business news in context, analysis with attitude

Published on: April 4, 2022

I got my second Covid-19 vaccine booster shot over the weekend, and with it, a business lesson in the power of local retailing.

Published on: April 4, 2022

Amazon workers at a Staten Island, New York, distribution facility voted Friday -  2,654 to 2,131 opposed, with 67 ballots being challenged - to unionize, the first time that the e-commerce behemoth had to deal with organized labor at one of its warehouses in the US.

It was a vote that generated an enormous amount of coverage, with experts cautioning that nothing will change overnight, especially because Amazon is likely to look for ways to delay having to negotiate a contract with the newly minted Amazon Labor Union.

Here is a sampling of the coverage and analysis:

• From CNBC:

"The Amazon Labor Union didn’t even exist until last year. Now, the grassroots organization that relied on a crowdfunding campaign to fund its organizing is responsible for negotiating a collective bargaining agreement on behalf of roughly 6,000 employees at Amazon’s largest fulfillment center in New York.

"The ALU is led by Christian Smalls, a former JFK8 manager, who was fired by Amazon in 2020 after the company claimed he violated social distancing rules.

"Rather than getting to dictate pay, benefits and working conditions as it does across its massive network of offices, data centers and warehouses, Amazon will now have to negotiate those key details with union leadership when it comes to JFK8.

"Contract talks between the ALU and Amazon could start soon. But don’t bet on it … According to an analysis published in June by Bloomberg Law, it takes on average 409 days for CBAs to be signed between employers and their newly unionized workers."

The story goes on:

"If the goal is delay, Amazon has unlimited resources to hire the top lawyers and consultants. The company has already expressed its disappointment with the outcome and said it’s considering its options, including 'filing objections based on the inappropriate and undue influence' of the National Labor Relations Board. Amazon didn’t specify instances of improper meddling, but said the National Retail Federation and Chamber of Commerce witnessed the same behavior.

"Either Amazon or the union can raise objections over conduct during the election. Both parties have left that door open. Any objection must be filed to the NLRB regional office by April 8. The agency will investigate the claims and, if there’s sufficient evidence, will schedule a hearing where each side can present its case.

"Challenges don’t have to end there. If they’re unhappy with the regional director’s ruling, either side can escalate its complaint to the NLRB board in Washington."

CNBC writes that "precedent is Amazon’s principal concern. JFK8 is one of 100-plus Amazon fulfillment centers in the U.S., and there are many truckers and delivery drivers who aren’t part of those facilities. Workers in Bessemer, Alabama, just wrapped up a second vote on whether to unionize, and while the effort appears to have failed again, the count was significantly closer than the first contest last year.

"Amazon has no interest in seeing the movement gain further momentum."

•  From The Information:

"More than 4,000 workers participated in the voting process, meaning turnout was likely somewhere between 50% and 70% of the total employees at JFK8. (Amazon and representatives from the Amazon Labor Union have produced different employee totals for the facility.) Though some of those ballots have been challenged by Amazon, the workers voted to unionize by a margin of more than 400 votes, which means that it is likely that decision will stand."

•  The New York Times has a terrific story about Christian Smalls and Derrick Palmer, the JFK8 employees who "set their sights on unionizing after (Smalls) was forced out" from his job.  "Along with a growing band of colleagues — and no affiliation with a national labor organization — the two men spent the past 11 months going up against Amazon, whose 1.1 million workers in the United States make it the country’s second-largest private employer.

"At the bus stop outside the warehouse, a site on Staten Island known as JFK8, they built bonfires to warm colleagues waiting before dawn to go home. They made TikTok videos to reach workers across the city. Mr. Palmer brought homemade baked ziti to the site; others toted empanadas and West African rice dishes to appeal to immigrant workers. They set up signs saying 'Free Weed and Food'."

Here's a remarkable statistic:  The unionization effort spent $120,000, largely raised through GoFundMe.  The Times writes that "Amazon spent more than $4.3 million just on anti-union consultants nationwide last year, according to federal filings."

