A leaked internal memo revealed that Amazon is potentially running out of prospective workers for its U.S. warehouses by the year 2024. The memo included internal research from 2021 forecasting a looming labour crisis for the tech giant that would impact some areas quicker than others.
The memo projected that Amazon would run out of labor supply in Phoenix, Arizona by the end of 2021 and in California’s Inland Empire towards the end of 2022. It calculated the available pool of workers by considering factors such as income levels and proximity to current or planned Amazon facilities.
The report urged the e-commerce giant to quickly address the future labor gap by raising wages to retain its current workforce and hire more workers. It also suggested investing more on automation in the warehouses.
An Amazon spokesperson quickly dispelled the leaked memo as an inaccurate assessment of its hiring situation. “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,” wrote Rena Lunak, Amazon’s director of global operations and field communications.
Amazon has already invested heavily in automation by acquiring Kiva Systems in 2012. However, Amazon’s warehouse robots are incapable of handling advanced fulfillment tasks that can only be done by a human employee.
Amazon’s turnover rate is about 150 per cent a year – twice the rate of the retail and logistics industries at large, according to a 2021 New York Times investigation.
Furthermore, Recode notes that Amazon’s attrition rate is even worse in Phoenix and the Inland Empire. It is also in stiff competition with big-box stores like Walmart and Target, which are now providing competitive wages to workers with warehouse experience.