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UNFULFILLMENT CENTERS

Amazon is worried about running out of people to hire

Jeff Bezos standing in Amazon fulfillment center.
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AI-generated photos of Jeff Bezos and his fulfillment warehouses.
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Amazon, the world’s largest private employer after Walmart, is worried it will run out of available US warehouse labor by 2024, according to internal research obtained by Recode.

“If we continue business as usual, Amazon will deplete the available labor supply in the US network by 2024,” the unidentified authors of the research note wrote. Quartz has not been able to independently verify the contents of this document, reportedly published in 2021. An Amazon spokesperson downplayed its implications.

“There are many draft documents written on many subjects across the company that are used to test assumptions and look at different possible scenarios, but aren’t then escalated or used to make decisions. This was one of them. It doesn’t represent the actual situation, and we are continuing to hire well in Phoenix, the Inland Empire, and across the country,” the spokesperson, Rena Lunak, told Quartz.

Amazon’s retail business depends on a global network of hundreds of fulfillment centers to complete orders. The company is growing outside the US, but still depends on its home country for about 70% of its retail-business sales, according to its most recent quarterly financial report (pdf). To keep up with demand and maintain its dominant market position, Amazon will have to solve its warehouse staffing challenge amid a broader reshuffling in the US labor market.

Amazon needs workers

The Amazon memo made its dire forecast based not on the entire US labor force, but on a specific pool of workers that the company deems eligible or likely to work at its fulfillment centers, based on demographic and location data. In certain markets, like Phoenix, Arizona, the pressures are immediate: Amazon was projected to exhaust that potential workforce by the end of 2021. Recode reports that the company loosened enforcement of workplace policies in its Phoenix warehouses to reduce turnover.

Amazon also is seeing pushback from employees who stick around. Its workers have attempted to unionize in multiple warehouses around the US, and in April they succeeded at a warehouse in New York’s Staten Island. The company has tried to quash organizing efforts, but even without them warehouse workers are increasingly vocal about things like insufficient bathroom breaks, dangerous working conditions, and a culture of surveillance in Amazon facilities.

In one survey of 31,000 former warehouse employees, referenced in the memo, employees reported improved working conditions at Amazon competitors FedEx and Walmart. According to Recode, the survey found that employees who left Amazon to join another company “rated Amazon significantly worse on work fitting skills or interests, demands of the work, shift length, and shift schedule.”

To fix its warehouse labor problem, Amazon may need to truly address those gripes, while also attracting new talent, fending off competition, and improving automated systems at its locations.

Amazon’s post-pandemic pickle

When covid-19 hit, many retailers shut down or limited in-person shopping. Amazon thrived. The company’s profit hit $8.1 billion in the first three months of 2021, up 220% year over year. Today, Amazon has roughly 200 million people paying $139 per year for Amazon Prime, which also acclimated its customers to one-day shipping.

All that e-commerce demand led to a surge in demand for fulfillment workers: Amazon’s global workforce grew almost 75% during the pandemic. In the last quarter of 2021—peak holiday shopping season—Amazon fell short on its plans to hire 150,000-plus people, chief financial officer Brian Olsavsky said on a February earnings call. But over the course of the second half of the year, Amazon hired some 270,000 new employees.

To keep more workers coming, and improve churn levels that can top 100%, Amazon has raised minimum hourly wages to as much as $18 an hour, and even dropped marijuana testing for prospective applicants. But it’s clear that even Amazon knows it’s getting harder to find people who consider working in Amazon fulfillment fulfilling.

This article has been updated with a comment from an Amazon spokesperson.

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