Amazon made waves when it announced late last week that it planned to spend $US700 ($994) million to retrain one-third of its U.S. workforce, 100,000 employees, as part of its â€˜Upskilling 2025â€™ initiative. The sizeable commitment, which the Wall Street Journal notes is â€œamong the biggest corporate retraining initiativesâ€ yet announced, will fund pilot programs, classes, and tuition fees for employees.
â€œThe American workforce is changing,â€ Amazonâ€™s announcement proclaims, and â€œthereâ€™s a greater need for technical skills in the workplace than ever before.â€ Translation: We will be automating your job soon, and if you want to keep a decent paying gig here, study up.
As is often the case when the online retail giant makes a sweeping, headline-grabbing announcement, weâ€™re left with at least as many questions as answers. The first among them being: Is upskilling — or retraining, or reskilling — that many employees even plausible? If it were, what would it look like in practice?
Itâ€™s a pretty important question to answer, because â€˜retrain the workersâ€™ is probably the most common policy idea we hear from politicians and business leaders around the world whenever theyâ€™re confronted with questions about how we might cope with an increasingly automated economy. Every conference panel discussion, political talking point, and sobering news report about automated job loss seems to feature pablum about the urgent need to educate workers to prepare them for the modernising world.
And itâ€™s safe to say upskilling is already being embraced among corporations: AT&T, JPMorgan Chase, Accenture, and, now, Amazon have all made splashy investments in programs in the U.S. that purport to future-proof its workers.
According to a survey by McKinsey, 66 per cent of executives see â€œaddressing potential skills gaps related to automation/digitization within their workforces as at least a top-ten priority.â€
â€œI think itâ€™s extraordinarily positive that Amazon is doing this, and I think there are things they can do to make sure it succeeds,â€ says Jane Oates, a former Obama administration official who helped modernise some of its federal retraining programs and the president of WorkingNation, a nonprofit founded by venture capitalist Art Bilger to spread the word of the coming employment crisis.
Yet the U.S.â€™s largest private sector labour union, United Food and Commercial Workers, sees Amazonâ€™s retraining initiative as little more than a way for the company to gloss over the fact that it plans to eliminate its workersâ€™ jobs. â€œJeff Bezosâ€™s vision is clear — he wants to automate every good job out of existence, regardless of whether itâ€™s at Whole Foods, Amazon warehouses, or competing retail and grocery stores,â€ UFCW President Marc Perrone said in a statement.
The Union Network International, which has been assisting Amazon workers around the world in their efforts to organise, points out the initiative was rolled out without the input or participation of workers.
â€œAmazonâ€™s history of disregarding the safety and rights of employees raises red flags about it unilaterally restructuring operations without the input from workers and their unions,â€ UNI General Secretary Christy Hoffman wrote me in a statement. â€œUntil Amazon negotiates with workers, many of the same problems — unfair scheduling, anti-union harassment, and extremely pressurised working conditions — will remain, even if the nature of the work has shifted.â€
As Perrone, puts it, â€œAmazon is throwing money at a problem it created and somehow thinks that it deserves applause. …Amazon has become an economic arsonist that suddenly decided to put out the fires it is starting.â€
But the question remains: Could Amazon put out this fire through mass retraining, even if it really wanted to? Can it feasibly re-educate a full third of its sprawling American workforce?
In the U.S., the history of corporate job retraining has been spotty to say the least. The WSJ recently ran a story headlined â€˜Why Companies Are Failing at Reskilling,â€™ which detailed the myriad shortcomings in the arena, including the fact that many employees were unable to meaningfully access the programs.
Federal job-retraining efforts have historically produced dismal results, too, sometimes fantastically so. One of the most comprehensive studies of federal programs designed to retrain dislocated workers, published by the Department of Labour in 2008, concluded that â€œthe gains from participation are, at best, very modest, even three to four years after entry. Overall, it appears possible that ultimate gains from participation are small or nonexistent.â€
That may be why Andrew Yang, a U.S. Democratic presidential candidate campaigning behind a promise to address the looming threat of mass job automation, has called out retraining programs. â€œThe efficacy level of federally funded retraining programs for manufacturing workers was approximately 0-15%,â€ he tweeted in March (without citing a source). â€œAlmost half of the workers left the workforce. If retraining is the answer we would need to be much better at it.â€
There were some bright spots in the Obama administrationâ€™s efforts to upgrade the long-ailing federal job retraining apparatus, and U.S. initiatives have long suffered from a relative lack of funding and resources (out of 29 developed nations, the U.S. is second to last in dollars spent).
Yet the highest profile examples are those like Janesville, Wisconsin, where GM closed a major manufacturing plant and served as the subject of Amy Goldsteinâ€™s haunting book about the impacts of mass job loss — and showed federal retraining to be helpless to revive the town that depended on those jobs.
Older workers are reluctant to reenter the classroom environment. Employees are wary of investing time, energy, and resources on retraining if there isnâ€™t a guarantee that a job will be waiting for them when theyâ€™re done.
Employers usually make retraining voluntary, after-hours, and donâ€™t pay employees to undertake it. (Amazon, for its part, says it will cover 95 per cent of tuition, and offers employees â€œpaid study timeâ€ but doesnâ€™t elaborate. The company did not respond to my request for comment.) And then employees face the challenges of entering a brand new fieldâ€”and of being inexperienced in it.