Here's some color from the Times piece:

"In the first dark days of the pandemic, as an Amazon worker named Christian Smalls planned a small, panicked walkout over safety conditions at the retailer’s only fulfillment center in New York City, the company quietly mobilized.

"Amazon formed a reaction team involving 10 departments, including its Global Intelligence Program, a security group staffed by many military veterans. The company named an 'incident commander' and relied on a 'Protest Response Playbook' and 'Labor Activity Playbook' to ward off 'business disruptions,' according to newly released court documents.

"In the end, there were more executives — including 11 vice presidents — who were alerted about the protest than workers who attended it. Amazon’s chief counsel, describing Mr. Smalls as 'not smart, or articulate,' in an email mistakenly sent to more than 1,000 people, recommended making him 'the face' of efforts to organize workers. The company fired Mr. Smalls, saying he had violated quarantine rules by attending the walkout.

"In dismissing and smearing him, the company relied on the hardball tactics that had driven its dominance of the market. But on Friday, he won the first successful unionization effort at any Amazon warehouse in the United States, one of the most significant labor victories in a generation. The company’s response to his tiny initial protest may haunt it for years to come."

You can read the entire Times piece here.

•  From the Los Angeles Times:

"The unorthodox but stunningly successful unionization campaign by Amazon employees in New York was propelled by a burst of new energy by many worker groups, which have emerged from the coronavirus pandemic with new tactics and edge.

"Amazon fought to beat back the unionization effort, and the victory against one of the country’s largest private employers could provide a new playbook for workers that are trying to reverse a historic trend away from union rights. And while Amazon confronts this new reality, other companies are dealing with restless workers, including railroad engineers, coal miners, baristas, nurses and teachers.

"Some of these union drives aren’t being driven by Washington-led progressive groups. Instead, they are being launched by upstart, worker-led campaigns that effectively ambush large companies still relying on old-model, anti-union strategies."

The LA Times goes on:

"Workers are wielding new leverage as the economy emerges from pandemic conditions with fewer workers, making employers more desperate for talent. Nearly 8 million workers left the labor force since the start of the pandemic, and almost 4 million workers have quit their jobs each of the last six months, according to federal workforce statistics, in a phenomenon known as the Great Resignation. It’s led to a boost in wages as employers compete for staff; wages have risen 5.6 percent in the past year, although 7.9 percent inflation has eaten away at much of those gains.

"Although they have more power, workers are still feeling pinched by higher prices on everyday expenses such as housing, fuel and child care, leading them to press for stronger wages, working conditions and benefits, increasingly through unions, or informal workplace collectives that resemble organized labor groups."

•  Reuters reports that "the union that Amazon.com Inc. workers recently voted to represent them has demanded the company start bargaining in early May and cease any changes to employment terms at their warehouse in the interim, according to a letter the group issued Saturday on Twitter.

"The Amazon Labor Union also demanded the retailer respect workers' rights to union representation during disciplinary meetings, the letter said. Amazon did not immediately comment."

•  From the Seattle Times, a story about collateral impact:

"As the world watched thousands of Amazon warehouse workers in New York form on Friday the company’s first U.S. union, a handful of employees of a Seattle thrift store celebrated their own victory. 

"Sixteen workers at Crossroads Trading Co. in search of higher wages, more hours and better benefits voted unanimously Wednesday to form a union at the chain’s store in Seattle’s Capitol Hill neighborhood. Organizers at Crossroads said they built off the momentum and union support in the neighborhood from another successful union drive at a Starbucks store just a few blocks away.

"Now, a group of security workers who have contracts with Amazon, Microsoft and Sound Transit are taking a similar tack, hoping to use the swell of enthusiasm created by Amazon workers in Staten Island to bring more workers in Seattle into the union fold."

It is worth pointing out that as all this union activity transpires, CNet reports that "a congressional committee is investigating Amazon over concerns that the tech giant may be endangering employees by making them work in unsafe conditions during tornadoes and other extreme weather events, says a letter sent this week to company CEO Andy Jassy by the committee.

