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How Does Amazon's Union Vote Affect Manufacturers?

How Does Amazon's Union Vote Affect Manufacturers?

April 1, 2022
With high wages and free education, and now maybe a union, competition for talent heats up.

The votes are in, and 55% of the workers at Amazon's warehouse located on Staten Island,  New York City, want to form a union, according to a statement released on April 1 by the National Labor Relations Board. 

In reaction to the vote, Amazon issued a statement. "We’re disappointed with the outcome of the election in Staten Island because we believe having a direct relationship with the company is best for our employees. We’re evaluating our options, including filing objections based on the inappropriate and undue influence by the NLRB that we and others (including the National Retail Federation and U.S. Chamber of Commerce) witnessed in this election."

While it's a historic event in Amazon's history, it also will have a far-reaching impact on manufacturers. At first, it might not seem obvious to draw the line from Amazon to manufacturing, but as any manufacturers will tell you, and many have told me, in the competition for talent, Amazon looms large. 

In an article on Bloomberg, in September of 2021, author Conor Sen said, "We're used to America losing manufacturing jobs because companies can find cheaper workers abroad, but perversely, we might begin losing more of those jobs because factory owners can't offer what service employers can."

He notes that while some manufacturing positions, like that of an autoworker,  pay $30 an hour, those in the food industry pay closer to $20 and that's not the starting pay. 

Sen said that manufacturing as a whole has lagged behind other industries over the past decade with leisure and hospitality wages increasing by 46% while factory wages rose 27% since 2011.

In many areas of the country, for workers who have a choice between both the higher wages of Amazon, in many cases, and the additional benefits such as paying full college tuition for front-line employees, Amazon wins. And that is happening without a union.  

Manufacturers who are already raising wages to attract more workers might need to keep up with this increased wage pressure. And despite efforts in the sector to keep talent, it hasn't been working. A report out on March 28 from the Department of Labor says the quit rate in the manufacturing sector rose by 7% in February. That's compared to a 2.2% quit rate overall. 

In addition to the wage pressure, will more manufacturing workers take up the cause as well? Currently, union membership has remained flat. In 2019 the number was 8.6% of those employed in the private sector and in 2020 the number was 8.5%. 

In addition to pay, manufacturers, large and small, that I have spoken with say that when younger people stack up jobs at Amazon against those in manufacturing, often Amazon prevails. Part of it is a perception problem of the industry, which actually has improved over the past few years according to a study released this week by Deloitte and the Manufacturing Institute.

Another issue is that of advancement. While manufacturers are getting better at laying out specific career paths when recruiting employees, Amazon has made a large splash by letting employees that can move up through education offerings. To young workers continuing education is an important factor when choosing a job, or even a career.  

There still is a long way to go before this union becomes a reality, but it's a signal that workers are willing to organize to get the pay and benefits they desire. And the influence of a company of this stature cannot be overlooked by the manufacturing sector. Even if workers don't try to unionize further, it's the choice available to them, in a drought of talent, that manufacturers will have to match, or at least address.

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