â€œThe challenge is youâ€™re trying to take workers who were reasonably well paid, far into their career and train them for a new type of job,â€ says Carolyn J. Heinrich, the lead investigator in the aforementioned DOL study and a professor of public policy at Vanderbilt University. â€œWorkers come out and earn entry level wages. In no way do they earn what they were making in the past.â€ Mobility is an issue, too. â€œSome of the jobs they trained for will be in other states — if youâ€™re paying off a mortgage on a house, or kids in high school, youâ€™re not going to be able to move very easily.â€
All of these are going to be problematic for any broader program that tries to address automation with retraining, but some are less likely to afflict companies like Amazon, where lower-skilled workers are not making such comfortable wages in the first place.
â€œWhatâ€™s different here is youâ€™ve got a company retraining its own workers for jobs it knows itâ€™s going to be able to provide,â€ Heinrich says. She says that this entire initiative is probably borne out of a cost-benefit analysis that concluded the best way to fill currently empty and future roles in an extremely tight labour market was to invest in retraining its own workforce.
Amazon is currently trying to fill 20,000 roles. Retraining current employees whoâ€™ve proven amenable to Amazon for those and future jobs, at a cost of around $10,000 per employee, could be cheaper than recruiting.
â€œYou have to look at the employersâ€™ perspective — whatâ€™s going to make them profitable and successful? Itâ€™s much easier for Amazon to have data on who they think is most likely to be successful in training, instead of having to go out and find these people. It should be a cost savings for them to do that within their own workforce.â€
Remember, Amazon is huge, and it keeps reams of data on its employees and their productivity. They may have reason to believe that a particularly efficient fulfillment center associate would make for an effective, say, sales or IT worker.
â€œWhen we looked at the problems with the worker training programs it was problems with soft skills — showing up on time, poor behaviour in the workplace,â€ Heinrich says. â€œAmazon can be selective with who they chooseâ€”how much and what kind of mix of skills a candidateâ€™s going to offer — does someone have the basic facility they need to learn coding? Now, if they canâ€™t learn coding theyâ€™ll be less likely to provide the training to get them to that point. Maybe theyâ€™ll have that data already.â€
And thatâ€™s one problem Heinrich sees with this kind of retraining — itâ€™s inevitably going to skew towards better educated, savvier workers.
â€œYou almost see, these days, two tiers of workers in manufacturing,â€ she says, â€œin the sense that employers have some of the lowest wage workers not on full time, or theyâ€™re hiring from temp agencies to meet demands at different times — and those are workers doing the lowest wage jobs, and are the least ready even in their soft skills to take on this kind of training. Thereâ€™s always going to be someone left behind, right?â€
Jane Oates of WorkingNation says that the first and perhaps most important step is to ensure that the training is part of the workweek. â€œPeople are busy, making this as easy to get to as possible will determine its success.â€ Amazon should also ensure they cover the tuition in the programs outright, she says. â€œA lot of the failure is due to the tuition assistance programs — a lot of the reason they fail is you have to pay upfront for the college yourself and get reimbursed,â€ she said. â€œAnd then if you donâ€™t get a grade youâ€™re out that money.â€
Oates is encouraged that Amazon is covering the vast majority of tuition and that theyâ€™re funding training for programs that fall outside the purview of the companyâ€™s own remit, like nursing. â€œHopefully theyâ€™re going to have discussions with their employees about whatâ€™s interesting,â€ she says. â€œHopefully theyâ€™ll do some preliminary work so people can self-assess or take a small course to see — is this something I would enjoy doing before they invest in a large amount of time in it?â€
â€œThe best of these programs guarantee people an interview,â€ she adds.
Again, as of now, Amazonâ€™s announcement is short on details, so whether the program will include any of those prescriptions remains to be seen. Just how seriously the company ends up taking this initiative at all is an open question, too — Amazon committed to running its operations on 100 per cent clean energy, after all, and stalled out at the halfway mark without offering up any explanation.
But this isnâ€™t ultimately about the workers. As Heinrich noted, itâ€™s a calculated investment in business operations. Amazon has said it will take about 10 years to automate its warehouses. Other facilities and departments will be following suit, and Amazon is providing a pathway for its more ambitious (and indefatigable) employees to continue to help the company turn a profit in less traditional roles.
Like its competitors, Amazon is presumably seeking to downsize its labour force and cut operating costs in the long run, and, whether through attrition or otherwise, job numbers are going to winnow. Amazon doesnâ€™t need 300,000 IT workers.
Thatâ€™s why the UCFW is up in arms about Amazonâ€™s program — it sees the writing on the wall. Itâ€™s why its president, Marc Perrone, ended his statement by saying, â€œIt is time to realise that Amazonâ€™s ruthless business model will lead to massive job losses that could cripple our entire economy.â€
Retraining may move a handful of capable warehouse employees into technical work, but by and large the net number of good jobs the company supports is still going to decline, probably steeply. It already has. Warehouse worker hiring plateaued, despite record sales, for the first time last year.
Combined with the dubious history of our jobs retraining programs, this all generally paints a grim portrait for the future of a large swath of current Amazon workersâ€”and for the feasibility of Americaâ€™s favourite automation solution. (This, by the way, does not mean we avoid investing in such programs; better, smarter retraining programs that actually support workers while theyâ€™re studying and give them more agency generally, as those run in places like Germany, France and Sweden, are more effective.)
Retraining will likely indeed work for some — but probably not many, and probably not those who need the jobs the most. Which is precisely why the only reasonably satisfactory path forward involves giving workers a seat at the table.
â€œWhen Amazon commits to larger scale upskilling,â€ Heinrich says, â€œwho is going to be chosen for those kinds of jobs? If they want their employees to advance, how much are they going to invest in them?â€ Anyone familiar with Amazonâ€™s record in dealing with labour issues at its facilities should already know the answer to that. â€œIf you have a worker whoâ€™s not as well prepared, is that worker going to be passed by? Thatâ€™s whatâ€™s happened in the past.â€