"The inquiry will examine the deaths of six workers last year who were killed when a tornado struck an Amazon warehouse near St. Louis, says the letter from the House Committee on Oversight and Reform. As the tornado approached, the letter says, supervisors at the facility reportedly threatened workers and contractors that if they left, they'd be fired or face other consequences.

"The investigation will also take a broader view of Amazon's policies."

And CNN reports, Amazon's new CEO, Andy Jassy, "received a pay package valued at $212.7 million in 2021, marking a substantial compensation increase for the executive during his first year running the tech giant, according to a company filing with the US Securities and Exchange Commission on Friday.

"Nearly all of Jassy's compensation comes in the form of stock options that will vest over 10 years, according to the filing. Jassy's 2021 compensation marks a sixfold increase to his pay in 2020, when he was head of Amazon's profit-generating cloud-computing arm AWS."

Published on: April 4, 2022

The Wall Street Journal writes about today is the day that Howard Schultz retakes the CEO job at Starbucks, the third time he has served in the position for the company that he built from its Seattle origins to global ubiquity.

However, the story says, "the modern-day chain Mr. Schultz helped found 35 years ago is evolving to serve consumers who want their lattes to-go, not sipped in a Starbucks cafe for hours. Business remains brisk, the company said, and sales hit a record last year. But ingredients and wages are growing costlier, and some investors said they are rattled by the company’s margins. A segment of workers said they are looking to unionize, including those working in cafes in Starbucks’s hometown of Seattle."

The Journal offers a list of challenges with which Schultz will have to grapple:

•  Third Place No More:  "Starbucks was built on offering a 'third place' between the home and office. Many customers are no longer interested in that.

"There are 15,500 Starbucks cafes in the U.S.—but fewer customers are sipping their Frappuccinos and lattes in one. Around 70% of all U.S. Starbucks orders are now to-go, with hundreds of traditional U.S. stores reformatted in recent years as take-away-oriented locations, according to the company.

"Covid-19 and widespread staffing shortages have made getting drinks and food out the door harder, the company has said. Many cafes earlier this year closed, reduced hours or restricted service with too few workers to fully staff them, and full in-store seating hasn’t returned in all stores, Starbucks has said."

•  The Job As Juggling Act:  "A Starbucks barista’s job is different now, and many of them are unhappy about it.

"Working at a Starbucks nowadays can be a juggling act, workers have said, managing orders coming in through drive-through windows, mobile phones and over the countertop—a challenge for employees who are scored on their ability to connect with customers … Those frustrations have helped drive the most serious unionization push in Starbucks’s history. Demands for better pay, improved staffing and a bigger voice in company affairs have prompted around 170 of 9,000 U.S. corporate stores to file for elections to be represented by the Starbucks Workers United union. Eight stores had voted to unionize as of March, with the National Labor Relations Board still determining the results in two challenged elections.

"Starbucks has told employees that their problems are better addressed by workers and management collaborating directly. The chain is boosting pay: A wage rise now under way, along with two previously announced increases, were slated to constitute an additional $1 billion over the past two years in spending on employees, the company said."

•  Investor Frustration:  "Starbucks’s shares fell 16% over the past 12 months, pressured by what analysts have said are concerns over rising costs as well as the impact of pandemic-driven restrictions challenging operations in China.

"Starbucks executives in February scaled back the company’s projected earnings and store-level profitability for its current fiscal year, citing unexpected cost increases and higher spending on workers. Inflation should ease by the end of the year, the company has said.

"Other restaurant companies face similar challenges, but their shares generally haven’t been hit as much as Starbucks’s. A Standard & Poor’s index of restaurant stocks was up 1% during the same period."

•  Competition:  "The company also faces more competition for consumers’ coffee habits, from artisanal coffee shops as well as expanding chains such as Dunkin’ and Dutch Bros Inc., some of which are also catering to demand for coffee on the go with drive-throughs and mobile orders.

