Bernie And The ‘BEZOS’ Act
Senator Bernie Sanders (I, VT) has decided he’s tired of the U.S. taxpayer subsidizing retailers who pay subsistence wages. And he’s got a plan to change it. It is called the “BEZOS Act” and while I agree with the bill in concept, I think it’s pointed in the wrong direction. Or perhaps it’s better to say it takes the easy way out.
Amazon has enjoyed more positive PR over the past decade plus than any retailer in memory. I’ve talked about this before, but as a quick reminder, think about a Sixty Minutes story on drone deliveries on the eve of Cyber-Monday, front page “stories” (vs. paid ads) showing price drops on 44 items in Whole Foods Market immediately after its take-over by Amazon, and perhaps my favorite long-term myth: Amazon’s retail operations don’t make money because they’re pouring all those profits back into R&D. On this last, I have called BS many times. You can drop me a line if you want me to go into details again.
However, it seems Amazon’s free ride is coming to an end. Despite the company temporarily reaching a valuation of $1 trillion this past week, negative publicity abounds. Quartz reports “a drumbeat of worker complaints, unionizing efforts from employees at Whole Foods, fatigue with its game-show-like-hunt for a new headquarters, persistent rumblings about anti-trust…,” etc. And we haven’t even started talking about pricing practices or Amazon Go.
But Sanders is taking what I’ll call “the easy shot.”
It’s not much of a secret that retailers don’t pay their store employees very well. In fact, back in 2014, my old friend Clare O’Connor reported in Forbes that Walmart alone was costing taxpayers $6.2 Billion dollars in public assistance. McDonalds (now branding itself as “America’s best first job”) wasn’t too far behind. Of course, things have changed a bit at Walmart and base pay has risen a bit, but I’m pretty sure we’d still find that all of us are subsidizing the operations of wage-stagnant retailers. You know who you are.
Having said that, generally, I’ve always found distribution center workers to be somewhat better paid, with a lot less turnover than store employees. There’s a reason for that. As we’ve talked about before, while retailers may bemoan the high turnover in their stores, in fact, if that turnover disappeared, and retailers had to pay annual raises to loyal in-store employees, absent finding ways to automate certain parts of store operations, the profit model of those stores would be in serious danger. Distribution centers depend on consistency in operations. So those workers tend to be better paid, even in non-union facilities. In distribution centers, turnover is a bad thing.
Unlike Scott Galloway and other voices in the media, I don’t believe Amazon has wandered into anti-trust-land. In fact, I think its growth is going to slow as pressures for it to actually have profitable retail operations rise.
So what’s my key takeaway here? I don’t think retailers have a lot of choice about “doing better” for their in-store employees. All our research tells us that those employees are critical to their long-term success. So I expect wages and benefits to rise, along with tech investments to offset those rises. With or without the “BEZOS Act.”
Do I think it’s right for the American public to subsidize retailers and fast food operations like McDonalds? No, I don’t, especially when those companies are getting tax breaks galore in the current administration.
But Bernie, seriously - just because you can turn “Bezos” into an acronym doesn’t mean that should be your focal point. It’s a cheap shot. There are other names to name. I know that anything to do with “Amazon” or “Walmart” will draw eyeballs. We’ve studied that phenomenon for eleven plus years now, but that doesn’t mean it’s the right thing to do in government.
Retail is an industry that employs millions of workers in the United States alone. Let’s elevate the conversation a bit more, to a strategic level. Amazon workers are a symptom of a problem, not the problem itself.
So, make the point, but do it the right way. If there’s merit, call out the industry as a whole, and put the focus where it should be.
Or, as a very clever company that placed a really interesting bet this week, reaping some serious benefits in the process might say, “Just Do It.”