Among Amazon's disappointing earnings reported yesterday, the world's biggest online retailer reported something that has so far flown under the rader yet has a significant impact, if not so much for shareholders as the broader economy: Amazon reported that its global workforce rose by more than 31,000 in the second quarter to 382,400, its highest employment number yet in what increasingly looks like an exponential chart.
Furthermore, in an attempt to underscore its dedication to jobs, earlier on Wednesday Amazon revealed plans to host a giant job fair next week to hire for its 50,000 current U.S. warehouse openings, part of its pledge to hire 130,000 U.S. workers through mid-2018.
It was Amazon's employee chart that we thought of first, when on Friday afternoon, Minneapolis Fed's dovish president Neel Kashkari, once again lamented that there is little inflation and that, more apropos, there is even less wage growth:
- FED'S KASHKARI SAYS THE U.S. JOB MARKET CONTINUES TO BE STRONG, BUT 'CURIOUS' THAT WAGES GROWTH NOT STRONG
Actually, it's not at all that curious Neel.
For the answer, look at the chart above (or read our 2012 article on America's transition to a part-time worker society). While on the surface, this aggressive hiring spree is fantastic for the economy and would suggest a surge in demand for labor, the reality of what is taking place below the surface is very different.
So what is happening? For the answer we go the St. Louis Post-Dispatch which reports the details of Amazon's first Missouri distribution facility, in the Hazelwood Logistics Center.
Hazelwood officials announced recently that Amazon would lease space in two warehouses there. The city said Amazon would occupy all 348,480 square feet in the park’s Building 3, at 462 Hazelwood Logistics Center Drive. That building will be used as a sorting center and Amazon will take an additional 100,000 square feet in Building 4 at 441 Hazelwood Logistics Center Drive for use as a delivery station.
But while the details of the sorting facility and the delivery station are trivial, what isn't are Amazon's hiring intentions. Here are the details:
Amazon is hiring nine full-time employees to operate the sorting center in Building 3 and will have 25 full-time employees working at the delivery station in Building 4. The company plans to hire 350 part-time associates for both locations, according to the announcement from Hazelwood. An Amazon spokeswoman said the company plans to have the facilities open later this year and that hiring has already begun.
To summarize: as part of its latest expansion, Amazon will hire 9 full time employees in one location, 25 full time employees at a second location, or a total of 34 new full-timers, and will fill the rest with 350 part-timers, a ratio of 10 new part-time workers for every new full-time hire. We hope we don't need to go into the compensation details of why part-time worker compensation leverage is non-existent, and thus there is virtually no wage inflation among the group. We also hope we don't have to explain why Amazon therefore chooses to hire part-time workers over full-time.
We do, however, want to point out that we are impressed at the PR effort Amazon put together: after all both full and part-time workers will soon be gone, replaced by robots as we explained in "Amazon Hosts Robotics Competition To Figure Out How To Replace 230,000 Warehouse Workers."
So, dear Mr. Kashkari, the next time you find it "curious" that wage growth in the US is not strong, look at the case study of Amazon. And then, when you notice that wage growth in the next decade is not only "not strong" but declining, watch the video below, and all your questions will be answered.