"Bringing customers back to Starbucks’s urban stores remains a work in progress, the company said in February. Companies are reopening downtown offices, a chance for Starbucks to reclaim coffee sales among workers who brewed their own coffee at home for much of the past two years."

The Journal also points out that there are challenges abroad, as geopolitical tensions - especially those with China - make it hard for Starbucks to expand outside the US to the degree it needs to in order to satisfy investors looking for certain levels of growth.

In breaking news this morning, the Journal writes that "Starbucks Corp. said it is suspending billions of dollars in share repurchases, a move that interim Chief Executive Officer Howard Schultz said would free up cash to invest in cafes and employees.

"Pausing the buyback program, which Starbucks initiated last fall, represents the best way for the company to invest in its next phase of growth, Mr. Schultz told employees in a letter coinciding with his return Monday as the coffee giant’s CEO."

And, reflecting the continuing challenges that Starbucks faces, CNBC reports that "Starbucks baristas at its New York City Reserve Roastery voted 46-36 in favor of forming a union on Friday, dealing a blow to incoming interim CEO Howard Schultz that may be more personal.

"The Reserve Roastery is the ninth company-owned Starbucks to unionize. On Tuesday, the National Labor Relations Board counted votes for a Knoxville cafe, but a challenged ballot left the results of that effort uncertain. The union was winning by a single vote. Last week, a cafe in Starbucks’ hometown of Seattle and a second location in Mesa, Arizona, also voted to unionize.

"To date, only one location has held an election and voted against unionizing under Workers United, an affiliate of the Service Employees International Union. However, the union pulled a petition for a union election for Roastery manufacturing workers, who were slated to cast their votes on Thursday."

Published on: April 4, 2022

The Los Angeles Times has a story about how a digital activist is using TikTok to dissuade people from accepting jobs at Ralphs as temporary "scab" workers in the event of a strike by the company's unionized employees.

According to the story, Sean Wiggs used TikTok to post a viral video that directed viewers to a computer script that "he said would, with just a few clicks, flood a Ralphs hiring portal with fake job apps. The script has facilitated more than 25,000 such submissions, he told the Times."

The story says that "the job page in question no longer seems active; a QR code directing applicants there leads to a gray page and the message: 'This job cannot be viewed at this time. It has either been deleted or is no longer available.' Wiggs said in his TikTok video that the site lacked basic protections against automated spam attacks such as email verification or anti-bot Captchas."

John Votava, a representative for Ralphs, said in a prepared statement that ""it's disappointing that these failed attempts were aimed at disrupting [a community’s] access to fresh food and essential items.  To be clear, we are focused on coming to [an] agreement with [the United Food and Commercial Workers union] that would eliminate the need for temporary workers."

The Times notes that "tens of thousands of union members voted to authorize a strike if their wage demands aren’t met during impending contract negotiations. Alongside Ralphs, a subsidiary of Kroger, other chains that could be subject to the strike include Albertsons, Vons and Pavilions."

And, in related news, the Daily Bulletin in Los Angeles County reports that "after months of failed negotiations, union representatives for Stater Bros. workers have reached a tentative labor agreement with the supermarket chain.

"Details of the contract were not revealed, but United Food and Commercial Workers Local 770 announced the update Friday, April 1 in a post on its website.

"'Your hard work and dedication to standing together has resulted in a tentative agreement for a new contract with Stater Bros.,'  the union wrote. 'Now it’s up to you to make the ultimate decision whether to accept the terms of this historic agreement. Please stand by for information on voting and details of the offer'."

Published on: April 4, 2022

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  In the United States, there now have been 81,832,612 total cases of the Covid-19 coronavirus, resulting in 1,008,198 deaths and 65,676,514 reported recoveries.

Globally, there have been 491,925,687 total cases, with 6,176,759 resultant fatalities and 426,926,349 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 77 percent of the total US population has received at least one dose of vaccine … 65.6 percent are fully vaccinated … and 45 percent have received a vaccine booster dose.

