revisiting policies to ensure the safety of our employees,” when it comes to paid and unpaid leave. It says anyone who tests positive with COVID-19 can receive two weeks paid or unpaid time off.
Amazon’s declarations that it tripled its cleaning staff, increased cleaning protocol and implemented a system for notifying employees if another worker in the building tested positive for COVID-19 were all concessions workers advocated for in their strikes and walkouts.
Matt Bramblett, the director of delivery solutions for warehouse staffing service company Aerotek, said as companies’ need for more workers increases, their willingness to cater to workers’ demands does, too.
“Employees are just interested to know that there is a protocol in place,” he said. “When there's more jobs than people, which is what I feel that it's going back to, it's definitely an employees’ market. And how they're treated is a significant part of what decisions they make.”
Third-party logistics companies have historically cut costs at the labor line, Gutelius said. All of Amazon’s moves have been unilateral changes to policy, not negotiated as part of a collective bargaining agreement. As its earnings have risen, so have its costs, which it could cut in the future by rolling back the measures.
“I do know that the trends have been to try and constrain the cost of labor, whether that has been directly through wages, whether it’s reducing other types of liability like workers’ compensation or benefits packages or things like that,” she said.
Gutelius said historically, warehouse companies did not invest in workers because they relied on turnover instead.
“The thing about the warehousing industry is that for the most part, there is a lot of turnover and employers have been willing to deal with the cost of turnover at the expense of the workers in order to avoid having to invest in any kind of retention strategies,” she said.
Smith, who teaches finance and labor economics at Emory University’s Goizueta Business School, said with rising unemployment, e-commerce companies won’t likely have much difficulty finding additional workers. Warehouse work is not considered skilled labor, and skilled laborers have more bargaining power.
“I think these people are important to keep the economy going. But it’s not work that requires a particular degree,” Smith said. “But those employers can find other people who can work, especially during an economic recession when you have 10% unemployment.”
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Experts Bisnow spoke to over the past two months are divided over whether the momentum for labor action in these warehouses is sustainable. While some argue that this is a turning point for workers, others say that it is already fizzling out.
“To some extent, it's already dissipated. Most of these companies have stopped giving extra pay,” City University of New York School of Labor and Urban Studies professor Joshua Freeman said at a Department of State briefing in June. “And they did it without a lot of public attention and much protest. The sense of a moral claim of these protestors has somewhat diminished.”
But others think that these walkouts and strikes, like some of the ones that occurred during 1919, are just a starting point for a 21st-century labor movement.
While the Seattle General Strike tapered from its thousands within a week, and both the Great Steel Strike and the United Coal Miners strike were considered, by many standards, failures, 1919 was a symbolic point in United States labor history, historians say. It marked a new era that would lead to continued demands to increase labor protections in the 1920s, the New Deal in the 1930s and the establishment of cross-industry unions in the 1940s and 1950s.
Christman, who is involved in groups advocating for Amazon worker protections, said the movement of e-commerce industrial labor organizing has been active for years, and until the conditions that are prompting them to organize — including climate change — are dealt with, labor organizing will continue.
“They’ve been trying to raise awareness to these issues for a long time, and have gotten some attention and some response from lawmakers, but it was always sort of howling into the wind as we all became seduced by the technological magic of Amazon and other big warehouse operators,” she said.
Sens. Elizabeth Warren, Bernie Sanders and Kamala Harris all signed a letter in May demanding that Amazon be investigated for firing Smalls and others who spoke out about conditions in the fulfillment centers. Warren and U.S. Rep. Ro Khanna proposed legislation that contained an essential worker bill of rights in April.
Future conditions for blue-collar workers partly rests on November’s election. The campaigns of President Donald Trump and former Vice President Joe Biden have signaled different approaches to how the candidates would handle worker protections.
“[The Trump campaign] would continue to cut regulations, they would continue to try and make government as small as possible, and [the Biden] campaign has made pretty concrete, policy-based recommendations about how to strengthen these protections and how to modernize them and how to bring them up to speed with the economy that we have,” Christman said.
Even if Biden were to win and the Democrats were to take control of the Senate, Christman said strengthening protections would be difficult.
“They are going to have to both mop up the damage of four years of neglect for labor standards and workers rights to organize, and they’ve got to hit the ground running in trying to create new protections to address these changes in the economy,” she said.
With climate scientists predicting more pandemics and other natural disasters that put the lives of workers more at risk in workplaces like warehouses, Christman said policymakers don’t have much time to rewrite the company’s labor laws. But, for the first time in decades, they might have the will.
“The COVID crisis snapped us all to attention about the warehouse [workers],” she said. “I think what has finally changed is the fact that we’re finally listening to them.”
Contact Jarred Schenke at jarred@bisnow.com