•  The Associated Press reports that "COVID-19 hospitalization numbers have plunged to their lowest levels since the early days of the pandemic, offering a much needed break to health care workers and patients alike following the omicron surge.

The number of patients hospitalized with the coronavirus has fallen more than 90% in more than two months, and some hospitals are going days without a single COVID-19 patient in the ICU for the first time since early 2020.

"The freed up beds are expected to help U.S. hospitals retain exhausted staff, treat non-COVID-19 patients more quickly and cut down on inflated costs. More family members can visit loved ones. And doctors hope to see a correction to the slide in pediatric visits, yearly checkups and cancer screenings."

Published on: April 4, 2022

•  Reuters reports that "Carrefour, Europe's largest food retailer, is joining forces with venture capital firm Daphni to invest in digital retail startups as part of a global plan to step up e-commerce expansion over the next four years, it said on Monday.

"Their new venture capital fund, Dastore, will initially invest 80 million euros ($88 million) by taking minority stakes in high-potential emerging startups in France and globally to allow Carrefour "to stay close to innovations and emerging technologies", the statement said."

•  In Australia, the Sydney Morning Herald reports that Amazon's local Prime Video business is considering a bid for the Olympics broadcast rights there "in a move that could pit it in a regulatory fight with the nation’s free-to-air networks."

Tyler Bern, who runs Amazon's Prime Video business in Australia said, "We look at every opportunity that comes to market.  We do have an appetite for additional sporting rights, but what will be our next sports property after swimming? We don’t know yet. It just depends on what the opportunity is, where it falls within our slate and our programming calendar and obviously, economics and how competitive it is."

The story notes that Amazon "signed its first sports broadcast deal in Australia last February, securing the rights to stream swimming trials for the 2021 Tokyo Olympics and 2022 Birmingham Commonwealth Games. The two-year exclusive agreement added to Amazon’s international sports streaming slate, which includes the global NFL rights, ATP Tennis, US Open and the English Premier League in Britain."

Bern also said that "there’s room for everybody to participate in sports rights.  What you’re seeing now is this explosion in customer choice."

Published on: April 4, 2022

•  From CNN, a story about how Ikea "said Thursday it is making its Buy Back & Resell program permanent across its 37 US stores on April 1 after piloting the offer last summer.

"The company said the service applies only to personally-used Ikea furniture that is fully assembled and fully functional. Ikea won't accept items that have been modified, or altered in any way … The program doesn't extend to non-Ikea-branded products or beds, sofas, mattresses, home furnishing accessories, leather products, lighting fixtures or chests of drawers. Any recalled Ikea products also are excluded.

"Ikea said it will inspect each item for its condition, age and functionality at participating stores, and if it passes muster customers will get a store credit. The company said all 'gently used' items approved for resale will be available in a designated 'as is' section in stores at discounted prices."

Published on: April 4, 2022

Reacting to our Friday story about how the latest reports were that "workers at an Amazon warehouse facility in New York City appear to have voted in unionization, while in Bessemer, Alabama, warehouse workers have rejected unionization.  In New York, the story says, 57 percent of the vote was pro-union.  In Alabama, 53 percent of workers rejected the union."

One MNB reader responded:

I don’t find this too unusual.  NY has long been a pro union state.  Especially in the city.  Alabama, I don’t know about, but it seems that country folk tend to be more relying on themselves and less on someone or thing telling them what to do.  Especially when it is taking money out of their pockets.  I know I am.

Forgive me … but this stuff about "country folk" is the biggest load of crap I've ever heard, especially because of the implications it has about "city folk."

I think there is plenty of evidence out there that "country folk" can be as pliable and submissive as anyone else when it comes to following people who tell them what they want to hear.

Same goes for city folk, by the way … who can be equally annoyed as country folk by institutions taking money out of their pockets, especially for what they see as inappropriate reasons.

And, by the way, city folk can be incredibly self-reliant.  In entirely different ways, of course, but self-reliance and rugged individualism are hardly characteristics exclusive to "country folk."

As it applies to unionization … I think it could be argued that the Amazon workers in New York actually stood up for their individual interests to a greater degree than the Alabama workers did.  Especially under the circumstances, in which they actually created their own union rather than joining an existing entity.

I think it remains to be seen whether this all plays out to the workers' advantage.  But to characterize it as pliant city folk vs. self-reliant country folk strikes me as ludicrous.

On the same subject, from MNB reader Steven Ritchey:

In my experience most corporations will keep wages as low as possible, until something or someone forces the issue.  A lack of employees due to low wages, or at least a lack of employees that costs them business and therefore profit may be one of those circumstances.  Then we have the behemoth Amazon who is fighting unionization, it seems this is very short sighted when the wise course of action would be to work with employees on their grievances and find a middle ground, because once a union get's it's foot in the door, they will have problems.  I'm not anti union, in many cases they work to keep employers honest.  It just seems that in the long run it would be to their advantage to address employees concerns, and actually address them, not just put some window dressing on something and call it done.

Agreed.

On Friday, we took note of an interactive Oxfam map posted by Axios, which looked at the US states with the highest - and lowest - percentage of workers making under $15 an hour.  Here's the map:

I commented:

I'm not arguing for a national minimum wage of $15 here … but I do think this map could serve as an indicator of where worker discontent could be highest.

On the other hand, maybe not … since New York, where just 25 percent of workers are making under $15 an hour, is where the union movement at Amazon seems to be getting some traction, while Alabama, where 40 percent of workers are making under $15 an hour, is where the union movement is having trouble.

One MNB reader responded:

KC, wondering how the map of “percentage of workers earning less than $15/Hour” would look as compared to each state’s cost of living index?  Let’s face it, the cost of living is generally lower in the south where % of workers earning less than $15 is highest.  Not arguing for or against but I do think it’s relevant.

And, from another MNB reader:

KC – Looking at a map of wage rates without overlaying the corresponding cost of living isn’t just bad journalism (no context), it’s sloppy thinking.   It’s something I’d expect from Washington DC.

It is a fair point, but I think I've made the case here on MNB numerous times that there are different scenarios in different places, and that a federal minimum wage of $15 might not be needed everywhere.  

I wrote on Friday that I spent Thursday doing something yesterday that I haven't done for something like 25 years - I spent the day alone with a 6-month old.  The baby in question is our great-niece, and the parents had a one-day babysitting emergency.  Mrs. Content Guy originally was going to do it, but then she accepted a substitute teaching gig;  I volunteered to take her place.  How hard could it be?

It wasn't hard … but it was exhausting.

MNB reader Mark Johnson responded:

I had to laugh at your exhaustion trying to keep up with a 6-month old.  Being a Grandpa is the best thing ever.  But check-in with me when you’re chasing after a four year-old and an 18-month old at the same time!!  Sheesh!!

And MNB reader Jackie Lembke wrote:

Yes, babies are exhausting. I work in our church nursery on Sunday mornings and I am exhausted by the time I am done. It reminds me why I am glad I had my babies when I was young. I couldn't do a full time gig at this point. Short term should I be blessed with grandchildren but not 24/7 for the next 18 - 21 years.

Babies are fun, but it is nice to hand back to mom and/or dad at the end of service.

Finally, thanks to all of you who liked Friday's April Fool's story about calls - from what i referred to as an "uninformed mob" spending way too much time on social media - for Russian dressing to be banned in the US.

Published on: April 4, 2022

•  In the NCAA women's basketball final last night, the University of South Carolina defeated the University of Connecticut 64-49.

Over the weekend, in the men's Final Four, North Carolina defeated Duke 81-77 and will go to tonight's championship game to play Kansas, which defeated Villanova 81-65.

•  And, in Major League Baseball, teams are preparing for Thursday's Opening Day … with the New York Mets two best pitchers being sidelined during the past week because of injuries.  Jacob deGrom is on the disabled list (and may not pitch in a game until June), and Max Scherzer is day-to-day with a hamstring discomfort.  The Mets have not yet named an Opening Day pitcher.